3 ways to supercharge my passive income streams in 2023

The stock market offers many opportunities for investors like me, looking for passive income from high yield investments.

Let’s look at three different ways to generate additional income with minimal effort in 2023.

1. Dividend shares

The first place I started looking for passive income was dividend stocks. This is where UK shares come into their own, offering higher dividend yields on average than their US counterparts.

A quick glance at the related index tells me that the yield is provided by FTSE 100 (3.54%) and FTSE 250 (3.07%) comfortably beat the S&P 500 (1.74%) and Nasdaq Composite (1.28%).

In particular, the greater concentration of stocks in the FTSE 100 compared to other indices means that London’s blue-chip benchmark is heavily weighted in financials, energy and materials. About 40% of the index, this is more than twice the S&P 500’s weighting in the sector.

Many of these companies are defensive, cash-generating businesses that pay large dividends, making them a good choice for passive income seekers. To highlight a few examples, Lloyds Bank pays a 4.33% dividend for the week. BP yields 3.9%, and Rio Tinto exercise 8.56% yield.

While I may sacrifice growth opportunities in other sectors like technology, with passive income on my mind, I think this is a name I want to see in my portfolio.

What’s more, defensive investments often outperform in recessions as investors flee more speculatively to find safety in quality companies. Amid concerns that the UK and the US could be in recession this year, I want to buy defensive stocks to weather macroeconomic turmoil.

2. REITs

Another asset class that offers passive income is real estate investment trusts (REITs). They provide an easy way to get real estate exposure without the hassle of being a landlord. It is definitely a more passive investment than buying property.

Typically, REITs will be listed on a stock exchange and pool investors’ cash to invest in properties, giving shareholders indirect exposure. Often each REIT will focus on a specific type of property.

For example, Ediston Property Investment Company focused on retail warehouses and yielded 7.91%. On the other hand, Custodian Property Income REIT has a more diversified portfolio that includes industrial properties, office blocks, and high-rises. This REIT yields 5.86%.

There are signs that commercial property prices have weakened with dealmaking at the lowest level for a decade. This could result in bumper yields offered by UK REITs. However, they are an important part of passive income portfolios because of the diversification they offer.

3. Dividend fund

Finally, an easier solution to increasing your passive income is a dividend stock fund. Although picking individual stocks is key to my investment strategy, I also own funds.

Due to its low cost and simplicity, I think it could be a good buy-and-hold investment for the long term.

One of the high-dividend funds I have is Vanguard FTSE All-World High Dividend Yield UCITS ETF. The top three stocks are pharmaceutical companies Johnson & Johnsonmain oil Exxon Mobiland financial services giants JPMorgan Chase.

With a dividend yield of 3.73%, this ETF offers a way to own some of the highest-yielding companies in the world.