Building passive income from the stock market is one of the best ways to create long-term wealth and financial freedom. If your goal is to earn at least $1,000 per month, you need a strategy that combines dividends, interest income, and options trading to maximize your earnings. Here are three proven strategies to generate consistent passive income.
1. Buy S&P 500 Stocks and ETFs That Pay Dividends
One of the simplest ways to earn passive income is by investing in high-quality dividend-paying stocks. Many companies in the S&P 500 index consistently pay and increase their dividends, providing you with a steady stream of income.
Best Dividend Stocks & ETFs to Consider
Some of my favorite dividend stocks and ETFs include:
✅ Costco (COST) – A strong retailer with a history of dividend growth.
✅ Walmart (WMT) – A reliable company that pays consistent dividends.
✅ Microsoft (MSFT) – While known for tech innovation, it also pays dividends.
✅ Visa (V) – A financial giant with stable dividend payouts.
✅ Schwab U.S. Dividend Equity ETF (SCHD) – An excellent ETF that focuses on high-dividend-paying stocks.
How It Works
Buy and hold dividend stocks/ETFs in your brokerage account.
Every quarter (or monthly, depending on the stock), you’ll receive dividend payments.
Reinvest your dividends to accelerate compounding and future income.
How Much Can You Earn?
If you invest $50,000 in high-yield dividend stocks averaging a 4% annual yield, you will earn:
➡ $2,000 per year in dividends = $166 per month
As you reinvest and add more capital, your income grows.
2. Keep a Portion of Your Portfolio in a Fidelity Money Market Fund (SPAXX)
While the stock market offers great returns, having some cash reserves in a high-yield money market fund is a smart way to earn additional passive income.
Fidelity SPAXX?
SPAXX is Fidelity’s money market fund, which invests in low-risk short-term securities and pays interest daily.
How It Works
Deposit cash into Fidelity’s SPAXX fund.
You earn interest payments automatically (paid monthly).
The yield fluctuates, but as of now, it’s around 5% annually.
How Much Can You Earn?
Let’s say you keep $50,000 in SPAXX earning a 5% annual yield:
➡ $2,500 per year in interest = $208 per month
This provides a stable $200+ per month in passive income with almost zero risk.
3. Sell Covered Calls for Extra Income
If you own at least 100 shares of a stock, you can sell covered calls to generate additional passive income.
What Is a Covered Call?
A covered call is an options strategy where you:
1️⃣ Own at least 100 shares of a stock.
2️⃣ Sell a call option against those shares, agreeing to sell them at a specific price (strike price).
3️⃣ Collect a premium (payment) upfront, no matter what happens.
How to Sell Covered Calls (Step by Step)
Step 1: Choose a Stock You Own 100+ Shares Of
Pick a stable stock that pays dividends (Microsoft, Visa, or Walmart).
Make sure you’re comfortable holding this stock long-term.
2: Sell a Covered Call in Your Brokerage Account
Go to your brokerage’s options trading section.
Select “Sell to Open” a call option.
Pick a strike price slightly above the stock’s current price (e.g., if MSFT is $400, choose a strike of $410).
Select an expiration date (1-4 weeks out is ideal).
Execute the trade and collect the option premium instantly.
Step 3: Profit No Matter What Happens
✅ If the stock stays below the strike price → You keep your shares + the premium = Free money
✅ If the stock rises above the strike price → You sell at a profit + keep the premium
How Much Can You Earn?
Selling 1 covered call per month on a stock like MSFT can pay $200-$400 in premium income. If you do this on multiple stocks, you can easily generate $500+ per month.
Final Income Breakdown
If you follow these three strategies:
✔ Dividend Stocks & ETFs → $166 per month✔ Fidelity SPAXX Money Market → $208 per month✔ Covered Calls → $500+ per month ➡ Total Passive Income = $1,000+ per Month!
By using dividends, interest, and options trading, you can create a reliable stream of passive income that grows over time. Start with what you can, reinvest your earnings, and watch your monthly income increase!
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