Don’t want the hassle of owning a rental property? Invest $30,000 in these dividend stocks and you could earn nearly $2,000 in passive income.

Investing in real estate is a well-established way to generate passive income. However, it has some drawbacks. For example, a large upfront payment may be required. Your rental property may not be as liquid as you would like. There can also be a myriad of recurring expenses, such as property taxes, insurance, and maintenance.

Don’t want the hassle of owning a rental property? There are other options. If he invested $30,000 in these dividend stocks, he could earn nearly $2,000 in passive income annually.

1. Crown Castle

crown castle (CCI -0.83%) ranks as the largest telecommunications infrastructure provider in the United States. The company owns more than 40,000 cell phone towers, about 115,000 small cell nodes, and nearly 90,000 miles of fiber.

Since 2014, Crown Castle has been organized as a real estate investment trust (REIT). As a REIT, the company must return at least 90% of its income to shareholders in the form of dividends to be exempt from federal taxes. The current dividend yield is 6%, so if he invests $10,000 (one-third of his original $30,000) in Crown Castle, he will earn $600 in passive income per year.

Crown Castle is clearly in a period of transition. The company continues to search for a new CEO. Revenue decreased due to the cancellation of mobile phone base station leases related to . T-mobileacquisition of Sprint by The company also faces a lawsuit from activist investor Ted Miller and Boots Capital Management.

However, demand for Crown Castle’s communications infrastructure remains strong. The company expects to generate adjusted funds from operations (FFO) of $2.98 billion to $3.03 billion for the full year 2024. This range is more than sufficient to fund the dividend program at current levels.

2. Innovative industrial property

innovative industrial property (IIPR 0.21%) (IIP) is the only REIT focused on the regulated U.S. cannabis industry traded on the New York Stock Exchange. The company owns 108 properties across 19 states. Most of it (98.5%) is leased to cannabis operators. IIP’s properties have a weighted average remaining lease term of 14.6 years.

Few REITs have as impressive a track record of dividend growth as IIP. The company has more than quadrupled its dividend over the past five years. IIP’s dividend yield is currently 7.47%. If you buy $10,000 of that stock, your annual income at that level will be $741.

Some of IIP’s tenants have faced financial difficulties in recent years. The U.S. cannabis industry continues to grapple with a glut that has caused prices to fall. These issues have a cascading effect on his IIP.

But the future could improve for cannabis operators. Wall Street is also generally bullish on IIP’s outlook, with its average 12-month price target reflecting nearly 25% upside potential.

3.WP Carry

WP Carry (WPC -0.96%) Ranked among the largest REITs specializing in commercial real estate. He owns 1,424 properties in 26 countries. The company has an occupancy rate of 98.1% and a weighted average lease term of 11.7 years. WP Carey’s top tenants include U-Haul, Andalusia, and Apotex Pharmaceutical Holdings.

The REIT continued to increase its dividend significantly until it cut its dividend by nearly 20% in the second half of 2023. However, I think this cut will put WP Carry’s dividend program on a stronger footing. The current dividend yield is 6.19%, so a $10,000 investment will earn you $619 in passive income per year.

Commercial real estate has been a tough market since the lockdown due to the coronavirus pandemic. WP Carey spun off office real estate into his own independent REIT as part of his strategy to exit this market. I think that’s a wise move. The company should be in a solid position to invest in more real estate and grow its adjusted FFO in 2024.

Two risks to be aware of

Investing $30,000 ($10,000 each) in these REIT stocks would earn you $1,960 in passive income over the next 12 months, which is just under $2,000. However, there are two risks to be aware of.

First, one or more of these REITs may cut their dividends. However, I think this is unlikely to happen, especially since WP Carey already cut its dividend last year.

Second, the stock price could drop significantly, wiping out all the dividend income you received. Investing in dividend stocks always involves risk. On the other hand, if the Fed cuts interest rates later this year, it could be a powerful catalyst for all three stocks to soar.