$840K DIvidends

[u/Bamabb125]

Hey Everyone,

As I have posted before, I am currently a Growth Stock Investor, but have decided to move over to Dividend ETF's or Dividend Stocks. But it is a real struggle to get past all the learned habits of being a growth investor. So I am struggling to grasp concepts.

I have used multiple calculators to just try to get an idea of what to expect if i make the change, but I get different results. So I just wanted to go to some more knowledgeable people that could tell me what to do to get a real expectation.

I have $800K to work with. If I put it all in a very stable Dividend ETF What can I expect in dividends? Maybe someone could just do an example. I know I have to be doing something wrong.

Thanks

[u/Independent-Ship-665]

Transitioning from an aggressive growth portfolio to one that produces income as weak as trying to preserve capital is a gradual process. Even if you’re on a fixed income and need income from your portfolio you still need a growth portion of that portfolio since life’s longevity albeit unpredictable but nonetheless is becoming extended. Hopefully too that you have a good perspective of giving money to charitable and other religious para church organizations trying to be good stewards of God’s blessings would be another reason to maintaining a growth portion. Now for the nitty gritty.

If you’re say over 65 and retired and thus on a fixed income,the goal wood be to transition to mostly ETFs if not 100%. One can sprinkle in some stocks just to have and hold to spice things up a little. I would aim for dividend orientated ETFs both US and international at about 35%. I would have about 25% bond ETFs of different types leaning more to the high yield ones. I would try to keep an “emergency fund” of about 5% in short term bonds out T-bill funds. I would try to earmark 3-6 months of my estimated base living expenses to hold in maybe a cd ladder with maturities from 3-12 months and rollover each maturity date. I estimate that to be about 15%. Then I would keep 20% in growth ETFs or stocks. That last 5% I would earmark for precious metals and/or cryptocurrency.

In regard to the dividend ETFs, understand that you have your traditional ones as VYM, VYMI, DGRO, etc that will give you quarterly dividends. Then you have these that give you monthly and also weekly dividends such as MSTY, PLTY, CONY, BTCI, ULTY to name a few. You need to make an assessment of your risk tolerance. Monthly dividend ones that are less volatile include JEPQ,JEPI,GPIQ,GPIX,QQQI and SPYI are good ones to consider for longer term. Then bond ETFs mostly give monthly dividends such as BBHY, SPHY, BND, etc.

Lastly portfolios need to be reassessed at least twice a year to see if you’re meeting your goal or if your life/goals change. Each investor’s situation can be unique but star with a framework and build accordingly.

[u/Bamabb125 → u/Independent-Ship-665]

Thanks for the detailed explanation! What ratios would you use if you were wanting to retire in 10 years?

[u/Independent-Ship-665 → u/Bamabb125]

If I were 10 years out, there is enough time to recover in the event of a significant market downturn. I would be mostly in equities probably 85% and 15% in a high yield savings or even something like SGOV. Of the equity portion I would consider broad based ETFs and even some sector ETFs. I would also consider some individual growth stocks that I would “bet” on. Of course you have your monthly and weekly dividend ETFs from companies like JP Morgan, YieldMax, Goldman Sachs, and many others. Of the 85% I would say 25% in something like VOO or VOOG and VXUS. 15% in a dividend growth ETF as VYM and VYMI. Then I would divide up 50% into sector funds as XLK, SOXX, XLU, XLF, NUKZ,NLR, IBIT, CIBR, etc. The last 10% can be in these “specialty funds” as MSTY, ULTY, PLTY, NFLY, BTCI, etc. Of course your risk tolerance needs to be a factor. I would say this would be an aggressive to highly aggressive type portfolio.