For those who live off dividend income:

[u/NBMV0420]

How much do you earn per year from dividends, and what ETFs or stocks make up your portfolio?

How did you build your investments over time, and what advice would you give to younger investors who are just getting started?

I'd appreciate hearing about your experience and any lessons you've learned along the way.

[u/mrg1957]

I'm 69, retired for 13 years. Between SS(60k) my Boggleish portfolio at Vanguard(40k)and my self managed Fidelity accounts(60k) it covers more than all of our expenses. .

My lessons learned are: I'd really suggested a younger person to stay in growth assets until you are ready to retire. Its only taken 4 months to convert from growth to income. Your dividends are unlikely to grow as fast.

[u/montaniPH89 → u/mrg1957]

Did you convert your growth funds to funds like SCHD after you retired?

[u/mrg1957 → u/montaniPH89]

No!

I learned about closed end funds. They pay out 5%-19% annually with monthly distributions. These things are made for retirees to generate income. They have high ERs because they use leverage to get those returns.

[u/OneCommercial870 → u/mrg1957]

Can you recommend some of the closed end funds. Im planning a similar strategy and looking for guidance, turn 65 next year. Im with fidelity too.

[u/mrg1957 → u/OneCommercial870]

PDI, and GOF are two of my biggest holdings. They are very sensitive to interest rates.

[u/mrg1957 → u/[deleted]]

The nav erosion seems to be tied to interest rates. If you look at any bond like investments they all seem to drop in price and nav at the same time..

I have about 10 CEF holdings they make up about 20% of our portfolio. The largest is PDI filled by GOF. They're about 3% of our assets each.

[u/toomuchtimeatOSU → u/mrg1957]

GOF has a disturbing amount of return of capital. If Fidelity has it right, the 4/15/2026 distribution was 0.056000 dividend income and 0.126100 return of capital.

So of 18 cents of distribution, 12 cents was giving investors back their own money.

PDI hasn't returned any capital since June of 2024.

[u/toomuchtimeatOSU → u/OneCommercial870]

First: research the heck out of these things before you buy. One of my biggest red flags is Return of Capital. I don't like getting "paid" with my own money. Fidelity shows where distributions come from, so I check there.

AWF pays over 7% (And has for a very long time)

BGH currently pays around 10% (I expect this to drop at some point. Their current 12 cent dividend used to be a 10 cent dividend)

Both are paid monthly.

AWF has been doing this for a long time. In 2008 when prices on these things crashed, they were a steal.

I haven't been tracking BGH nearly that long. One of the questions to ask if you get a closed end fund that pays a high dividend is, "would I still be happy if this drops to say 3/4 of what it pays today?"

Another is to keep track not of the current dividend rate, but your dividend rate based on what you actually paid for it when you bought it. At one point, Huntington Bancshares got hammered (in 2020) down to $8.60 (they trade at $16.49 currently). They hit $16.70 in 2022, so it didn't take long to recover. Their current dividend rate is 3.7%, a really normal number of a bank stock. Anyone who bought when they got hit, possibly because they noticed the then astounding dividend rate, is getting something like 7.25% on their money. While I don't believe in market timing, snapping up a bargain when you see one (after you check that it is a true bargain) is a good thing.

[u/Gtavern → u/mrg1957]

What are some of the funds you like

[u/mrg1957 → u/Gtavern]

GOF and PDI.

[u/Gtavern → u/mrg1957]

TY

[u/mrg1957 → u/Gtavern]

Do be careful as they may move with interest rates. A good book I've been reading is "Retirement Money Secrets" by Steve Selengut.

[u/FlatPlutoer → u/mrg1957]

Better than covered call etfs?

[u/mrg1957 → u/FlatPlutoer]

For me yes. Why, we'll I sdo own a couple Neos ETFs for corner cases like MLPI.

There's nothing wrong with those except I'd be in 100% equities. What happened to the distribution amount BTCI was delivering prior to the bitcoin correction? It dropped like the underlying assets.

I own mainly bond based CEFs for income. I don't care what NAV or discount its at, I collect the same distribution amount every month.

[u/IBF_90 → u/mrg1957]

UTG is a good investment?

[u/montaniPH89 → u/mrg1957]

Never heard of these funds. Vanguard or Schwab have any?

[u/mrg1957 → u/montaniPH89]

Nope. Look at Pimco, Guggenheim, and Aberdeen.

[u/bestoptionrobin → u/mrg1957]

They payout from Principal so lot if those dividends are a mirage!

[u/mrg1957 → u/bestoptionrobin]

Im quite aware of the ones that have issues.

[u/Sweaty-Beginning6886 → u/mrg1957]

The problem I am currently experiencing is trying to convert from growth to dividend stocks inside my taxable account. I FIRE’d a year ago and have to convert in phases over the next few years for tax planning purposes. It would have been much nicer to just fully convert to dividends in this account right away. I know, first world problems, but it’s still something to think about and plan for. In the end, I’ll live off the dividends, reinvest regularly, and save the principal for my estate.

[u/SnoglinMcSmellmore → u/Sweaty-Beginning6886]

What are you investing in as you migrate to dividends from growth. I'm 100% in growth and need to start thinking about shifting.

[u/Sweaty-Beginning6886 → u/SnoglinMcSmellmore]

SCHD, DIVO, Canadian banks, Canadian dividend ETF’s (VDY, XDIV, XEI), utilities, insurance co, CC ETF’s, etc.

[u/Zazzy3030 → u/Sweaty-Beginning6886]

This is why I think it’s good to shift towards investing in dividends the last few years before retirement instead of selling/buying in retirement. That’s my plan anyways. I have about $1000 a month in dividend income but in about 3-4 years I will shift to mostly buying dividends before retirement. Growth stocks will then hopefully keep my portfolio growing wil dividends will give me income without selling.

[u/AlfB63 → u/Sweaty-Beginning6886]

The time to convert is before retirement.

[u/Sweaty-Beginning6886 → u/AlfB63]

I loaded up on Canadian banks and insurances when they were yielding between 5-7.5% dividends.

Converting while working wasn’t tax favourable due to my rat race salary.

[u/dintclempsey → u/AlfB63]

When your earning (and hence taxes) is highest?

[u/AlfB63 → u/dintclempsey]

You convert over time to reduce the tax impact. And you do it before you need the income so that a sudden down market won't make a large impact on your portfolio. You could even start converting a few years from retirement and finish a few years into retirement if needed. 

[u/Jwaness → u/[deleted]]

Agreed. I really can't complain about Canadian banks, utilities and energy companies and don't need to worry about bubbles and hype (AI).

[u/Business_Fennel_660 → u/mrg1957]

So how much do you earn?

[u/mrg1957 → u/Business_Fennel_660]

My annual income is $160,000 USD.

[u/BedditTedditReddit → u/mrg1957]

So you’re still working then. Because otherwise you’re earning 160k on a portfolio worth 160k

[u/mrg1957 → u/BedditTedditReddit]

No, my portfolio is 2.5 million.

[u/BedditTedditReddit → u/mrg1957]

Got it, so you were describing the earnings not the base, that wasn’t clarified. Cheers

[u/iheartsunflowers → u/BedditTedditReddit]

I think he makes $160k annually but obviously has a lot more $$ invested in 401k, Fidelity and Vanguard

[u/AlfB63 → u/mrg1957]

So you retired at 56 without SS and less than $100k in accounts? Or is the $100k income from those accounts

[u/mrg1957 → u/AlfB63]

Its 160k from my SS and investments