Forget Rental Properties: Invest $10,000 Into These Dividend Growth Stocks With Ultra-High Yields for Passive Income

Passive income is a popular concept these days. Defined as money earned outside of a traditional job and requiring minimal time or effort, it is a tantalizing proposition for investors tired of the rat race.

Many people will pitch buying rental properties as the best form of passive income. But I think this is a misnomer. Managing a rental property may be profitable, but it requires a lot of time and effort to maintain. That is not "passive" income in the traditional sense.

The purest form of passive income comes from buying high-dividend-yield stocks, as they require zero upkeep to maintain your cash flow. Here are two ultra-high dividend-yielding stocks to buy with $10,000 over any rental property for your investment portfolio right now.

Legacy tobacco pricing power

Many investors shy away from investing in tobacco companies. There is an idea that the sector is in terminal decline with fewer and fewer users of cigarettes around the world. While it is true that tobacco consumption is going down, there is still plenty of profit to be made for legacy brands such as Marlboro, owned by Altria Group (NYSE: MO). With so much skepticism pointed toward the industry, you can buy the stock at a cheap earnings multiple today. It currently has a price-to-earnings ratio (P/E) of 8.7.

Today, Altria Group has a dividend that yields 7.83%. If you invest $10,000 into Altria stock, the company will pay out $783 in dividends to you each year. For the last 10 years, Altria has consistently raised its dividend-per-share to stockholders, and the payout has climbed 100% in those 10 years.

The fuel to this dividend growth is the pricing power of its tobacco brands such as Marlboro. Even though cigarette usage -- especially in the United States -- is falling, Altria has the pricing power to counteract volume declines and grow cash flow (the lifeblood of dividend payments). Free cash flow per share has increased by 125.8% in the last 10 years despite massive declines in cigarette usage in the United States.

Cigarettes may not be around forever. But they will still generate healthy cash flows for many years. This makes Altria Group an easy dividend income stock that will likely generate heaps of passive income and help you grow your wealth without lifting a finger.

MO PE Ratio data by YCharts

International exposure and new-age products

Perhaps a more promising tobacco company is British American Tobacco (NYSE: BTI). It is the owner of legacy cigarette brands such as Newport and sports a higher dividend yield than Altria Group at 8.21%. That equates to $821 in annual passive income on a $10,000 investment.