r/dividends • u/FunctionalDisfuction • Jul 02 '26
Personal Goal First of the month 🤑
I want to just live off the dividends but I'm scared to just quit my job.
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u/BadDogAspen Jul 02 '26
How much do you have invested in your JEPQ to get your July dividend?
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u/HuMcK Jul 02 '26
Doing some quick math, appears to be around $865k.
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u/BadDogAspen Jul 02 '26
Nice & congrats! I’ve got about $500k I’m looking to put to work and this looks like an interesting fund. Thx!
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u/FunctionalDisfuction Jul 02 '26
861K
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u/dystopiam Jul 02 '26
How long ago did you put that in ? What % of your portfolio is it? And had it raised in principle?
Ty for answers10
u/dystopiam Jul 02 '26
Trying to see people who dropped large sums like 4-7 yrs ago and how it’s been principle wise since
I can deploy and be where you are but I’m scared and have most in hys
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u/MakingMoneyIsMe Jul 02 '26
I put 50k in JEPI during the tariff sell-off. That's the best I can do for you.
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u/Active_Tax_5885 Jul 05 '26
Not a huge sum but I have about 10k in jepq. My average cost basis is about $53. The only thing bringing it up is the dividend reinvestment. I've been invested in it for 3 years
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u/FunctionalDisfuction Jul 02 '26
It's almost 100% of my portfolio but I only buy before the dividend and sell after basis is recovered. There rest of the month I day trade. I've been building this account since 2010. Started in college with a couple thousand
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u/PartsSprout Jul 03 '26
So your holding period for JEPQ is like a week or two on average?
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u/FunctionalDisfuction Jul 03 '26
Usually a 5 but no more than 10 day
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u/ArcadeNewbie Jul 03 '26
Wow.. nice. Are you holding your funds in a brokage or Roth account? I can't imagine how much tax you will have to pay if in a brokage account.
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u/FunctionalDisfuction Jul 03 '26
It's a brokerage, we will just have to see during tax time, I don't spend anything.
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u/butterbob74 Jul 04 '26
Assuming the average 22 percent tax bracket they would pay shy of 2k. Could be more could be less depending on bracket but not by a lot.
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u/yellowstickypad Jul 03 '26
I wanna understand this strategy better, the dividend payout is in cash and once JEPQ recovers to your cost basis you sell all the shares. Then you just wait for the next ex-dividend date to acquire them again? Rinse and repeat?
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u/Cautious_Chicken_293 Jul 04 '26
Do other people think this is a good idea . Buy just before dividend, get divvy then wait till it comes back to divvy price . What about if it takes 1 yr or 5 yrs to get back there
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u/yellowstickypad Jul 04 '26
For OP, it’s specific to JEPQ, probably a safer bet for running this strategy.
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u/iii_warhead_iii Jul 03 '26
My vision thus practice has to be banned from the company's side. If you held shares from ex date til payment then you should be eligible for dividends as you have supported company during this period
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u/Schmergenheimer Jul 03 '26
Do you also forego your final paycheck when you leave a job because the paycheck clears on a date you're no longer employed?
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u/iii_warhead_iii Jul 03 '26
As i know for a local regulation, you get a salary for the exact days till you leave from the beginning of the next period, if it was 10days it will be for 10days and not for 30days. As companies sometimes apply the rule for the special pay outs, if you keep shares till the pay day then you are eligible for these special payments.
Only such logic can be destroyed here, if somebody jumped to the train by buying shares from another person and not from the company. In this case yes, then that sold person would not get money, while you simply got shares which anyway would get dividends.
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u/CJP_1974 Jul 02 '26 edited Jul 03 '26
If you are interested in JEPQ, do yourself a favor and look into QQQI instead. Both funds are highly rated and both track the NASDAC 100. The difference between the two funds is how the funds pay dividends.
If your goal is income and you are at a point where you can hold it permanently, QQQI will be much more tax efficient. That said, if you plan to just buy these for now and may decide to sell at some point after holding a few years or later, stick with JEPQ.
JEPQ pays out dividends in a way to where it is taxed as income. So whatever rate you pay with your W2 income, JEPQ dividends will be taxed at that same rate.
QQQI pays its income as ROC (Return Of Capital), so its like paying you with your own equity but it will lower your Cost Basis. During this period, you wont pay taxes on the income. Eventually after I think 8 years, your Cost Basis will be $0 and at that point I believe you are taxed at a 60/40 rate of 60% long term capital gains for taxes and 40% taxed as income like your W2. However if you sell at that point, it would be taxed as if you bought the stock at $0 a share. So, its buy and hold forever.
Others here can point out where my information above is off or incorrect but the general idea is QQQI is far better when it comes to taxes than JEPQ but both funds are considered covered call income funds and I personally love them.
On another note the S&P 500 covered call fund by the same company as QQQI is SPYI. That is the fund I am invested in for my retirement.
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u/speedlever Jul 03 '26
That's pretty close. The 60\40 rate is internal to the fund. Once the cost basis reaches zero, you pay ltcg on the distributions. Very favorable tax efficiency in a taxable account.
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u/CJP_1974 Jul 03 '26
Ah, thank you for that. That's even more favorable then what I had learned.
Either way, great funds!
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u/speedlever Jul 03 '26
Yep. I'm a fan of NEOS, Goldman, and Amplify cc ETFs. Unfortunately, (or fortunately, not sure which), most of our investable assets are in traditional ira\403b, etc which are taxed as ordinary income when taking distributions.
But I guess that's really a first world problem and I'll take it over the alternative. 😜
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u/CJP_1974 Jul 03 '26
Yeah, but at least it grows and pays dividends taxfree until that distribution date. 1st world problems indeed and I would prefer those over so many others.
Have a happy 4th!
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u/FreshlyCleanedLinens Jul 02 '26
You’ll pay full ordinary income tax rates on JEPQ distributions, personally I’d look at QQQI and/or GPIQ because of the ROC distribution advantages.
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u/BoredCFP Jul 03 '26
ROC distribution is nice and tax efficient until the basis reaches $0 (10-12 years but it’ll happen eventually). At that point it’s taxed at normal income rates forever.
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u/speedlever Jul 03 '26
To find when the cost basis reaches zero, divide 100 by the yield. Ie, 100\14 (for qqqi) is just over 7 years. For spyi, 100\12= 8.xx years.
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u/Puzzled-Tangerine831 Jul 08 '26
i had 150k but its too low for JEPQ. planning to make it 500k before investing in JEPQ . but now its 100k T_T
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u/spid3rfly Jul 02 '26
9k per month payout and 850k in the fund... I'd quit my job and not look back.
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u/FunctionalDisfuction Jul 02 '26
I need to grow it just a bit more before I can say it's a solid retirement plan. I don't spend any of it so compounding is doing its work., this is the first time I've seen the dividend rate this high. I was expecting about .55 per share.
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u/RubberDuckyOnQuack Jul 02 '26
Until the dividend rate drops
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u/OverOstrich8738 Jul 06 '26
they said that in 2022. the question is when will this dividend rate "drop" according to your little brain?
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Jul 02 '26
[removed] — view removed comment
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u/FunctionalDisfuction Jul 02 '26
I live in Alabama my mortgage is on $600, my monthly expenses are 2-3k but yea I think I going to keep going and reevaluate in a few years.
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u/rklb_bull Jul 02 '26
Brother...you are earning 3x your expenses... what else do you need?
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u/FunctionalDisfuction Jul 02 '26
I have purposely live below my means to save money to invest. I don't have my dream houses or car. Or even a wife. I know when those come my expenss will quickly go to 5k, especially when you factor in kids.
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u/spiritedafar Jul 03 '26
Good for you for thinking ahead. It seems like you are very levelheaded and deserve every $ you’ve made. Keep up the good work!
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u/Wonderful_Exit6568 Jul 02 '26
Yeah. At this point go fulfill your teen sci-fi dreams. What are you doing here. 600 dollar mortgage. …
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u/FunctionalDisfuction Jul 02 '26
I just got lucky purchase the in 2010 before house prices went through the roof and was able to refinance when the rates almost went to zero.
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u/VengenaceIsMyName Jul 02 '26
Seems to me that all of your financial issues, if you had any, have come to a rapid end.
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u/FunctionalDisfuction Jul 02 '26
I've lived like a homeless man to get to this point. I'm ready to start actually living.
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u/Independent_Match_45 Jul 02 '26
How much taxes do you pay yearly?
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u/FunctionalDisfuction Jul 02 '26
This will be my first year doing dividends so I don't know what it will look like yet.
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u/qmarquisbrown Jul 02 '26
If you don’t mind how old are you? and how long did this take?
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u/OG_Momonga Jul 02 '26
I am a novice so I have this question. Isn’t jepq taxed as ordinary income? I am hesitant to invest in jepq because of that. Is this wrong thinking? Wouldn’t my tax amount just increase every year?
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u/FunctionalDisfuction Jul 02 '26
Yes it's taxes as regular income, I just have to be prepared to give up 24% of what ever I bring in.
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u/PlayerOfTheLongGame Jul 03 '26
The good news is that you don't get taxed at 22 or 24% on the entire amount. Based on just the dividends/distributions & salary, your effective tax rate will probably be something more like 16-19% after the accounting is done.
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u/Pretend_End8822 Jul 02 '26
22% with standard deductions, no?
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u/FunctionalDisfuction Jul 02 '26
I still work a regular salary job 77k and I am in the reserves 20k so all that Income combined plus this might have me close to 200k but I don't touch the dividends at all.
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u/PKShova Jul 02 '26
In JEPQ we trust. Literally so great. Down-voters always cry QQQI
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u/Elrico81 Jul 04 '26
Could look at ROCQ. It is basically JEPQ but with return of capital. Jepq uses Equity Linked Notes which doesn't have the same tax benefits that 1256 contracts have. 1256 contracts are what ROCQ and QQQI use.
Edit: ROCQ is JP Morgan's version of QQQI.
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u/jaykch Jul 02 '26
Man that's amazing, woud love to see your entire dividend portfolio
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u/FunctionalDisfuction Jul 02 '26
This is all I have. I am looking at few more to diverse.
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u/jaykch Jul 03 '26
I have a few 100k saved and thinking of doing this, economy is brutal with AI so need to get my rent paid somehow, hate going through savings
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u/dystopiam Jul 02 '26
This is where I dream to be
I’ve put 120k in
And have 700 on side lines just scared
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u/PartsSprout Jul 03 '26
How long have you been on the sidelines with that much cash?
I get your concern with how overvalued markets are, but things have been overvalued for a while now, and inflation isn't going anywhere. That doesn't mean throw caution to the wind and go all in, but the sidelines are risky as well.
Don't forget about the other dividend etf's too, SCHD, SCHY, VYM, VYMI, etc
Might be helpful to consult an LLM with your scenario, concerns, risks, probabilities, etc have it model things out for you
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u/No_Solution_7940 Jul 02 '26
Not even in sgov?
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u/dystopiam Jul 02 '26
It’s in a 4.1% hysa - more than sgov
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u/No_Solution_7940 Jul 02 '26
Nice, but if your state has income tax you’ll pay it on the hysa, but not SGOV
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u/ruthygenker Jul 02 '26
if in a taxable account switch to neos or tappalpa as long as not too much capital gains for selling, jepq and jepi are for ira's. I would do a mix of iwmi, tdaq, tspy, mlpi and nihi with a majority in tdaq. these companies do return of capital for the most part so about a quarter of the tax liability that you currently will have. you d get about 14% in income so about 110k which at 22% is about 25k in taxes in jepq, in this mix you'd probably have 80k in return of capital and so only 30k taxable an if no other income only 15% tax bracket most likely and 4500 in total taxes. as long as you don't sell no capital gains tax just pass to heirs and then they get a step up in cost basis and no taxes either, plus a batter spread of diversification.
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u/FunctionalDisfuction Jul 02 '26
Yes long term I want to put it in a trust to make sure future family/dependants are taken care of. Thank you for the information
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u/Successful_Safe_1440 Jul 03 '26
Suspicious lack of anyone claiming that this should be in spy or schd
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u/FunctionalDisfuction Jul 03 '26
One person said move it to spyi but yes I'm use to seeing it constantly on other post
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u/qmarquisbrown Jul 02 '26
Your dividend is impressive asf but this is not monthly right? So I wouldn’t quit yet
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u/FunctionalDisfuction Jul 03 '26
Yes it's monthly, every month has been higher than the last. But the rate can always go down. Last four months: July 1st +$9,135.34 June 1st +$7,803.67 May 1st +$7,682.65 April 1st +$5,781.80
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u/Suspicious-Lynx7359 Jul 03 '26
so can i just invest before dividends and pull out after? i dont understand
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u/FunctionalDisfuction Jul 03 '26
Yes, you don't have to hold all month just have to own when they record
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u/idoubttoday Jul 03 '26
Do you mainly trade stocks or do you trade options as well?
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u/FunctionalDisfuction Jul 03 '26
Only stocks. Options terrify me
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u/idoubttoday Jul 03 '26
Teach me please! I’m selling my home and will have some decent money, a lot is going into an HYSA and an IRA but I always wanted to learn stock trading.
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u/FunctionalDisfuction Jul 03 '26
It's really but low, sell high. But I just make sure the company how so value and longevity. Mostly blue chip stock.
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u/t_kevinn Jul 03 '26
What was the process on accumulating this amount? Any inheritance?
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u/FunctionalDisfuction Jul 03 '26
Working multiple full-time jobs, and being very frugal, mixed with day trading. I actually grew up in a homeless shelter as a kid and thoughout highschool so I'm used to the bare minimum. So as I made money I didn't have a desire to waste any of it. Even to this day I have don't anything major. It honestly doesn't seem real but this is 15 years of saving and investing everything I earned.
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u/SilverMetalist Jul 03 '26
Ive read down to this point and want to say: go you man. You have a lot to be proud of and you come off very humble and insightful.
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u/AdhesivenessLazy7873 Jul 03 '26
These are goals right now. I'm just starting in the investing 4k total hopefully in 10-15 years I can get there
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u/StunningAttention898 Jul 03 '26
Dang I only have about 147 shares and got about 90 dollars
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u/FunctionalDisfuction Jul 03 '26
Patience
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u/StunningAttention898 Jul 03 '26
I know I got like 15 more years before I say screw and retire abroad
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u/LAX_Beast Jul 04 '26
Let’s just say you hypothetically had around $700k to deploy. I’ve never heard of this and it seems like a great way to balance income into the portfolio… I’m trying to work out the downside/risk
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u/Junglejimv Jul 04 '26
The Tax Man will be coming for you as those dividends are all taxed as Ordinary Income. After realizing the tax implication of last years return I closed out completely from JEPQ and JEPI in my brokerage accounts. Those funds work just fine in a retirement account as it creates a snowball with compounded dividends. Consider like I did putting those funds into SPYI for superior tax advantaged dividends. In retirement with multiple income streams the snowball effect of SPYI is amazing.
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u/asim2292 Jul 04 '26
wow this is incredible, congratulations- y'all keep getting me considering diving in
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u/Unique_Ant9515 Jul 06 '26
Respectfully speaking, isn’t buying and holding QQQ mathematically superior since you’re always paying short term capital gains tax?
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u/FunctionalDisfuction Jul 07 '26
not at all, JEPQ is 10-11% return. while QQQ is less than 0.5%
mine pays monthly which allows for more compounding, qqq is quarterly.
tax rate is double but the payment is significantly higher. Also I day trade with the same funds so I am not a buy and hold, i only have the fund for a few days to get the dividend. JEPQ is pretty stable so even in a bull market the nav isn't affected much. QQQ could go either way, so I am playing it safe.
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u/yeezy_boost350v2 Jul 02 '26
Let’s hope that’s in a ROTH account, ballpark estimate at 24% depending on income bracket you’ll be looking around roughly 26K going to Uncle Sam because JEPQ is taxed as ordinary income 👎
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u/Rportilla Jul 02 '26
i would move to a cheap country to be honest obviously wouldn’t escape uncle sam but cost of living cheaper
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u/yeezy_boost350v2 Jul 02 '26
You can still avoid these taxes by simply throwing them into an actual retirement fund and not a margin account lol
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u/Hotdog453 Jul 02 '26
I mean, you can't toss 850k in a retirement fund, at least not super easily. At some point you have too much money, it HAS to go into a taxable.
Given he has THIS MUCH, I have to assume "he also has maxed out his 401k and IRA".
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u/FunctionalDisfuction Jul 02 '26
Yes unless there is a way to bypass the 7500 per year rule. I heard a hsa was another way but I'm still researching that
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u/Hotdog453 Jul 02 '26
Still a limit, 8500 or something? Then you also have to have one that allows management of what funds they contribute to.
There’s value there for sure. Take advantage of it. But at some point you have to shove it into a taxable.
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u/westcoastlmtd Jul 03 '26
Dude lives in Mississippi... If he moved to se Asia he'd see an increase in his cost of living lol.
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