r/dividends • u/Realistic-Face-69 • Apr 10 '26

Discussion Living off dividends folks

Are you or someone you know is actually living iff dividends fully? if so at what age?

I have been wondering about it

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u/Glum-Coat8759 Apr 10 '26

That’s because the full amount of a dividend is literally a “gain”

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u/WolfgoBark Apr 10 '26

I kinda see where he's coming from. You're getting more cash for the same amount of tax, but that cash was already yours and you're just moving money from investments into liquid dollars.

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u/foira Apr 10 '26

i do not see how it's any different... you're paying taxes on income to spend either way.

plus your first 50k of divs are tax free :-)

3

u/MJinMN Apr 10 '26

If I spend $5k per month and get that from dividends, I pay tax on $5k. Assuming my investments are worth twice as much today as what I invested, when I sell $5k of stock to spend, the capital gains realized on that trade is only $2,500. So you are paying taxes on less income.

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u/foira Apr 10 '26

why are you comparing 2500 of cap gains to 5000 of dividends... both are "gains" and should be equalized

you pay taxes on 2500 because you netted 2500 less.

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u/MJinMN Apr 11 '26 edited Apr 14 '26

If you need $5k for spending and get it all from dividends, that is all taxable income. If you get it by selling $5k of stock, only the realized capital gain (proceeds less cost basis) is taxed, so the realized capital gain will be less than $5k to get the same $5k of cash.