The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life.
I agree! That's why it is advisable that you have to invest while you still have a regular job or earning a regular income, and do it constantly. You still need to have something that will keep you going even if you're investing. Good financial planning and money allocation is the key.
I definitely agree, this is one thing I want to do for my daughter, build a portfolio of dividends that the initial dividend will be reinvested for about 10-15 years of her life and by the time she gets to be 30 she will have them to live off of as an extra source of income and also it will be a set amount so she will have to budget and still be responsible 👍
This is my plan. While I am earning money I am continuing to grow a dividend portfolio. Any dividends I receive are reinvested into dividend companies. When I stop receiving an income in 30 years I then stop reinvesting the dividend and live off it.
I welded steel together for ten hours a night for 11 years and saved as much as possible until the 2008 crash , then finally bought a house with 40%down when people were selling everything at a discount. I had just got a raise to ten dollars a hour and that gave me hope to keep going. Next five years I put everything extra on paying off that house until that was accomplished. After living debt free with a stable home with no payments I started investing 25% of all my income in the market and 20 years later I’m a 50 year old debt free millionaire. It’s a long road but it is achievable with a good plan and self discipline.
I am a fellow retiree living off dividends + SocSec. I have taxable, IRA and HSA buckets. IRA and HSA get dividends reinvested, taxable dividends + SocSec are used to live on. I expat'd to Mexico for lower cost of living, safer and much cheaper healthcare. ~$50,000 USD annual dividends without SocSec. 8.02% is my combined average dividend yield of the 3 buckets which keeps me ahead of taxes and inflation.
The problem with these "live off dividends" videos is for the amount you need to live off would have to be so high that you can retire on the principle. So then that dividend "livelihood" would be nothing more than a side hustle.
There are stable companies that pay around 5 %. These companies generally don't have that many dramatic growth-spurts to pump the extra cashflow into and decide to instead funnel it into a dividend, or a buyback of stocks. Double digit dividends usually indicate a recent drop in the stock price. While some swear by dividends you can simply automate the process of liquidating to create a dividend system that works just as well as a normal one. I stick to mostly index funds. I do own a single stock that is dividend paying, but the primary reason for owning it is that I consider it undervalued. Stock picking is a small part of my portfolio, because I am aware that underperforming the market is the norm with stockpicking.
I am still young (below 30, as my goal is to start to go safer at 30) and I took some bigger risks so far. Already have a standard pension fund but I want to be able to retire sooner. In the end, I made 3300% profit since 2018 to the end of 2021. Along the way I started putting more of those profits in to (trying) calculated investments including some aristocrats that went down a by significant amounts which made the yield rise a lot. Still hold them and won't sell unless its needed for what ever reason. Long term the goal is dividend income with short-term higher risk growth investing
@@mikee368 while there are reliable opportunities that give a very high return that is skill based, those are rare and even professionals have a hard time spotting a winning investment from a loosing one. You can also make a LOT of money on bad investments and you can loose a LOT of money on good investments. That's just the nature of things. My thought is that I don't need to try and frequently pick investments that make gargantuan swings in value. My strategy will greatly exceed my needs and the needs of my family, but with a much, much lower risk. When it comes to compounding your wealth or expanding your investments it's a huge detriment to start over, as time is one of the largest factors in investment success. With my current financial strategy I need around 400 dollars after tax from an employer for my day to day life to remain perfectly comfortable and allow a small savings rate. I'm 31 years old, my wife is 30 and we have two kids (9 and 12). My wife works full time and from this year I'm working 50 % to have more time for other projects. Together we make a bit more than those 400 dollars we need xD. I don't need to try and get rich quick. The plan that works consistently is better than a plan with a higher rate of failiure.
This was a good overview of dividend investing. And I love dividend investing. But retiring on dividends alone is a very high bar to set because of cash flow -- I retired much earlier than on dividends alone by putting half my money into rental units.
@@Livvvid I bought in the New Orleans area. Lately, though, a small house in a suburb like Metairie can easily go $300K. That's 3x what we were buying in at 20 years ago. Right now, I would do exactly what YOU said: focus on stocks. Buy quality stocks, though, and learn to read company statements.
Love 99.9% of your content. I found it odd that you looked at this only from the perspective of cumulative income generated from the initial investment. I'd be interested in comparing the options at the end of a time period; like a 30yo starting this strategy to have income generated at typical retirement. Initial investment, reinvest the dividends, then compare the 3 strategies at time of retirement. Not only should the reinvestment along the way have a meaningful impact, but it could make for very interesting comparisons on yield relative to initial investment.
Have a million dollars..Got it.. The best strategy that I understand is Voo for most of my portfolio let it grow for many years as your work. Then as I get close to retirement, transition some of it to high yield div etfs; VYM for example. Also I’ve been finding VIG to be a good balance to dividends and safe growth.
SCHD is better. Slightly less dividends but much higher ROI from stock growth. The management fee is 0.01 higher than VIG but the amount of difference in annual returns makes up for it many times over
@@maddog3704 I strongly suggest picking your own stocks based on what you use/buy, but to answer your question my 5 largest positions at the moment are in IIPR, IRM, ED, AXP, PEP.
I'm not going to lie, I've just avoided dividend investing (high yield and growth) and stuck with index funds simply because I could never really wrap my head around how dividends actually worked. Index fund investing was just more hands off and I didn't have to constantly monitor my portfolio and worry about a company deciding to change their dividend payout. Yes the income can be nice, but it can change on you quickly. If I want (mostly) passive monthly income with double digit returns, I'll invest in a rental property or two.
Hands off is definitely a nice perk for the index investor! And, yes, dividend income can shift from time to time, sometimes by quite a bit (especially with those extremely high dividend companies). Thanks for the comment :)
Once my individual stock get to 3 figures per quarter in about 2 months I'll actually use the sort of "increase" of cash to buy more stable index, etf's that pay dividends. Individual stocks for increase index and etf for security. Which as you get older security should definitely be a target.
@@martinsl1979 I'm not trying to meet market average returns I'm after a very aggressive portfolio at this moment. I will be adding at least 4 index or etfs funds to it as I progress. Probably voo sphd spchd. Mvmt. Cost to return is mostly the reason currently. I will be adding one of the etf funds to my portfolio in 2 months.
I highly disagree I got into dividend investing because of the simplicity ! And never having to monitor my portfolio I feel is something that dividend investing has provided for me ! And to sum things up for you going for companies between 3-6% div/yield do not fluctuate very often or change their dividends hardly ever ….
I dont follow the rules. I have my full portfolio on VZ and will only sell if they cut the dividend or my portfolio reaches 25% to the downside. Until then, i just enjoy the dividend every quarter
I don't like the sell conditions. Those two seem like particularly bad times to sell. You might instead consider selling after a period of outperformance, then wait to get back in at a more historically low price or higher yield.
You must have done your assignment and studied very well to be living on your own rules and comfortability by having your own technic and strategies. Good job and see you around :)
my personal method is dividend safety>dividend yield greater than or equal to average inflation rate (2% is the Fed's targeted rate) > dividend growth. most important to me is investing in reliable companies I can count on, especially in bad times. After that, I want to outpace inflation, growth is important to me but relatively minor as I will reasonably supplement that with covered calls as I get enough shares to do so
So, save your cash in HY; then diversify when share price is high, accelerate acquiring HY shares when prices are low; as the cash grows put it into growth (maybe index). As for 401; Retire and don't touch the 401k until 70 maximizing contributions and catch ups; you'll be fine, even in a down turn. If not, there's alway Bali.
Thanks for the honest insight every month. I’m in TNT, too, and always appreciate hearing experiences from people who’ve been consistent. Keep it coming!
Can you imagine how easy investing was 20 years ago just put your money in AT&T and live off the dividend. Now when you buy a dividend stock the price goes down more than the dividend.
The comparison is great but this is not an either or... We don't have to do one of these or the other. I have about 80 holdings all generating income that fall in each of these categories. I diversify my income investing just like I do my growth investing.
We can always do it on our own, and judging by your comment, I can say you're doing very well with your investments. All the best and see you around! :)
Just came across this now. Timely given the market drop. A lot of those dividend growth stocks have considerably higher yields now than when this video dropped. I am pumping what I can into the dividend part of my portfolio. a bunch of high quality companies are yielding 4% or more.
How about inviting in all three at the same time? If someone is moderately aggressive when investing, how would you breakdown what % of your money should go into which ETF?
In terms of the return/growth figures? Not really, as dividends were assumed to be reinvested during the accumulation period. It's just that during this particular time frame the overall share price appreciation of the simple S&P 500 approach more than made up for the slightly lower dividend yields compared to the dividend growth and high-yield dividend fund.
Such an wonderful designed yacht. This video is very useful and Informative .i learned about many things in this video.detail explanation.thanks for sharing
If a person retires with less than a couple of million (in today's dollars) then you should keep working, because you dont have enough, unless you dont live very long. Also, there are numerous investments that generate over 5% steadily and have less draw-down than the S&P 500. The author only listed some obvious ways and may not know of others.
Does this dividend income last indefinitely? You stated that 1.2 mil would net about 50k a year but how long would that last? Would this last for the rest of my life like 50+ yrs?
As long as you don't get loose on your first invested money, you're surely just gonna wait for your dividends. Dividends is a sum of money paid regularly by a company to its shareholders out of its profits.
Dividend investing is fine but if you want to retire soon this isn't the way. Best way is to teach yourself how to value invest in smaller cap stocks set for good growth.
I am 65 with no retirement plan. I have opened a Roth IRA Fidelity account and like to invest for next 5-10 yrs. which ETFs or Index funds are good to invest in?
the issue with dividends is unnecessary taxes. if you reinvest the dividend because you don’t need the dividend, you pay taxes every year on the dividend distribution anyway. If you’re lucky enough to end up with a large amount in retirement, you may get more dividends than you actually need each year, but you have to pay taxes on the total distribution.
I don't get it, if i could buy low risk dividend producing funds that were kicking out 8.4 / 9.7 / 10% in dividends annually why would i ever waste my time with total stock market index holdings that only produce 9-10% returns through a mix of dividends and selling to collect capital gains?
@a That's what i'm trying to say, although it appears poorly communicated. Funds don't exist, at least none i've ever seen, that kick out the level of dividend returns that I thought this talk was implying do exist.
Don't mix up the concepts of dividends paid and total returns. There are certainly low volatility dividend stocks that have a total return that are as good as or better than stock indexes. You can't compare the total returns if the stock market to just the dividend returns from your dividend portfolio. Apples and oranges.
@@TR-lh9yz makes sense on stocks that have seen massive growth and are kicking out dividends. The same wouldn't be possible with bonds or bond index funds given there price remains fairly flat right?
@@myusrn It doesn't have to be a stock that has massive growth. Look at a long term chart of PG compared to SP500. PG blows away the market in total returns over the long haul even though it's a "boring" low vol dividend stock.
You could but you have to remember if you sell a certain number of share you miss out if you reach a ex dividend date and you no longer have them. My goal personally is just to get it to cover my monthly "fixed" expenses which is a bit more predictable.
@Leanne Wesk how dividends have been shown to beat the market largely. Also in only 10 month of investing I've reached $563 per year. Imagine having that on auto pilot but every month. Without selling the underlying assets.
@Leanne Wesk we get taxed for everything anyway so I'm not to concerned. Put it under a trust, llc c Corp I'm told it can help. I'm looking to retire by 30 due to a disability that is getting worse sadly so I need a second income being established.
@@jasoncortez3159 yeah I'm aware of them and I'll probably be utilizing that as soon as possible. I'm pretty sure I don't have a Roth yet though but I'm just trying to maximize my focus on a certain few investments to increase my overall return on them and then diversify those returns into a much more stable plan. I'm on take off essentially and eventually I'll get to where I level it out and make it alot stronger. Next target is NEWT for probably the next few months.
Dividend should be x2 your income so u can retire. Let's say u make 100k/year so u need 200k/year on Dividend so 50% goes in reinvesting and the rest for personal use so in case they crash or they will stop pay them then u r covered
I'm not sure I agree you would need that much, since dividends are taxed more favorably than income. Also, it might still be acceptable to have two times your annual expenditure instead of income. You are advocating that someone who previously made 100k will need to retire on 2 million dollars, with every dollar invested being in a 10% annual dividend stock. So with a more balanced distribution around 5% dividend, they would need 4 million dollars.
@@NextLevelLife Yeah there Market Capitalization is way to low for me. If a crash or Recession happens the first thing that will go would be the dividend. Big companies that are apart of everyday life. HD,CAH,PEP,KO. for example are way safer for me.
How do taxes come into play? Dividends are typically issued quarterly and are taxed when they mail you checks at home. Do you bypass these taxes if you reinvest dividends? I'm in my 30s and have typically invested in S&P 500 index through 401ks. Hard to deviate from this strategy but open to it if it makes sense. S&P also seems like it's the least amount of maintenance
Generally speaking you will still be taxed on reinvested dividends unless they are produced in some sort of tax-advantaged account like a 401K/IRA. Some dividends may be considered "Qualified Dividends" and thus qualify for special tax rates, but still will be taxed. I agree that a simple S&P 500 index fund approach is pretty hard to beat in terms of maintenance :)
I'm a US citizen . I used to own TEVA which is an Israel drug company. Every time they pay dividend, they will withhold tax. My tax statement will show how much foreign tax I paid and I can claim it when I file my tax return.
Great vid! Though, really, people should think in terms of taking income/gains from both dividends and capital gains combined. Such as the $730k capital gain delta between the Index scenario and the HY Div scenario.
Investing $100 per week is the same as reducing your withdrawals by $100 per week. When you're retired and withdrawing from the account it doesn't make sense to be talking about investing unless your buying more than selling. If this is the case are you really retired?
@@ed_hodge58 my thing is I won't be selling. Just increasing the earned dividends. So say I'm earning 5k a month from dividends. Then I take a hundred out of that 5k return and reinvest it then It could grow even more. As a famous investor that makes 400k a year I dividends once said the magic really starts taking affect when the dividends cross over your monthly expenses and the extra can be reinvested. In this sense if you did not increase your cost of living as your dividends are increasing you could definitely be retired and still investing.
@@rubygreen1249 I understand your approach. I just presumed you would be investing the dividends by default and I don't consider the dividends or capital growth to be investing in the same way as when your are putting in money earned from a job. I'd consider that to be compound interest instead. Just my viewpoint, I'm not saying you're wrong.
@@ed_hodge58 this is assuming I have turned off the DRIP off of my investments then yeah I don't have a problem doing it manually. 🙂 my biggest goal for me is just cover my fixed expenses by 25. At about 3 figure a year currently coming close to the 4th figure. Only been a year but I think it's going to be worth the while.
The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life.
A great goal :)
I agree! That's why it is advisable that you have to invest while you still have a regular job or earning a regular income, and do it constantly. You still need to have something that will keep you going even if you're investing. Good financial planning and money allocation is the key.
I definitely agree, this is one thing I want to do for my daughter, build a portfolio of dividends that the initial dividend will be reinvested for about 10-15 years of her life and by the time she gets to be 30 she will have them to live off of as an extra source of income and also it will be a set amount so she will have to budget and still be responsible 👍
Can you adopt me.
This is my plan. While I am earning money I am continuing to grow a dividend portfolio. Any dividends I receive are reinvested into dividend companies. When I stop receiving an income in 30 years I then stop reinvesting the dividend and live off it.
9-5 is so tiring. Feel like a rat. No end in sight. Taxes and Inflation are this generation’s plague
I welded steel together for ten hours a night for 11 years and saved as much as possible until the 2008 crash , then finally bought a house with 40%down when people were selling everything at a discount. I had just got a raise to ten dollars a hour and that gave me hope to keep going. Next five years I put everything extra on paying off that house until that was accomplished. After living debt free with a stable home with no payments I started investing 25% of all my income in the market and 20 years later I’m a 50 year old debt free millionaire. It’s a long road but it is achievable with a good plan and self discipline.
i want to kill myself from financial issues and i’m 19, can’t imagine what hell id next
I am a fellow retiree living off dividends + SocSec. I have taxable, IRA and HSA buckets. IRA and HSA get dividends reinvested, taxable dividends + SocSec are used to live on. I expat'd to Mexico for lower cost of living, safer and much cheaper healthcare. ~$50,000 USD annual dividends without SocSec. 8.02% is my combined average dividend yield of the 3 buckets which keeps me ahead of taxes and inflation.
Safer healthcare in Mexico?
@@burkles4456 Safer to live and much cheaper quality healthcare.
Where in Mexico?
immigrated*
@@jaredflurry937 No, white people are called expats.
The problem with these "live off dividends" videos is for the amount you need to live off would have to be so high that you can retire on the principle. So then that dividend "livelihood" would be nothing more than a side hustle.
There are stable companies that pay around 5 %. These companies generally don't have that many dramatic growth-spurts to pump the extra cashflow into and decide to instead funnel it into a dividend, or a buyback of stocks. Double digit dividends usually indicate a recent drop in the stock price. While some swear by dividends you can simply automate the process of liquidating to create a dividend system that works just as well as a normal one. I stick to mostly index funds. I do own a single stock that is dividend paying, but the primary reason for owning it is that I consider it undervalued. Stock picking is a small part of my portfolio, because I am aware that underperforming the market is the norm with stockpicking.
I am still young (below 30, as my goal is to start to go safer at 30) and I took some bigger risks so far. Already have a standard pension fund but I want to be able to retire sooner. In the end, I made 3300% profit since 2018 to the end of 2021. Along the way I started putting more of those profits in to (trying) calculated investments including some aristocrats that went down a by significant amounts which made the yield rise a lot. Still hold them and won't sell unless its needed for what ever reason. Long term the goal is dividend income with short-term higher risk growth investing
@@mikee368 while there are reliable opportunities that give a very high return that is skill based, those are rare and even professionals have a hard time spotting a winning investment from a loosing one. You can also make a LOT of money on bad investments and you can loose a LOT of money on good investments. That's just the nature of things. My thought is that I don't need to try and frequently pick investments that make gargantuan swings in value. My strategy will greatly exceed my needs and the needs of my family, but with a much, much lower risk. When it comes to compounding your wealth or expanding your investments it's a huge detriment to start over, as time is one of the largest factors in investment success.
With my current financial strategy I need around 400 dollars after tax from an employer for my day to day life to remain perfectly comfortable and allow a small savings rate. I'm 31 years old, my wife is 30 and we have two kids (9 and 12). My wife works full time and from this year I'm working 50 % to have more time for other projects. Together we make a bit more than those 400 dollars we need xD. I don't need to try and get rich quick. The plan that works consistently is better than a plan with a higher rate of failiure.
This was a good overview of dividend investing. And I love dividend investing.
But retiring on dividends alone is a very high bar to set because of cash flow -- I retired much earlier than on dividends alone by putting half my money into rental units.
@@Livvvid I bought in the New Orleans area. Lately, though, a small house in a suburb like Metairie can easily go $300K. That's 3x what we were buying in at 20 years ago. Right now, I would do exactly what YOU said: focus on stocks. Buy quality stocks, though, and learn to read company statements.
Excellent video and advice! I am in Canada. I am retired and living from dividends.
I like option number 4! I set up my TFSA with high yield investments and my RRSP with dividend growth stocks.
Love 99.9% of your content. I found it odd that you looked at this only from the perspective of cumulative income generated from the initial investment. I'd be interested in comparing the options at the end of a time period; like a 30yo starting this strategy to have income generated at typical retirement. Initial investment, reinvest the dividends, then compare the 3 strategies at time of retirement. Not only should the reinvestment along the way have a meaningful impact, but it could make for very interesting comparisons on yield relative to initial investment.
He might not have all the stats to compare the historical growth
Have a million dollars..Got it.. The best strategy that I understand is Voo for most of my portfolio let it grow for many years as your work. Then as I get close to retirement, transition some of it to high yield div etfs; VYM for example. Also I’ve been finding VIG to be a good balance to dividends and safe growth.
SCHD is better. Slightly less dividends but much higher ROI from stock growth. The management fee is 0.01 higher than VIG but the amount of difference in annual returns makes up for it many times over
Retiring on Dividends alone seems like a bad idea. Gotta diversify. But that’s not stopping me from jamming all my money into dividend paying stocks!
@@ghostfacekicker like what ones
@@maddog3704 I strongly suggest picking your own stocks based on what you use/buy, but to answer your question my 5 largest positions at the moment are in IIPR, IRM, ED, AXP, PEP.
I'm not going to lie, I've just avoided dividend investing (high yield and growth) and stuck with index funds simply because I could never really wrap my head around how dividends actually worked. Index fund investing was just more hands off and I didn't have to constantly monitor my portfolio and worry about a company deciding to change their dividend payout. Yes the income can be nice, but it can change on you quickly. If I want (mostly) passive monthly income with double digit returns, I'll invest in a rental property or two.
Hands off is definitely a nice perk for the index investor! And, yes, dividend income can shift from time to time, sometimes by quite a bit (especially with those extremely high dividend companies). Thanks for the comment :)
Once my individual stock get to 3 figures per quarter in about 2 months I'll actually use the sort of "increase" of cash to buy more stable index, etf's that pay dividends. Individual stocks for increase index and etf for security. Which as you get older security should definitely be a target.
Why not just have an index fund with a dividend yield.
@@martinsl1979 I'm not trying to meet market average returns I'm after a very aggressive portfolio at this moment. I will be adding at least 4 index or etfs funds to it as I progress. Probably voo sphd spchd. Mvmt. Cost to return is mostly the reason currently. I will be adding one of the etf funds to my portfolio in 2 months.
I highly disagree I got into dividend investing because of the simplicity ! And never having to monitor my portfolio I feel is something that dividend investing has provided for me ! And to sum things up for you going for companies between 3-6% div/yield do not fluctuate very often or change their dividends hardly ever ….
I dont follow the rules. I have my full portfolio on VZ and will only sell if they cut the dividend or my portfolio reaches 25% to the downside. Until then, i just enjoy the dividend every quarter
Everything in 1 stock? Good luck!
I don't like the sell conditions. Those two seem like particularly bad times to sell. You might instead consider selling after a period of outperformance, then wait to get back in at a more historically low price or higher yield.
You must have done your assignment and studied very well to be living on your own rules and comfortability by having your own technic and strategies. Good job and see you around :)
Thank you for all your helpful videos during the course of the year. All the best wishes for the coming year.
Thanks, and happy new year :)
Hopefully one day I will be living off of my dividends...
Me too. I hope.
SCHD is a hybrid alternative to the S and P 500 and the DGI approach. An ETF that emphasizes reasonably high dividends.
It also pays monthly. The slightly higher expense ratio is tolerable IMO bc of that one fact.
@@AnimatedIdiotGuide I believe it distributes quarterly dividends.
@@AnimatedIdiotGuide You're thinking of SPHD... SCHD pays quarterly and its expense ratio is the same as VYM (0.06%)
@@ifowl oh you’re right I am
Huge fan of dividend growth investing! My favorite form of investing and the smartest, in my opinion.
my personal method is dividend safety>dividend yield greater than or equal to average inflation rate (2% is the Fed's targeted rate) > dividend growth. most important to me is investing in reliable companies I can count on, especially in bad times. After that, I want to outpace inflation, growth is important to me but relatively minor as I will reasonably supplement that with covered calls as I get enough shares to do so
Thanks for sharing!
Combining these approaches seems like a good strategy.
I agree, it's a different level of assurance to have a multiple investment portfolio, of course we can start with a little step one day at a time.
What’s your take on STAG and realty income?
Both are good in my view, but I think the stock price for both is a bit high right now. I would hold off and wait for a pull back.
Perfect analysis as always. Best information channel on RUclips.
Thanks, Joe!
I like the coloring
So, save your cash in HY; then diversify when share price is high, accelerate acquiring HY shares when prices are low; as the cash grows put it into growth (maybe index). As for 401; Retire and don't touch the 401k until 70 maximizing contributions and catch ups; you'll be fine, even in a down turn. If not, there's alway Bali.
Thanks for the honest insight every month. I’m in TNT, too, and always appreciate hearing experiences from people who’ve been consistent. Keep it coming!
Nru
Thanks
Can you imagine how easy investing was 20 years ago just put your money in AT&T and live off the dividend. Now when you buy a dividend stock the price goes down more than the dividend.
Then 20 years later AT&T share price drops 20 percent and there goes your portfolio
@@tegowoodz7234 plus at&t cut their dividend as well
I’m doing a little of all 3 I have some high dividend stocks some dividend growth stocks and I have VOO
Like voo vym and vig? lol
Can someone please break it down this for me, Let's say I invested 50K n the stock market how much can I get a mount?
Thank you so much for the information you share 🙏🏼🥰
The comparison is great but this is not an either or... We don't have to do one of these or the other. I have about 80 holdings all generating income that fall in each of these categories. I diversify my income investing just like I do my growth investing.
We can always do it on our own, and judging by your comment, I can say you're doing very well with your investments. All the best and see you around! :)
Just came across this now. Timely given the market drop. A lot of those dividend growth stocks have considerably higher yields now than when this video dropped. I am pumping what I can into the dividend part of my portfolio. a bunch of high quality companies are yielding 4% or more.
How about inviting in all three at the same time? If someone is moderately aggressive when investing, how would you breakdown what % of your money should go into which ETF?
Would dividend reinvestment change this comparison at all? Good video to wake up to on a Monday!
In terms of the return/growth figures? Not really, as dividends were assumed to be reinvested during the accumulation period. It's just that during this particular time frame the overall share price appreciation of the simple S&P 500 approach more than made up for the slightly lower dividend yields compared to the dividend growth and high-yield dividend fund.
@@NextLevelLife that makes sense, thanks for the reply/video!
Such an wonderful designed yacht. This video is very useful and Informative .i learned about many things in this video.detail explanation.thanks for sharing
Glad it was helpful!
If a person retires with less than a couple of million (in today's dollars) then you should keep working, because you dont have enough, unless you dont live very long. Also, there are numerous investments that generate over 5% steadily and have less draw-down than the S&P 500. The author only listed some obvious ways and may not know of others.
Does this dividend income last indefinitely? You stated that 1.2 mil would net about 50k a year but how long would that last? Would this last for the rest of my life like 50+ yrs?
Yes, because you are not using your investment funds. You are only taking dividends. Your investment is left to grow.
As long as you don't get loose on your first invested money, you're surely just gonna wait for your dividends. Dividends is a sum of money paid regularly by a company to its shareholders out of its profits.
Step 1. Invest 1,000,000. Step 2. Live off dividends.
Watched and liked, thanks!
Thanks for the breakdown!
finally you cover my perspective! Thanks man :)
Glad you liked it!
Is it wise to have a average div yield of 5%?
Sounds stable. Long as they’re good companies you believe in
Dividend investing is fine but if you want to retire soon this isn't the way. Best way is to teach yourself how to value invest in smaller cap stocks set for good growth.
This comment didn’t age well in just 3 months lol
@@tegowoodz7234 why not?
I am 65 with no retirement plan. I have opened a Roth IRA Fidelity account and like to invest for next 5-10 yrs. which ETFs or Index funds are good to invest in?
Yes, but what if I live with my wife and kids? How do I live off dividends then? Is it any different?
You just need a whole lot more capital then! There might be certain ways of tax optimisation that are applicable to the country you live in.
the issue with dividends is unnecessary taxes. if you reinvest the dividend because you don’t need the dividend, you pay taxes every year on the dividend distribution anyway. If you’re lucky enough to end up with a large amount in retirement, you may get more dividends than you actually need each year, but you have to pay taxes on the total distribution.
That certainly is a factor to take into consideration.
Thank you for the helpful content. 🙂
Brilliant analysis!!
Thanks, David!
Make sure there is enough cushion for that dividend or you will get .01 a yr for dividends.
I don't get it, if i could buy low risk dividend producing funds that were kicking out 8.4 / 9.7 / 10% in dividends annually why would i ever waste my time with total stock market index holdings that only produce 9-10% returns through a mix of dividends and selling to collect capital gains?
@a That's what i'm trying to say, although it appears poorly communicated. Funds don't exist, at least none i've ever seen, that kick out the level of dividend returns that I thought this talk was implying do exist.
Don't mix up the concepts of dividends paid and total returns. There are certainly low volatility dividend stocks that have a total return that are as good as or better than stock indexes. You can't compare the total returns if the stock market to just the dividend returns from your dividend portfolio. Apples and oranges.
I have stocks I've held so long that the dividend yield on cost is in the 30-40% range!
@@TR-lh9yz makes sense on stocks that have seen massive growth and are kicking out dividends. The same wouldn't be possible with bonds or bond index funds given there price remains fairly flat right?
@@myusrn It doesn't have to be a stock that has massive growth. Look at a long term chart of PG compared to SP500. PG blows away the market in total returns over the long haul even though it's a "boring" low vol dividend stock.
What is 'sell'? :P
I think a cool video is
Looking at what someone can do to make more money on 15$ hour full time.
Get a 2nd job working 12-18 hours week at 12-13 bucks an hour. Should be another $500-$800 more per month in your pocket.
Hypothetically, is it wise heavily invest in vym & use the dividends to buy into voo/vti ?
horrible
Gonna try and live of dividends
DRIP those dividends until you need them.
Can you combine living of dividends and use the 4% rule? or modify it to something smaller without losing out on dividends?
You could but you have to remember if you sell a certain number of share you miss out if you reach a ex dividend date and you no longer have them. My goal personally is just to get it to cover my monthly "fixed" expenses which is a bit more predictable.
@Leanne Wesk how dividends have been shown to beat the market largely. Also in only 10 month of investing I've reached $563 per year. Imagine having that on auto pilot but every month. Without selling the underlying assets.
@Leanne Wesk we get taxed for everything anyway so I'm not to concerned. Put it under a trust, llc c Corp I'm told it can help. I'm looking to retire by 30 due to a disability that is getting worse sadly so I need a second income being established.
You can also avoid paying taxes on dividends, legally.
@@jasoncortez3159 yeah I'm aware of them and I'll probably be utilizing that as soon as possible. I'm pretty sure I don't have a Roth yet though but I'm just trying to maximize my focus on a certain few investments to increase my overall return on them and then diversify those returns into a much more stable plan. I'm on take off essentially and eventually I'll get to where I level it out and make it alot stronger. Next target is NEWT for probably the next few months.
Great video
Dividend should be x2 your income so u can retire.
Let's say u make 100k/year so u need 200k/year on Dividend so 50% goes in reinvesting and the rest for personal use so in case they crash or they will stop pay them then u r covered
I'm not sure I agree you would need that much, since dividends are taxed more favorably than income. Also, it might still be acceptable to have two times your annual expenditure instead of income. You are advocating that someone who previously made 100k will need to retire on 2 million dollars, with every dollar invested being in a 10% annual dividend stock. So with a more balanced distribution around 5% dividend, they would need 4 million dollars.
Nope. I will stick to my Blue chip dividend stocks. These stock tickers with huge dividends are turds
They can definitely go sideways real quick there's no doubt about that. Glad to hear that you've got an approach that you're comfortable with :)
@@NextLevelLife Yeah there Market Capitalization is way to low for me. If a crash or Recession happens the first thing that will go would be the dividend. Big companies that are apart of everyday life. HD,CAH,PEP,KO. for example are way safer for me.
How do i start?
How do taxes come into play? Dividends are typically issued quarterly and are taxed when they mail you checks at home. Do you bypass these taxes if you reinvest dividends? I'm in my 30s and have typically invested in S&P 500 index through 401ks. Hard to deviate from this strategy but open to it if it makes sense. S&P also seems like it's the least amount of maintenance
Generally speaking you will still be taxed on reinvested dividends unless they are produced in some sort of tax-advantaged account like a 401K/IRA. Some dividends may be considered "Qualified Dividends" and thus qualify for special tax rates, but still will be taxed.
I agree that a simple S&P 500 index fund approach is pretty hard to beat in terms of maintenance :)
how to avoide dividend tax as a foreigner investing in US market?
I'm a US citizen . I used to own TEVA which is an Israel drug company. Every time they pay dividend, they will withhold tax. My tax statement will show how much foreign tax I paid and I can claim it when I file my tax return.
I’m sorry but when someone refers to £325k as ‘only’ I find the whole ‘guide’ dodgy.
What about defensive strategies?
IEP has a payout ratio of 5,714.29%
Why does no one ever mention, “hey maybe if I just turn off auto reinvest dividends and let the dividend cash go into my investment account….”
Woweee let's goooo
I’m very interested in what is the demographic watching this video
P&G!!!!!!
Is this the wendover productions guy? they sound the same
Wow you draw really good 😂
This matrix is stressful asf
Step 1: have a shit ton of money
With DRIP the analysis changes.
Great vid! Though, really, people should think in terms of taking income/gains from both dividends and capital gains combined. Such as the $730k capital gain delta between the Index scenario and the HY Div scenario.
i have $2000 in VOO im 22☝️
let’s gooo
Good job. Keep buying in your 20s and 30s and you’ll be rich!
@@1974dodgecharger i now have 3k invested into it
@@1974dodgecharger i’m up 7%
REIT O
Dividends till the end
IEP no dividends anymore lol
people that tell you to like before the video even starts are so cringe
How to live off dividends:
Step 1) you never do, you just make videos about how awesome it would be to live off dividends and make ad revenue off them
Best answer
Know it all video like this are very irritating.
If you even just kept investing $100 dollars every week even when you go into retirement you could have a infinitely growing income. 🤔
Investing $100 per week is the same as reducing your withdrawals by $100 per week. When you're retired and withdrawing from the account it doesn't make sense to be talking about investing unless your buying more than selling. If this is the case are you really retired?
@@ed_hodge58 my thing is I won't be selling. Just increasing the earned dividends. So say I'm earning 5k a month from dividends. Then I take a hundred out of that 5k return and reinvest it then It could grow even more. As a famous investor that makes 400k a year I dividends once said the magic really starts taking affect when the dividends cross over your monthly expenses and the extra can be reinvested. In this sense if you did not increase your cost of living as your dividends are increasing you could definitely be retired and still investing.
@@rubygreen1249 I understand your approach. I just presumed you would be investing the dividends by default and I don't consider the dividends or capital growth to be investing in the same way as when your are putting in money earned from a job. I'd consider that to be compound interest instead. Just my viewpoint, I'm not saying you're wrong.
@@ed_hodge58 this is assuming I have turned off the DRIP off of my investments then yeah I don't have a problem doing it manually. 🙂 my biggest goal for me is just cover my fixed expenses by 25. At about 3 figure a year currently coming close to the 4th figure. Only been a year but I think it's going to be worth the while.
PLEASE DONT DO THIS!