Generating thousands of dollars a year in passive income from your portfolio sounds great, but there's a right way and a wrong way to do it.
Investing in stocks based solely on their yields can result in a portfolio of companies with poor balance sheets, inadequate cash flows, and shrinking stock prices. A better way to go about it is to find a diversified dividend exchange-traded fund (ETF) that focuses on above-average yields without sacrificing long-term growth potential in the process.
That way, you can capture the income, maintain quality in your portfolio, and diversify away some downside risk.
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