We tend to find that many Kiwis when weighing their options will opt for property which has that mix of yield and income security. In this case, your income will be totally predictable, and for that youвЂ™ll accept the lower yield. Similarly, if you are very risk-averse, then investing with a bank may be the right fit for you.

As part of seeking those higher returns, youвЂ™ll accept that the passive income you get from your dividends will go up and down each year and frequently change. If you are more risk-seeking, then you might be willing to seek the higher yields that shares can bring. This makes it a good option for people who are willing to take a moderate amount of risk. The right asset class for you will depend on how much risk you are willing to take.ДЇor instance, although property is not always the highest yielding asset class, it does have a mix of yield and stability of income. If they stop paying you have the ability to replace them with a tenant who can make rent, and the original tenant will still be liable for what they owe you. Tenants, on the other hand, will continue to pay their rent because they still require a place to live. However, after the Covid-19 induced shutdown and the closing of New ZealandвЂ™s borders, it is now unlikely the company will pay out a dividend for many years. In the 12 months to December 2019, the company had the highest yielding stock at 16.42%. They will change based on each companyвЂ™s performance.ДЄ good case study for this is Air New Zealand.

So the benefit of shares is that if you focus on higher-yielding stocks, the dividend yield you can get is likely to be higher than property in some years. The average yield was 3.39% for all shares, and 5.35% from those shares that paid a dividend. Of those that did pay a dividend, the yields ranged from 0.31% from Allied Farmers, all the way up to 51.72% from Sky Network TV.

Passive income examples