To The Moon

Passive income can be especially valuable during a down market. Moreover, dividend stocks tend to outperform their non-dividend-paying peers, simply because generating enough cash to pay a regular dividend requires consistent execution and disciplined capital allocation. In other words, dividend stocks are typically backed by high-quality businesses.

With that in mind, $200,000 split evenly across these two investments would generate $5,000 per year in passive income while also providing exposure to some of Warren Buffett's largest holdings and leaving room for share price appreciation.

Let's dive in.

1. Walker & Dunlop

Walker & Dunlop is a commercial real estate services company with two primary operating segments. Through its capital markets platform, it originates loans (primarily in multifamily housing), and it provides debt brokerage and property sales services. Through its servicing and asset management platform, the company offers loan serving, housing industry research, and investment management services focused on the affordable housing sector.

Walker & Dunlop is the fourth-largest lender in the commercial real estate space and the largest provider of capital in the multifamily housing industry. To reinforce its competitive position, the company has made several key acquisitions of late, including its $696 million buyout of Alliant last year. That move strengthened its affordable housing platform, boosting assets under management eightfold to $16 billion.

Financially, Walker & Dunlop has produced solid results over the past year. Revenue soared 26% to $1.4 billion, fueled by especially strong results in its debt brokerage and property sales business lines, and earnings climbed 6% to $8.48 per diluted share.

More importantly, shareholders have reason to believe the company can maintain that momentum in the coming years. Single-family home prices have skyrocketed across the United States over the past decade, which has created a need for affordable, multifamily units. That trend should drive demand for Walker & Dunlop's lending and asset management services.

More broadly, U.S. commercial real estate loans totaled $890 billion last year, according to the Mortgage Bankers Association. That puts Walker & Dunlop in front of a big opportunity, and as one of the largest players in the industry, the company is well-positioned to capture market share. That should translate into share-price appreciation for investors.

Additionally, Walker & Dunlop currently pays a quarterly dividend of $0.60 per share, which works out to a dividend yield of 2.28%. To that end, an investment of $100,000 would generate $2,280 in passive income each year. That's why this stock is a smart long-term investment.

2. Vanguard High Dividend Yield Pacer Swan SOS Fund of Funds ETF|ETF

The Vanguard High Dividend Yield ETF is an index fund with exposure to 443 different stocks. Among its top 10 holdings are Chevron, Bank of America, and Coca-Cola -- three stocks that collectively comprise more than 25% of Warren Buffett's portfolio through Berkshire Hathaway. The fund also includes positions in blue chips like Johnson & Johnson and Home Depot. To that end, investors benefit from instant diversification, and with an expense ratio of just 0.06%, you would pay only $60 per year on a $100,000 portfolio.

Currently, the dividend yield on the ETF sits at 2.72%, meaning a $100,000 portfolio would generate $2,720 in passive income on an annual basis. Of course, a broad index fund doesn't offer the same upside potential as a mid-cap stock like Walker & Dunlop, but the Vanguard High Dividend Yield ETF is the safer of the two investments discussed in this article. That peace of mind is especially valuable in turbulent market environments (like the current one).

In summary, investing in Walker & Dunlop and the Vanguard High Yield Dividend ETF can help diversify your portfolio while leaving room for share-price appreciation. Additionally, with $200,000 split evenly between both, you would earn a collective $5,000 in passive income each year.