Want $4,000 per Year in Passive Income? Invest Just $2,500 in These Big-Yield Dividend Stocks

High headline yields can be useful signals, but they are not the same thing as durable income capacity. For ETF buyers, the key question is how much of the payout comes from portfolio income versus option premium, return of capital, or a temporary market setup. That distinction matters because distribution rates can move quickly, even when the strategy label sounds stable.

With covered-call and option-income ETFs, the trade-off is structural. The fund may collect premium by capping some upside in the underlying holdings, which can help cash flow but can also make the distribution path more dependent on volatility and market pricing than on long-term asset growth. Investors should understand that the distribution engine is tied to the fund design, not just to the name of the stock exposure beneath it.

Concentration is another issue that deserves attention. Several single-stock option-income ETFs may look diversified because they are different tickers, yet each one can still be dominated by one underlying company and one sector-specific risk factor. That means the portfolio may have multiple income sleeves, but not necessarily multiple independent sources of risk or return.

For long-term allocation, the practical question is fit, not yield alone. These products may have a role as satellite income positions, but they are usually not substitutes for a broad equity or bond core. Investors comparing them should also watch for turnover, bid-ask spreads, and the possibility that payouts change faster than the business case for owning them.

Quick Read

  • Cherry Hill Mortgage Investment Corp. (CHMI) earned roughly $2 million of quarterly net income, and its stock provides a juicy 23.91% annual dividend yield.
  • ZIM Integrated Shipping Services (ZIM) generated $123 million in Q3 net income, and ZIM stockโ€™s 21.94% yield is a real attention-getter.
  • You may augment your mega-yield portfolio with weekly-paying ETF picks like APLY, BABO, and JPMO.
  • If youโ€™re focused on picking the right stocks and ETFs you may be missing the bigger picture: retirement income. That is exactly what The Definitive Guide to Retirement Income was created to solve, and itโ€™s free today. Read more here
How can you leverage your savings into a more secure financial future? Dividends can be a key component of your wealth-building plan, and you can start today by investing just $2,500 per asset into five stocks or exchange traded funds (ETFs). When all is said and done, it might even be possible to take a $12,500 total investment ($2,500 times five different stocks/ETFs) and parlay it into $4,000 in annual passive income. The formula for success is to buy a couple of high-yield dividend stocks and then add several ETFs to raise your overall yield even further. In order to get $4,000 in annual dividends/distributions from a $12,500 total investment, youโ€™ll need to achieve an average yield of at least $4,000 divided by $12,500, or 32%. Thatโ€™s a high yield target, so letโ€™s start off with a pair of ambitious income-generating stock picks.

Cherry Hill Mortgage Investment Corp. (CHMI)

To begin, you could allocate $2,500 into shares of Cherry Hill Mortgage Investment Corp. (NYSE:CHMI). This firm is a real estate finance company that specializes in U.S.-based residential mortgage assets. Before we look at the dividend yield, we should make sure that Cherry Hill Mortgage Investment Corp. is income-positive so that the company can afford to pay its dividends. Cherry Hill Mortgage Investment Corp. appears to check that box, as it reported GAAP net income applicable to common stockholders of around $2 million in 2025โ€™s third quarter. Will CHMI stock help you reach your goal of a 32% average annual yield, though? Cherry Hill Mortgage Investment Corp. offers a 23.91% forward annual dividend yield, which falls short of 32% but is still quite high. So now, letโ€™s reveal our second individual stock pick for a $2,500 investment.

ZIM Integrated Shipping Services (ZIM)

This firm happens to be a leader in an important market sector. Founded in Israel but global in operations, ZIM Integrated Shipping Services (NYSE:ZIM) is a well-established container liner shipping company. Turning to the topic of financials, ZIM Integrated Shipping Services recorded $123 million worth of third-quarter 2025 net income. In other words, ZIM Integrated Shipping Services is income-positive and ought to be able to pay its dividends for a while, at least. Furthermore, ZIM Integrated Shipping Services pays a forward annual divided yield of 21.94%, which is nothing to sneeze at. Weโ€™re still below our target average yield of 32%, but now we can catch up with some giant-yield ETFs.

Ramp Up Your Returns With Three Excellent ETFs

When Iโ€™m falling behind and want to rapidly ramp up my total returns, I can turn to YieldMaxโ€™s high-paying ETFs. The following YieldMax funds utilize options-trading strategies, possibly including writing covered call options and creating synthetic option positions, to generate weekly cash distributions for investors.
Kicking off our three-pack of YieldMax funds is the YieldMax AAPL Option Income ETFย (NYSEARCA:APLY). This ETF creates weekly income opportunities by deploying options-trading strategies based on the price movements of Apple (NASDAQ:AAPL) stock. Thereโ€™s no doubt that Apple is income-positive, so we donโ€™t need to debate that issue. And while the APLY ETFโ€™s share price may be volatile sometimes, the YieldMax AAPL Option Income ETF offers an outstanding 41.76% expected annual distribution rate.
Pressing forward, our second ETF selection is the YieldMax BABA Option Income ETF (NYSEARCA:BABO). Although BABO uses similar options-trading strategies to APLY, the YieldMax BABA Option Income ETF focuses onย Alibaba (NYSE:BABA) stock instead of Apple stock. Because Alibaba is a multinational e-commerce leader, the risk level may be mitigated somewhat with the YieldMax BABA Option Income ETF. In any case, the BABO ETF advertises a 51.55% annual distribution rate, so weโ€™re definitely getting closer to achieving our objective of $4,000 in yearly passive income.
The last piece of the puzzle will be another weekly-paying fund, the YieldMax JPM Option Income ETF (NYSEARCA:JPMO). This one, as you surely surmised, utilizes options-trading strategies to extract income from the price action of JPMorgan Chase (NYSE:JPM) stock. It cannot be denied that JPMorgan Chase is a financially sound business, and this should provide some confidence if youโ€™re investing $2,500 in the JPMO ETF. Plus, impressively, the YieldMax JPM Option Income ETFย carries a 47.65% anticipated annual distribution rate.

Your $4,000/Year Journey Starts Here

So, what might you get if you invest $2,500 each into CHMI, ZIM, APLY, BABO, and JPMO? We can find the answer simply by adding the yields up and then dividing the sum by five. I wonโ€™t keep you in suspense any longer. If the yields of these assets arenโ€™t reduced, then you ought to achieve an average annual dividend/distribution yield of 37.36%. Thus, we have exceeded our 32% yield target and should be able to generate $4,000 per year from a $12,500 total investment. Your role, then, is to conduct your due diligence and consider starting on your journey to massive passive income today.
Want $4,000 per Year in Passive Income? Invest Just $2,500 in These Big-Yield Dividend Stocks

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