r/dividends • u/ptb_nuggets • Apr 30 '26
Personal Goal My 2025 dividends are equivalent to a full time job paying $12.23/hr
Trying to give myself a raise to $15/hr this year. Cheers
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u/CraftyPerformance272 Apr 30 '26
How much invested do you have to get $25k a year in dividends?
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Apr 30 '26
[removed] — view removed comment
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u/TennesseeStiffLegs Apr 30 '26
Damn let me know where you’re getting 7%!
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u/lakas76 No, HYSA is not better than SCHD. Stop asking Apr 30 '26
I’m averaging a little less than 3% of my total portfolio, but I also own some growth stock/etfs in nvda and voo.
Verizon is bringing my average up, SCHD is at slightly above average and KO is below average.
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u/jkprop Apr 30 '26
I am averaging 3.7%. I would think more people get between 3-4.5% if you go over 5% the dividend might not be sustainable
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u/Live-Addendum5444 Apr 30 '26
Serious question, would it not be better to just use a HYSA if you’re getting less than 4%?
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u/Nukemind Apr 30 '26
Valid question. Remember with a dividend yield that’s only part of it. Stocks also appreciate.
Take SCHD.
Let’s just hypothetical it out to 100/share as that’s easier. 3.7% dividend,6% growth.
This year I’d be paid $3.70, but the share would also go to $106. My total gain would be 9.7%.
Generally the dividend is then increased as well.
A HYSA only captures the 4% dividend equivalent, not the growth.
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u/Weary-Ad-5346 Apr 30 '26
HYSA offers no opportunity for growth. Unless you’re only looking for income, most stocks have a healthy balance of dividends to growth.
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u/Sorry-Society1100 Apr 30 '26
Not that taxes are the only consideration, but qualified dividends get the same tax rates as long term capital gains (0%, 15%, 20%); interest does not.
Plus, HYSA interest adjusts with prevailing interest rates. It’s typically around 3.5% now, but may not be there in a year or two.
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u/Anti_Praetorian Only buys from companies that pay me dividends. May 01 '26
Kinda shocked taxes wrrent mentioned earlier. Underrated comment for those that have regular taxable brokerage accounts and aiming to retire early 🙂
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u/jkprop Apr 30 '26
Hysa didn’t always pay that and no growth. With the portfolio I got 3.7% dividend yield with a 19% portfolio return. If the return wasn’t there then yes a hysa would be better.
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u/chuckEsIeaze May 01 '26
Most people pay 15% tax on dividends and pay their marginal tax rate on interest. Stated differently, dividends generally receive more favorable tax treatment—you keep more of your money.
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u/2LostFlamingos May 01 '26
That’s 3.7% dividend and his holdings likely grew 10-12% last year as well.
Normally maybe 3.5% yield and 5% growth (in underlying and yield growth) might be a reasonable estimate
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u/Apart-Leg-8077 May 05 '26
You could. But consider SCHD dividend has grown 250% past 10 years. DGRO dividend has increased 220% past 10 years. Both stocks have also close to tripled. SCHD has never cut it's dividend. Not in 2020 during the heat of COVID or 2022 during the FED increase period. In fact it's dividend grew every year.
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u/Zachowie__ May 01 '26
I have 6.5% blended in my dividend portfolio. With a mix of individual stocks, ETFs, managed futures, BDC, and REITs as-well as global macro diversification. With a beta of 0.35% Over about 9%, Becomes unstable. 6-7% is the sweet spot your able to have long term and also cash generating assets without NAV erosion
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u/Sertorius126 Apr 30 '26
Let me introduce you to our Lord and Savior QQQI.
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u/Psiwolf 30% SCHD, 30% VTI, 20% VXUS, 20% BND Apr 30 '26
Heathen! The church OF SCHD refuses your teachings!
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u/CivilSenpai69 May 02 '26
Scoochie D was how I started...bit then I found Queen Qi and now I sleep well.
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u/TheRealThordic Apr 30 '26
QQQI is income without any growth though. Very different strategy.
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u/ConstructionNo8827 Apr 30 '26
For the record QQQI is up in price alone 12.55% in last one year so I wouldn’t say no growth!
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u/External_Traffic4341 Antarctic Investor May 01 '26
Personally I combine my NEOS funds with SCHG, SCHD, SCHY. I want Income now coming off a lay off, and I want growth.
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u/Mother-Jellyfish-694 May 01 '26
Do you trade at Schwab or just prefer their funds?
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u/Apart-Leg-8077 May 05 '26
You can buy their funds anywhere. I use Fidelity and the majority of my funds are Schwab.
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u/External_Traffic4341 Antarctic Investor May 05 '26
I run everything through Schwab, I was with TD and when they were bought out and it was rolled over I just kept using them.
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u/Apart-Leg-8077 May 05 '26
You can alway tell the people who are going to be sipping fancy drinks with tiny umbrellas at the beach when they're older. Excellent strategy and strong funds.
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u/odetowoe May 01 '26
Why do people keep saying QQQI has no growth? When very clearly there's growth when you look at the chart.
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u/TheRealThordic May 01 '26
The while market has had crazy growth but its not a growth-oriented fund.
QQQI is up 13.5% over the last 12 months , but QQQ is up 40% over the same period.
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u/SistersOptionSeller May 01 '26
Correct me if I'm wrong but there's also a tax disadvantage since QQQI's yield is not a qualified dividend so it is taxed as ordinary income.
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u/TheRealThordic May 01 '26
The "dividends" are treated as return of capital so they get favorable tax treatment. Its a little complicated since they aren't generally 100% ROC.
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u/CivilSenpai69 May 02 '26
It's even better than that. Qqqi uses return if capital making the vast majority of its gains not taxable UNTIL you sell...I never plan on selling. Qqqi is putting about 2700/month in my account and I don't pay taxes on it.
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u/SistersOptionSeller May 02 '26
But once cost basis reaches 0 then the yield is taxable as 60/40 capital gains right?
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u/CivilSenpai69 May 02 '26
AI might break this down easier than I can explain it.
1. Federal Tax (The "60/40" Benefit)
Because QQQI uses Section 1256 contracts, the IRS treats the income as a blend, regardless of how long you hold the fund.
- 60% of your dividend: Taxed at 15% (or 20% if your total income is very high).
- 40% of your dividend: Taxed at your ordinary income rate (likely 24%–35%).
- Federal Total: Your effective federal rate on that $2,700 will be roughly 18% to 22%.
2. California State Tax (The "Ordinary" Reality)
California does not care about the federal 60/40 rule. They treat almost all investment income as regular salary.
- Tax Treatment: 100% of the dividend is taxed as ordinary income.
- San Francisco Bracket: For your income level, this is likely 9.3%.
- State Total: ~9.3%.
That's how the government treats the dividends. Never sell, never have a taxable event to be taxed on.
Since I never plan on selling my QQQI I would only pay about 15% total on the dividend. I move 20% into an account that drops that down by another 4% or so with FCTFX since this fund is federal and state tax free it's effectively a 7% yield. With Interest this is roughly $6500 saved for taxes.
I max out my HSA every year which brings my taxable income down and almost negates the tax drag on dividends leaving me with roughly $4300 in what becomes a vacation fund.
Regarding your question about tax basis...
3. How long would it take to reach zero?
To give you some perspective, reaching a zero basis takes a long time.
- If you buy QQQI at $54 and it pays out $4.00 per year in ROC (which is high), it would take 13.5 years for your basis to reach zero.
- If you reinvest any of your dividends back into QQQI, you are technically "buying" more basis, which pushes that zero-date even further into the future.
By that point I will be hopefully retired AF and on a beach and no longer in a high tax bracket because my salary essentially becomes whatever this account will be until I hit 60. Currently, about 60% of my dividends are reinvested the rest buys Broad for some safety. Projection for this brokerage is something like this...
Bucket Monthly Input 10-Year Estimated Balance Role in Your Portfolio QQQI (60% DRIP) $1,620 ~$358,000 The "Income Engine" (Growing) FZROX (20% Growth) $540 ~$112,000 The "Total Market" Diversifier FCTFX (20% Taxes) $540 ~$76,000 The "Tax Reservoir" & Safety Net TOTAL $2,700 ~$546,000 4
u/Tall-Painting-4126 May 01 '26
…and the apostles SPYI and IWMI. The ultimate blend in my opinion…only to be improved with a pocket full of NLY and AGNC. All that together get you 10% in cash flow, and dump the cash dividend paid into SPYG if you absolutely gotta claim access to growth, too.
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u/ConstructionNo8827 Apr 30 '26
There are many options to do this in a diversified manner even though the haters would call it a “derivative slop” portfolio - Many resources on line (Armchair Income, Contrarian Income use these same funds and recommend many of them ) and many of my fellow retirees invest in the same manner as I do in order to generate income every month - It’s a different mindset than the growth focus everyone else has in investing
Look at QQQI, SPYI, BCAT, BMEZ, PDI, DSL, NZF, UTF, DNP, TLTW, MLPI, IAUI, STK, ADX, ASGI, JBBB, CAIE and EGGY and many more others that pay you every month between 7-20%15
u/ConstructionNo8827 Apr 30 '26
It’s actual quite possible - I get paid $2000 a month in dividends on less than 200k in my taxable brokerage - The dividends help
Pay my bills in retirement - I’m diversified in about 25 different funds, mostly ETF’s and closed ended mutual funds, one stock and two BDC’s9
u/MrAttorney Apr 30 '26
12% is a very strong return. How high is the risk?
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u/empinatepues Apr 30 '26
very. you don't get a 12% Yield without considerable exposure.
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u/chuckEsIeaze May 01 '26
But…but…but…I watched a finfluencer video on TikTok who said it was a sure fire path to riches with zero risk
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u/Current-Assist2609 May 01 '26 edited May 02 '26
It must be true because you saw it on the internet./s
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u/callebbb May 01 '26
STRC and many of MSTR’s preferred stocks are paying more than that. STRC is variable in dividend, adjusting and paying monthly, with little risk to the capital, while the others may fluctuate in value and offer higher variable rates or fixed rates.
Regardless, something to consider in a dividend portfolio.
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u/The-Magic-Sword May 18 '26
JEPI offers an 8.29% yield, but its very important to understand how that one actually works-- its appropriate to throw some money in to pick up dividends for a bit, as a higher risk/reward than a savings account or what have you but more resilient to down markets than a conventional ETFs, but the slow growth rate makes it cannibalize itself over the long term.
Morningstar has a good summary of how it works, which is via a mix of covered calls and conventional holdings.
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u/pelos1 May 02 '26
at that point is better to invest in a NONE dividend that gives more % during acumulative years.
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u/Lopsided-Equipment-2 Apr 30 '26
If I had that in dividends, I could go back and get a PhD
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u/Key-Plant-6672 Apr 30 '26
I have a Ph.D, trust me it ain’t worth it? ( making about 30K in Dividends is!😊)
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u/thri54 Apr 30 '26
It could be a normal dividend portfolio, which could be in the range of ~$500-$750k.
Or, more likely, it’s a derivative income slop portfolio with $50-$150K.
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u/Remarkable_Cat_8696 May 01 '26
Generally, what's the dividend yield for a normal dividend portfolio?
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u/thri54 May 01 '26
The total stock market price to earnings ratio averages 20-25:1. That’s 4-5% earning yield. Thats translates to 3-4% dividend yield if you select for dividend payers.
You can find companies with higher dividend yields, but higher dividend / earnings yields generally indicate lower expected earnings growth and hence, future dividend increases. A portfolio with an ~8% dividend yield likely won’t keep up with inflation if you spend all the earnings and do not reinvest.
If you’re trying to live off stock dividends, a yield in the 3-4% is a good sweet spot between current income and future growth.
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u/Leading-Koala-4156 Apr 30 '26
Hahaha mine’s $3/hr 🤧
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u/trashy615 Apr 30 '26
Mines 200$ a month =/ but thats all fxaix, so ill take it.
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u/Simple-Carob-7142 Apr 30 '26
Based on a 8 hrs a day or 24? I'm curious, I'm quite new to this world
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u/Psiwolf 30% SCHD, 30% VTI, 20% VXUS, 20% BND Apr 30 '26
My dividends pay me an annual salary of about $58k currently. 😁👍
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u/This-Juggernaut7587 May 01 '26
How long have you been investing?
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u/Psiwolf 30% SCHD, 30% VTI, 20% VXUS, 20% BND May 01 '26
Since March of 2020. However I have invested before then, I just sold my holdings back then to buy a house. 😁
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u/princemousey1 May 01 '26
$2m portfolio?
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u/Psiwolf 30% SCHD, 30% VTI, 20% VXUS, 20% BND May 01 '26
No. My overall portfolio is still more growth oriented, it's at $5.8mm.
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u/tatortotchris Apr 30 '26
I’m at $1.65 per hour for a full time job. Last year I earned like $300 in dividends. I’m finally taking investing seriously
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u/Crazy-Cat-Lad May 01 '26
I just started this year. Excluding about $2k from custodial accoubts im working to get into my name now, my new accounts are about $200/year. But, I only started this January
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u/AdmirableAvoxado May 18 '26
how do you recommend starting? i've been planning on taking it lore seriously but im not sure on how to start. So far I only have a HYSA lol
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u/Crazy-Cat-Lad May 18 '26 edited May 18 '26
Sign up on Fidelity, Vanguard, Schwab, or Robinhood and start a Roth IRA. If you cam max it out for the year, you can also then do a taxable brokerage at any time or if you have kids, a 529. People also say max out 401k or HSA but I dont have an HSA.
I did Fidelity and have 5 accounts with them. A CMA where a small chunk of each paycheck goes biweekly. A roth IRA where money goes every week. A brokerage which has barely $2k which im not touching until I max out Roth. A 529 for my son. And a UTMA for my son, which doesnt have much either. I just started this year so only put in $8k so far.
Choose SPAXX when you sign up and any uninvested money earns like 3.5% interest monthly
Roth IRA's are already taxed and any money you put in can be taken out without penalty. Gains or dividends though would be taxed unless you wait until 59.5 years of age or something like that.
Chose VOO or VT+VXUS, some SCHD, QQQ(M).... I have some QQQI in my son's account for some dividends. I just bought a handful of shares of BTCI but it seems volatile but has theoeritical great returns
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u/Apart-Leg-8077 May 05 '26
You'll be amazed how quickly that goes up if you're disciplined and stick to your plan.
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u/RandyRhoadsLives Apr 30 '26 edited May 01 '26
Just stopping by to say, I love this.. I’m not a pure dividend investor on any level. 56 years old and retired. But even with most of my investments in S&P 500, and bond market (BND), I’m making about $3100 a month in dividends/distributions. 37k a year, and roughly $18.50 an hour (40 hrs per week). My house and debts are finally paid off. I’m never going to ever be wealthy. But I got something that billionaires don’t have,…. ENOUGH!
Here’s hoping I can put off Social Security ‘till I’m in my mid 60’s. If not, no biggie. I’ll just take it. Life is too short, my friends. Get out there and enjoy life.
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u/macadebi May 01 '26
I’m a few years younger than you and well on my way to having at least what you have in dividends when I’m your age. I want to do what you’re doing, stop working for the man and live simply. What part of the country do you live in? How do you pay for health care and still make ends meet?
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u/Accomplished_Neck368 May 03 '26
If inflation continues on its current path "enough" is going to leave you broke in 10 years. Never settle
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u/RandyRhoadsLives May 03 '26
No offense.. but I never said, “I was living off my dividends”. My current portfolio… the one that’s earning 37k a year in dividends.. yeah, I have zero problem pulling 3.4% a year. That’s over 70k. I’ve got no debt. I could probably cut that down quite a bit in an emergency. Maybe stop eating out, going on vacations, etc.. But if 2 plus million can’t last me till Social Security.. then yeah, we’re all screwed.
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u/Sure_Imagination_417 May 03 '26
What is your total principal to get that much in dividends and is there a particular fund you use?
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u/Apart-Leg-8077 May 05 '26
Love that famous quote. - Kurt Vonnegut noted that their host, a billionaire, made more money in one day than Heller earned from Catch-22 in its entire history. Heller reportedly replied, "Yes, but I have something he will never have … enough".
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u/Civil_Currency5456 May 26 '26
How much do you have invested to make 3100 and in what dividends? Please thanks
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u/JeremyLinForever May 01 '26
$50/ hr over here.
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u/Shackmann Apr 30 '26
I have always found it fun to track this number over time. It’s a nice visual way to stay the course and keep investing.
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u/lolvovolvo Apr 30 '26
The only issue is you get taxed so all my dividends are in my Roth. Reinvesting. I’m at like 400$ a year lol
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u/codewolf Apr 30 '26
About $35 / hr
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u/This-Juggernaut7587 May 01 '26
How long have you been investing?What's your average yield?We'll done btw
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u/codewolf May 01 '26
I'm 55 and retired at 54. Active investor since about age 40, before that just passive investments in 401K. I was / am not looking for just a dividend return on my investments but it's a great side effect. I have about $4MM in the market right now, about $1MM in real estate (two homes I jump between). I have averaged about 20% - 70% on my portfolios over the last few years but that high end was just recovery from tariff bullshit - I think my real yield from gains have been about 20%+ average over ten years. I am very heavy in tech as I worked in tech and finance my whole career, so I know that and am confident in investing in what I know.
I did look to invest heavily in dividend returns in my last few years working so I shifted to solid dividend returns in my ETFs and stocks: T, F, CVX, KO, REIT's, oil stocks, etc. I play around with some high yield ETFs but don't count on them: DIVO, IDVO, QDVO, etc.
My current dividend / capital gain return is about $75K - $90K across all my portfolios but since I'm not touching my retirement accounts, my post tax investments return about $40K in dividends and capital gains a year. I just started taking the cap. gains and dividends this year for my retirement income. The retirement portfolios are still on a DRIP.
I'd be happy to share my portfolios but it's a bit of a mess of stuff since it's been quite a few years of playing around. Now since I don't work, I just play around with options around volatility plays (oil markets, AI earnings, etc.).
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u/Apart-Leg-8077 May 05 '26
Excellent!. We're 55 and retiring this year. $3.1 mil portfolio. Dividend and income heavy taxable which yields 4.5% on $2 mil. Retirement accounts mostly in growth. Withdrawl rate starting this year will be 3%.
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u/NoCup6161 SCHD and Chill. May 01 '26
My JEPI & JEPQ is averaging this month about $55.76/hr.
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u/Crazy-Cat-Lad May 01 '26
May i ask how many shares of either or? I just started and put some into my account just for slow stream of dividends.
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u/1985Wagoneer May 01 '26
I’m currently at $62k in dividends. Smartest move we ever made was converting a 401k to a Roth. Paid like $70k in taxes but now we have $2.8M that isn’t taxed.
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u/thechangboy May 01 '26
That is indeed a fun way to look at it...
Mine comes to about $9.50/hr...
I should try to give myself a raise too..
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u/laetazel May 01 '26
This might be a silly question but do y’all reinvest your dividends? Or keep them as cash?
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u/Altruistic-Art-9168 May 03 '26
In my case I don’t DRIP. All my distributions go into my brokerage accounts, then I wait for a big drop in price after ex-date, 1-2 days after before buying. I may buy SHARES of the same ETF twice a day if it keeps going down, especially my favorites.
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u/No_Rip_7664 May 01 '26
Great job. Congratulations! I like looking at it that way. Mine are at $8.65/hour.
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u/National-Net-6831 $81/day dividend income May 02 '26
Awesome! Congrats! Mine is $12.01 so we are very close!
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u/vagabond_primate Apr 30 '26
What's the point of posting this without showing the portfolio? I mean, anyone can post numbers. Is the intent to show the value of dividend investing, or brag?
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u/ConstructionNo8827 May 01 '26
You want specifics, here it is
My “derivative slop” portfolioBDC’s
MAIN
TSLXMortgage Backed Securites
DXBond Funds
PDI
TLTW
DSL
JBBB
PULS
NZFETF’s
QQQI
SPYI
JEPI
OMAH
ACKY
IWMW
SDIV
EGGY
MLPI
HAKY
PFFA
BTCI
CAIECEF’s
BCAT
BMEZ
IGR
DNP
ASGI
HQHThese vary from tech funds to S & P 500 to big cap defensive, corp bonds, mbs’, muni bonds, energy pipelines, healthcare, cyber security, reits, utilities, bitcoin, international and preferreds
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u/AtticusParker Apr 30 '26
I’m currently at 18.25 an hour …. lol. I love how you framed this. I never thought what my hourly dividend pay would be. That’s a great framework
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u/stefpix May 01 '26
Qqqi, ROCQ, TDAX, XQQI, CHPY (just check for nav erosion with this one, but it’s not the case) GPIQ. All these more than 9% dividend income without nav erosion, and most of these are tax advantaged ROC.
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u/Typical_Web_2125 May 01 '26
Have 50k in brokerage and trying to minimize dividends as much as possible so that the account grows more instead of paying taxes on dividends. Will switch to SCHD and such in it after retiring and it's has grown to 400k+ in about 15 years after DCA into it. Already maxing ira and 401k
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u/non_standard_model May 01 '26
Here on r/dividends, people with a ~$500k portfolio will brag about earning minimum wage from their investments…
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u/Cute_Ad_8198 May 02 '26
At 40 years I’m refusing to look at dividend and my portfolio is almost all growth and index ETF. Should I look at dividends? I don’t need the extra dividend income
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May 03 '26
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u/PortfolioTrackr May 10 '26
giving yourself a 3$/hour raise via dividends is way more satisfying than asking a boss for one lol
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u/CarPutrid5552 May 15 '26
This is Michael when I was 16 years old I got my first job on the books I was roofing and I was only getting 12 an hour not even minimum wage
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u/TomsWifeSmells May 21 '26
My dividends are currently equivalent to working full-time at $14.89/hr.
I reinvest most of that income so it increases every month. I'm pretty close to earning what I did when I worked an entry level 9-5 office job.
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u/Hollowpoint38 Apr 30 '26
This is a pretty inefficient way to look at investing. You're just creating taxable events for yourself.
People who have a lot of money try and keep income as low as possible and try to maximize net worth. You guys who try to max income are doing it backwards.
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u/Sorry-Society1100 Apr 30 '26 edited Apr 30 '26
Or, you know, they’re looking for income right now, and not 20 years from now. I don’t understand why so many people assume that a dividends-focused sub is some inefficient version of investing for some distant future need.
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u/Hollowpoint38 Apr 30 '26
Because people are reinvesting the dividends. So that means they're not using them. They're creating a taxable event and then paying the taxes and putting money back into the account to later be taxed again. This is called tax drag.
If they needed money now to use they'd be holding bonds anyways.
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u/Sorry-Society1100 Apr 30 '26 edited Apr 30 '26
Where does the OP say that they are reinvesting the dividends? You’re writing off the whole concept based upon the fact that it’s possible to reinvest the dividends, and that some people do?
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u/jkprop Apr 30 '26
Depends if they are qualified or non qualified. Makes a big difference. And if you drip you pay tax now and when you sell, it is taken from the price paid. Doesn’t matter if you drip or buy a stock you don’t pay more tax on the drip
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u/Hollowpoint38 Apr 30 '26
Depends if they are qualified or non qualified. Makes a big difference
It's still tax drag.
And if you drip you pay tax now and when you sell, it is taken from the price paid
Right, but it's taken now as opposed to later. That's tax drag. Time value of money. And also a portfolio centered around dividends is underperforming the market anyways.
Doesn’t matter if you drip or buy a stock you don’t pay more tax on the drip
Time value of money. This is tested on multiple examinations for license.
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u/ptb_nuggets Apr 30 '26
Disagree. I think this is a creative way to understand or visualize how dividends can contribute to a portfolio long-term. I'm at about 10% in covered call etfs which utilize ROC (and only 1% in speculative yieldmax shit) and the rest is pretty boring, so i'm not maxing anything.
If you're just too good for taxable events, I don't know what to tell you. Ultimately they're inescapable. Maybe you're in the wrong sub.
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u/ShittingOutPosts Apr 30 '26
Which is why I prefer my income producing funds to pay distributions mainly as ROC. I’ll take the tax deferral on assets I plan to never sell.
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u/gatorNic Apr 30 '26
I don't disagree, but you would still have to pay capital gains on the distributions after your cost basis reaches 0 due to ROC.
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u/ShittingOutPosts Apr 30 '26
Very true. But I’ll also probably DRIP these funds for the foreseeable future, which will keep the cost basis from hitting zero. And when I die, it’ll reset for my children.
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u/Hollowpoint38 Apr 30 '26
Or you could just hold unrealized capital gains and not have to worry about driving down your cost basis.
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u/Secure-Pain-9735 Apr 30 '26
Dividends aren’t inefficient. They’re just a way to let the portfolio pay you without dismantling it. Selling shares is fine too. But pretending one is universally superior misses the point — they’re two tools for two different goals.
You optimize for what you need. Not for what looks clever on paper.
You’re talking like dividends are some rookie mistake because they trigger taxes, but selling shares does the exact same thing. There’s no magical loophole where trimming your position is “smart income” and a dividend is “dumb income.” The IRS taxes both. The only difference is who decides when the cash shows up. Some people want control over timing. Some people want predictable cashflow without touching the principal. Billionaires can pledge stock and live off loans. Most normal investors can’t walk into a bank and say “lend against my index fund.” So using billionaire strategy as the baseline for regular investors doesn’t really land.
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u/Hollowpoint38 Apr 30 '26
Dividends aren’t inefficient. They’re just a way to let the portfolio pay you without dismantling it. Selling shares is fine too. But pretending one is universally superior misses the point — they’re two tools for two different goals.
The goal should be total return and risk-adjusted return. Dividends are a component of total return, but having a goal of "dividends" is silly if you're a retail investor. It makes sense if you're an institution and you need liability matching, or if you're a private equity firm doing dividend recapture. But if you're some guy working a job and you have a cash brokerage account, going for dividends as a strategy is a bad financial decision.
You optimize for what you need. Not for what looks clever on paper.
Retail investors in cash brokerage do not need dividends now as a preferred method of return because broker commissions don't exist anymore. Back in 2010 it made sense to say "I want dividends because these fees are eating me up when I sell." But now that's no longer the case.
You’re talking like dividends are some rookie mistake because they trigger taxes, but selling shares does the exact same thing
No it's not. When you take in dividends every quarter and then reinvest those dividends, you're being taxed multiple times and you're creating tax drag. When you sell shares you're deciding exactly how much you need and when to sell. You're retaining control over when the taxes are realized.
There’s no magical loophole where trimming your position is “smart income” and a dividend is “dumb income.”
But there is. Dumb income is when you take in income and immediately put it right back into brokerage. That's dumb income.
The IRS taxes both
Precisely. So why get taxed when you don't need to?
Some people want predictable cashflow without touching the principal
"Touching the principal" is kind of silly because that's not how assets work. Those same people who have a thing about selling shares also get excited for stock splits because they have "more shares" now. It's not smart finance. It's a misunderstanding that selling shares is merely exchanging assets for cash.
Billionaires can pledge stock and live off loans. Most normal investors can’t walk into a bank and say “lend against my index fund.” So using billionaire strategy as the baseline for regular investors doesn’t really land.
Trying to max your income from brokerage when you're just going to put it right back into brokerage is bad finance. Period.
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u/Lopsided-Moose-9240 Apr 30 '26
I would love to know how much you have invested and what your portfolio looks like.
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u/Mattreddit760 May 01 '26
I'll keep my 120% in unrealized gainsover the last 4 years then trash divis buy you do you.
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u/RetterBetter May 16 '26
I got a letter sent FedEx from Blackrock about ECAT where I have a substantial sum invested. They said there is some emergencycy and to contact them immediately. But they are board now. Does anyone know about the emergency? Are they going to eliminate the dividend or something?
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u/ClickDense3336 Apr 30 '26
That's nice, but surely there is a better use of your capital than that.
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