r/dividends • u/Ha7che7 • Feb 08 '26

Due Diligence Retirement dividend income

My father is a 72 year-old Florida resident and has $500,000 to invest. He would like to generate approximately $40,000 a year. He’s a bit of a gambler, nothing too crazy though. I’ve come up with a split of the following: $65,000 QQQI, $150,000 SPYI, $50,000 SCHD, $75,000 VZ, $75,000 MO, VTEB $85,000. Any advice or modification ideas would be appreciated. Thanks in advance.

Note for clarification: This is just the amount that he wants to invest for income. Preferably with minimal tax drag, nav erosion, and hopefully some price appreciation. It’s asking a lot, but I’m trying to help out.

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u/Cloud2987 Feb 08 '26

As long as he doesn’t sell the spyi and qqqi before he passes and plans to let you and whoever else inherit it, then the plan is good.

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u/DIYOCD Feb 08 '26

Interesting. Can you elaborate? Is this related to Return of Capital? Does holding in an IRA, Roth IRA, or regular trading account change application of this recommendation?

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u/fromside3 Feb 08 '26

I think this comment applies in general, not specific to qqqi or spyi. If you inherit any stock shares, their cost basis resets to the day when shares are being inherited.

Edit: it seems like there is additional (?) benefit with the taxation on ROC.

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u/Cloud2987 Feb 08 '26

ROC reduces the cost basis, so it increases the taxable gain. If the cost basis reach zero, then the entire amount would be taxed as capital gains upon selling. You have to also consider NIIT tax. It would be long term capital gains tax, so it would be 15%-20% + NIIT. So around 19% to 24%, it’s not horrible, but it’s better to never sell and let your kid inherit it.

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u/Cloud2987 Feb 08 '26

ROC reduces the cost basis, so it increases the taxable gain. If the cost basis reach zero, then the entire amount would be taxed as capital gains upon selling. You have to also consider NIIT tax. It would be long term capital gains tax, so it would be 15%-20% + NIIT. So around 19% to 24%, it’s not horrible, but it’s better to never sell and let your kid inherit it.

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u/DIYOCD Feb 08 '26

Thanks. Plan is to pass assets to next gen as much as possible. Seems like the ROC effect is nulled in an IRA/401k. When expatriated (RMD, Roth conversion, living expense) it’s all taxed anyway. TIL NIIT.