Rental property revenue is recognized by the IRS as passive income. Anyone who has ever owned a rental property, however, is aware that it is anything from passive to be a landlord. Finding and managing renters, taking care of the bills, and keeping up with maintenance all take active management.

The good news is that folks who like the notion of making passive income from real estate but don’t want to put in as much effort to do so have options. Investing in real estate investment trusts is a simple way to jump on the passive income gravy train. Here are two of the best REITs that provide some of the advantages of rental property ownership without the work.

How to become a landlord quickly

The majority of people who own rental property begin by buying a single-family house to rent out. While running a single home doesn’t require much labor, owning a single rental property is unlikely to provide the passive income required to retire. You would need a large portfolio of properties for that, which would be more difficult to maintain.

Shares of Invitation Homes (INVH 0.72%) are a simple method to invest in a portfolio of single-family rental homes. The residential REIT is largely focused on the nation’s housing areas with the strongest growth rates, and it owns more than 80,000 rental units nationwide.

An ongoing revenue stream is provided to stockholders by Invitation Homes. The REIT now pays a quarterly dividend of $0.22 per share, translating to a dividend yield at the current stock price of 2.4%. Accordingly, the REIT would generate $24 in passive income for every $1,000 invested. Investors may rely on that sum of money each year. Contrarily, a landlord’s rental revenues might vary from month to month based on costs and may even be negative if they have a significant unforeseen expense or a vacancy.

As its profits climbed as a result of growing rental rates and portfolio development, the REIT gradually boosted its dividend. In the second quarter, lease rates across its portfolio increased by 11.8% year over year. It also spent $426 million on 955 more residences throughout the quarter.

Strong house demand and low inventory levels are expected to be Invitation Homes’ two key growth drivers. Through a number of collaborations, the firm has ensured a consistent flow of new rental properties, including one with major homebuilder PulteGroup that will provide it with 7,500 new houses over the next five years. In the next years, investors should be able to get even more passive income from Invitation Homes thanks to these growth factors.

The simple method to buy a multifamily

Multifamily housing, such as four-plexes or tiny apartment complexes, is another kind of conventional rental property investment. Owning multifamily properties sometimes entails a lot of labor in terms of managing tenants and keeping the structures in excellent condition.

Purchasing shares of a top-notch apartment REIT like Camden Property Trust (CPT -1.44%) is a simpler approach. The firm has 171 buildings with 58,425 flats spread throughout 15 rapidly expanding housing markets.

Currently, Camden pays a $0.94 per share fixed quarterly dividend. That translates to a dividend yield of 2.8% at the current stock price.

The REIT has a strong history of increasing payouts because to rising rents and its continually growing unit inventory. Due to the competitive housing market, its rentals increased by an average of 15.3% in the second quarter. Camden is now able to invest in new housing construction thanks to this. It is now investing $603 million in the construction of 1,842 flats, and there are numerous projects in the works. The REIT will also buy stabilized units; most recently, it invested $1.1 billion to buy 7,247 flats and took full ownership of them. The combination of rising rental rates and an expanding portfolio ought to make it possible for Camden to keep raising its dividend payments.

Earn real estate revenue that is genuinely passive

Even while rental homes promise passive income, you’ll really have to put in some effort to make that money. However, REITs are really completely passive investments. Even better, many provide consistent revenue as opposed to the inconsistent cash flow generated by the majority of rental properties. They are therefore a simple method of generating passive income from real estate.

This year, there have been ups and downs for the stock market. The Nasdaq Composite, Dow Jones Industrial Average, and S&P 500 are the three main indices, and they are all down by 22%, 12%, and 16%, respectively. Investors should keep in mind that over the last ten years, the same indices have increased by 285%, 140%, and 180%, respectively.

With that in mind, it looks like a fantastic moment to buy discounted equities right now. So let’s look at three growth stocks that are begging to be purchased.

Alphabet

Alphabet (GOOG -0.69%), (GOOGL -0.66%), is the first high growth stock I am monitoring. Alphabet immediately makes me think of size. Alphabet is the third-largest American corporation with a market valuation of $1.4 trillion, behind only Apple and Microsoft.

And that makes sense. Alphabet is home to a number of well-known businesses, such as YouTube, Google Cloud, and its omnipresent Google Search company. Alphabet’s growth is extraordinary given its wide range of profitable business divisions. The most recent quarter saw a 12.6% increase in quarterly revenue. Additionally, the business is reasonably priced.

The price-to-sales ratio for Alphabet is at 5.4, which is still well below the five-year average of 6.6. Alphabet should now be considered by long-term investors wishing to add a top growth company with established business areas.

Snowflake

Snowflake (SNOW -2.05%) is currently the second-best growth stock to own. The business has an application for cloud computing called Data Cloud that enables users to collect their data, run analyses, and come to conclusions. Data siloing is an issue that Data Cloud assists clients with resolving since it has grown more prevalent as businesses use cloud services from several providers.

Shares of the corporation recently increased by more than 17% after it released outstanding financial reports. Snowflake reported $497 million in sales for the fiscal second quarter (the three months ended on July 31), above average projections by around $30 million. The company’s income increased by an astounding 83% year over year, and its client base soared to 6,808, up 36% from the previous year. If there is one important lesson to be learned from Snowflake’s stellar quarter, it is that the company’s explosive expansion is still going strong.

Lululemon

Lululemon (LULU -2.31%) is the third and last growth stock on my list that is an absolute must-buy. The business creates and markets athleisure-related apparel, footwear, and accessories.

Despite widespread worries about an impending recession, Lululemon has so far in 2022 shown exceptional growth. In the previous year, revenue totaled $6.6 billion. Revenue increased 31.6% from the prior year in its most recent quarter (the three months ending on May 1, 2022).

However, it’s important to keep in mind that Lululemon has more to offer than just their well-known yoga clothes and ubiquitous belt packs. In fact, Chief Executive Officer Calvin Mcdonald believes that by expanding sales to males and boosting footwear sales, Lululemon would be able to quadruple its revenue by 2026.

If the business achieves its objective, it seems to be a buy. Despite having a 39 price-to-earnings (P/E) ratio, Lululemon remains affordable when compared to other companies. The company’s average P/E ratio over the last five years is 54, demonstrating that market participants were ready to pay a premium for Lululemon.

After the market closes on September 1, the firm releases its results. It would be good for long-term investors to buy into any dip.

The once-single market for cryptocurrencies is now inundated with competing products. It’s simple to think that cryptocurrency investments are only suitable for the short term due to the introduction of meme coins that seem to create millionaires quickly. Although there are several cryptocurrencies, Ethereum (ETH 4.92%) is one that investors should never sell.

Ethereum is a cryptocurrency that, in a similar manner to Bitcoin (BTC 1.28%), altered the way we think about money in the modern day. There are several ways that Ethereum differs from Bitcoin. But one, in particular is in charge of decentralized finance, often known as DeFi, which is perhaps the biggest breakthrough to come out of blockchain and cryptocurrency technology.

The modern financial era

Traditional financial institutions that administer and process financial services include banks, notaries, brokers, exchanges, and other intermediaries. Traditional financial procedures like requesting a loan or buying shares call for some kind of middleman to carry out the transaction.

But these conventional banking procedures are progressively being replaced by Ethereum and its cutting-edge smart-contract technology. DeFi’s core technology, smart contracts, are what set Ethereum apart from other platforms. No other cryptocurrency has smart-contract functionality prior to its inception in 2014. Blockchain developers may create special conditions and criteria for carrying out certain operations by using smart contracts.

Smart contracts, for instance, might control loan arrangements and release collateral after complete payment. Smart contracts might control agricultural drought insurance policies by automatically paying out if certain rainfall quantities materialize since they can combine with other data.

Smart contracts and DeFi have the potential to fundamentally alter what we think conventional institutions’ functions are in the financial sector, in addition to their almost limitless customizability.

DeFi’s inclusion is one of its most alluring features. All you need is an internet connection to use a DeFi financial product. There are no loan officials, brokers, or credit bureaus. Users may trade and transfer assets anytime, anywhere, as long as they have a cryptocurrency wallet set up.

Furthermore, every transaction is real-time and totally transparent. Due to the near-instantaneous nature of transactions on the blockchain, banks and brokers are not required to handle them. The blockchain also has the benefit of enabling anybody with an internet connection to see network activity once a transaction is added. It helps that the high degree of security provided by the blockchain almost eliminates any chance of fraud or manipulation.

The fact that DeFi is always developing is maybe its biggest advantage. All projects and applications created on Ethereum are open-source. Developers may thus combine several DeFi applications to create financial solutions that can adapt to changing consumer needs.

The first-mover advantage

The majority of the market share in the DeFi industry is held by Ethereum, which was the first blockchain to support smart contracts. Despite the entry of new rivals like Tron (TRX 1.68%), Binance Coin (BNB 1.53%), and Avalanche (AVAX 2.82%) to take a piece of the market, they will have a difficult time competing due to Ethereum’s extreme disproportionate hold on the DeFi economy.

Total Value Locked (TVL), a measure that compares the total value of a blockchain’s DeFi ecosystem, may be used to make this comparison.

Nearly $36 billion of the $62.5 billion that has been invested throughout DeFi as of this writing is on Ethereum’s blockchain. Tron is the next-closest rival, but it can only maintain a value of roughly $9 billion. It’s a long way off.

Investors have to give DeFi’s potential long-term worth careful consideration, particularly in light of the fact that it is still in its infancy. Those who believe DeFi can replace conventional finance should plan on Ethereum dominating for the foreseeable future.

A stock that pays you to hold it every quarter (and, in some circumstances, monthly)? That notion is popular among investors. Unsurprisingly, dividend stocks often draw a lot of capital.

Dividend stocks may soon become even more desirable despite how well-liked they currently are. You can thank Joe Biden for that.

Limits placed on buybacks

On August 19, the Inflation Reduction Act was ratified by President Biden. One of the most important laws in our history, according to him, was the legislation. That isn’t being dramatic at all.

One benefit of the plan is that it allocates $430 billion more than prior efforts to combating climate change. Additionally, it will provide Medicare the first-ever opportunity to directly negotiate the costs of the most expensive medications. The pharmaceutical business may experience disruption as a result of this transition.

The Inflation Reduction Act also has another clause that hasn’t gotten as much attention: starting in 2023, corporations will have to pay a 1% tax on stock buybacks.

Companies repurchase their own stock to provide cash to shareholders. The value of already-issued shares increases when shares are bought back. As the same amount of net income is distributed across fewer shares as a result of stock buybacks, profits per share might increase.

The increased tax will make it less likely for businesses to purchase back their shares. Some of these businesses may be encouraged to reward shareholders with bigger dividends, however.

Three examples

How may future business decisions be affected by the 1% tax on buybacks? Let’s examine three businesses that have a history of stock buybacks and dividend payments in 2022.

The first two quarters of this year saw Apple (AAPL -1.37%) buyback $44.6 billion worth of its own stock. Dividend payments of $7.4 billion were made to shareholders. Apple would have had to pay out $446 million in taxes on its stock buybacks if the Inflation Reduction Act had gone into force on January 1. Without incurring any more taxes, the corporation could have greatly increased its dividend distribution.

Another IT juggernaut with significant stock buybacks is Microsoft (MSFT -1.07%), which stands out. In the first two months of calendar year 2022, the business repurchased $15.6 billion worth of its shares. A $9.2 billion dividend was also handed out. If a 1% tax on those stock buybacks had been imposed, Microsoft may have chosen to boost dividend payouts instead.

In the first quarter of 2022, Amgen (AMGN -0.53%) repurchased more than $5.4 billion worth of its shares; no repurchases were made in the second quarter. Additionally, the large biotech spent almost $2.1 billion on dividend payments in the first half of the year. Again, if the upcoming tax on stock buybacks had been in effect, these sums might have easily been tilted further in favor of dividends.

Paying dividends

The new tax enacted under the Inflation Reduction Act: Would businesses actually be more inclined to increase their dividends as a result? According to a Tax Policy Center study, a 1% tax on share buybacks would raise company dividend distributions by 1.5%.

The decision to increase dividends rather than buy shares with additional cash has a few disadvantages for businesses. Once a corporation raises its dividend, lowering it later might enrage shareholders. This issue does not exist for stock buybacks.

Dividend taxes must also be paid by shareholders. Those tax rates are usually much higher than 1%. When choosing how to deploy capital, businesses may take this tax impact into consideration.

But this was a factor in the Inflation Reduction Act’s justification for including the additional tax. No matter what actions are taken by businesses like Apple, Microsoft, and Amgen, taxing stock buybacks will benefit Uncle Sam.

Your money should work for you. The concept behind passive income is just that. There are many methods to invest your money, but some provide higher returns than others.

Closed-end funds have stood out as a fantastic choice for investors. They are mutual funds that resemble exchange-traded funds in that they may be exchanged on a stock exchange. Additionally, CEFs sometimes provide very alluring returns. Here are a few high-yield ETFs that are reliable sources of passive income.

1. Aberdeen Global Dynamic Dividend Fund

The primary goal of Aberdeen Global Dynamic Dividend Fund (AGD -3.15%) is to provide substantial dividend income. The future capital growth of the fund is its secondary investing goal. As of July 31, 2022, the CEF’s net assets were at $139.7 million.

The top holdings of the fund make a lot of sense in light of these two objectives. The greatest investments are made up of dividend-paying equities with promising growth potential, such as Apple, Microsoft, and AbbVie.

Currently, the CEF provides a very high dividend yield of around 7.8%. It has a net expense ratio of 1.18%. The price of the Aberdeen Global Dynamic Dividend Fund is 10.1% below its net asset value (NAV).

2. The Alliance of the AllianceBernstein Global High Income Fund

Another CEF that aims to deliver high levels of income with an additional goal of capital appreciation is Bernstein Global High Income Fund (AWF -1.53%). Based on the performance of the markets, this fund modifies the degree of risk in its portfolio, lowering risk during turbulent markets and increasing risk during favorable markets.

The CEF primarily invests in government bonds and corporate debt assets. Fund managers at AllianceBernstein favor a global, multisector strategy that offers a compelling risk-return scenario. Currently, American assets make up more than 72% of the portfolio of the fund.

The distribution yield for AllianceBernstein Global High Income is around 7.6%. The fund has a 1% net expense ratio. The market price is 5.3% below the NAV.

3. BlackRock Global Dividend Trust Enhanced

Similar to the first two CEFs discussed, BlackRock Enhanced Global Dividend Trust’s (BOE -2.27%) main investing goal is to provide income, along with long-term capital growth as a secondary goal. As of August 22, 2022, its net assets were above $721 million.

At least 80% of the fund’s net assets are typically allocated to dividend-paying equities. And generally at minimum 40% of its assets is held outside of the United States. Microsoft, Novo Nordisk, Sanofi, and Reckitt Benckiser Group are some of the largest holdings.

The dividend yield for BlackRock Enhanced Global Dividend Trust is now above 7.4%. By writing covered options, typically between 30% to 45% of its total assets, the fund increases its revenue. It has a 0.90% net expense ratio. Additionally, the CEF is accessible for 10.5% less than its NAV.

Several things to consider

These three closed-end funds are all genuine generators of passive income. Investors need be aware of a few crucial details about the funds, however.

First, none of these three CEFs could be expected to have considerable capital growth. Yes, they all have capital growth listed as one of their secondary investing goals. However, distributions will account for the majority, if not the whole, of their overall returns.

Second, the share prices of these funds might fluctuate greatly. All three have decreased more so far this year than the S&P 500.

Leverage might cause certain CEFs’ volatility to increase (borrowing). The good news is that none of these funds heavily rely on debt. Leverage is not used by BlackRock Enhanced Global Dividend Trust at all. Only 4.84% and 0.11%, respectively, are the effective leverage rates for the AllianceBernstein Global High Income Fund and Aberdeen Global Dynamic Dividend Fund.

The anticipation for the impending network upgrade, “The Merge,” has contributed to the recent rise in the price of Ethereum (ETH -4.03%).

Ethereum engineers said last month that the upgrade was slated to arrive in the middle of September. The Merge will now officially start on September 6 and end between September 10 and September 20.

It is a thrilling time for cryptocurrency investors, and there are a few obvious reasons to think about purchasing Ethereum before The Merge.

1. One of the strongest networks is already Ethereum.

Leaving aside The Merge, Ethereum is already among the industry’s top competitors. It is the most extensively utilized network for decentralized applications (dApps), including NFT markets and decentralized finance (DeFi) initiatives. It is the second most popular cryptocurrency after Bitcoin (BTC -1.97%).

Ethereum already has a lot going for it and is more useful in the real world than many other cryptocurrencies. Ethereum has a stronger chance of seeing long-term growth than Bitcoin, and The Merge will only make that more likely, albeit no one can predict with certainty how it will fare over time.

2. The Merge’s energy efficiency will significantly increase.

Ethereum still employs the time- and energy-consuming proof of work (PoW) mining process at this time. However, The Merge will switch Ethereum to the far more effective proof of stake (PoS) technology.

In fact, the network is anticipated to use around 99.95% less energy following the change than it did with its previous PoW technique. That might offer it a significant edge over Bitcoin, which has received a lot of flak for how much energy it consumes.

3. It will have a stronger competitive edge over smaller networks.

Expanding Ethereum’s capabilities and converting to a PoS architecture may help it become more competitive with newer blockchains.

PoS is already implemented in many smaller networks, giving them an edge over bigger cryptocurrencies like Bitcoin and Ethereum that continue to employ PoW. Ethereum will, however, compete more fairly with networks like Solana and Cardano after it has finished its update.

Before purchasing, evaluate the risks.

There are still hazards involved even if The Merge is a significant move in the right path for Ethereum.

Ethereum is still a speculative investment despite its benefits. Even if Ethereum has the strongest blockchain in the world, it won’t be easy for it to survive in the long term if cryptocurrencies and decentralized networks never get widespread acceptance from the general population. Furthermore, it is still too early to predict how the crypto market will perform in the future.

Additionally, Ethereum may see severe volatility once The Merge is implemented. Although a flaw in the planned update has already been discovered and immediately fixed, there is always a chance that further issues could crop up as the release date approaches.

Updates on Ethereum have a long history of being delayed. The Merge was first scheduled for June, then it was moved to August, and eventually it was postponed until September. While delaying an upgrade is preferable than hastily releasing one and running the risk of significant problems, all of these delays might erode investor trust in Ethereum and allow other cryptocurrencies more time to catch up.