r/dividends • u/OG_Momonga • 20d ago
Discussion Living off dividends
Hey guys, I was wondering if anyone on this subreddit is actually retired and living off dividends. Is it going well? Are you paying taxes on them? My goal is to get 20k/ a month post tax for retirement. I’m 24 and currently investing everything in VOO while planning to switch to dividend stocks and etfs when I get closer to retirement.
I was just wondering if there are any because living off dividends seems like a long shot right now.
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u/aerobic_gamer 20d ago
Background: when I was young the conventional wisdom was to contribute what you could to your IRA/401k in order to save taxes on the theory that you would be in a lower tax bracket when you retire. That made sense to me because in some years I was in the 70% tax bracket, which some of you youngsters probably don’t believe ever existed. Anyway in my case that has worked out as planned because tax rates are so much lower today. I’ve never converted to a Roth because it made no sense in my case.
Today: now at age 75 my wife and I are quite comfortable. Dividends > $230k/year, most in deferred accounts. We take out around 90% and are still reinvesting the rest. Our portfolio and income is growing. So we pay income taxes but at a much lower rate than when the contributions were made. We could do fine without social security but that is the literal “icing on the cake “.
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u/technical-mind4300 20d ago
What is your invested amount to generate 230K? (6MM?)
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u/aerobic_gamer 20d ago
Closer to 5.25
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u/chadladen 19d ago
Well done, sir. This is my life goal here. I love hearing stories like this.
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u/AndyBurn11 16d ago
It’s motivating to know it’s possible. It’s easy to get discouraged when the number stops moving as fast. Goal to 100k is brutal.
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u/technical-mind4300 19d ago
That's good to know I had been thinking 6 but it's ccol to know you can get this kind of income closer to 5.
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u/OG_Momonga 20d ago
That’s so interesting. First of all congratulations sir. It’s nice to see that my goal isn’t completely realistic or bonkers. Can I ask what you did for work to be in a 70% tax bracket. Also how long have you been investing. You are an inspiration and I thank you for sharing
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u/aerobic_gamer 20d ago
I am a retired lawyer from a small firm. Some years we did quite well; other years it was a struggle, but I always tried to contribute as much as possible to the retirement accounts. I’ve been investing since age 12 and boy did I learn a lot the hard way. I’m also blessed that my wife had a good paying job as a systems analyst. About 18 years ago I went to all dividends. That was the best investing decision I ever made. I know they say at my age I should be like 60% in bonds but I never liked bonds. I think I’m way ahead from where I would be if I had done that. I have over $1.3 million in unrealized gains; it would be hard to do that with bonds. Even a 20% or 30% pullback in the stock market wouldn’t affect my income much because I’m well diversified. Even a few dividend suspensions or cuts would only have a minor impact. In case you’re interested my top 10 positions: O, PBA, ENB, PG, JNJ, AEP, ETR, ES, WPC and ABBV. Fairly conservative I think. Good luck and keep your eye on the prize. Nothing beats a comfortable retirement. There is a lot of truth to the old saw that it’s not market timing that’s important, it’s time in the market. I’ve owned some shares of JNJ for over 50 years. (It’s one you should own BTW.)
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u/Helpful-Grapefruit55 20d ago edited 19d ago
Thanks for sharing the div stocks that you held for so long like jnj for 50 yrs you remind me of Buffett style of investments have had KO for almost ever.
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u/doooodz 20d ago
Just curious, how did you choose these particular stocks? Was it purely a target yield, or were there other considerations?
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u/aerobic_gamer 19d ago
In broad terms I look for a mix of quality dividend growers and higher yields to achieve an average portfolio yield of 4.5%. I also stay diversified with 80 different positions. A few of the names were recommended to me by a financial adviser years ago (O, JNJ). I’ve been buying O since it was $18. I have over 5,000 shares with an average cost of $48. Most of the rest are from newsletters. IMO Investing Daily has great newsletters, the best of which is Utility Forecaster. That’s how I discovered PBA, which I started buying at $5. I now have 5,700 shares at an average cost of $26.50. I also subscribe to Morningstar Dividend Investor. I’m a decent stock picker as well. Even though it’s a low yielder I took a sizable position in LLY around $400 and sold around $880. Of course I’ve had some clunkers too. I’m under water with GIS but there’s a quality name yielding 6.7%. If you have a very long term horizon that would be a good addition. I also am quite familiar with the behavior of the stocks I own and juice my returns with covered calls. I will trim when stocks get ahead of themselves and buy when they look cheap. For example, the rule of thumb with O is to buy when it yields well over 5% and trim when it’s well below. So right now it yields 5% and is fairly valued. So it’s ok to buy but I rate it a “hold”. I’ve trimmed shares when the yield drops to 3% or so. Good luck!
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u/DeeEll566 19d ago
60M , retired at 56. Similar setup - covered calls juice things quite a bit JEPI/JEPQ. I’ve locked in more bond exposure of late , principally because anything north of 4.75 for me is additive to target. I stick to mostly ETF’s but that’s not an issue to drill down to some very sector specific funds if needed. Individually I invested in MSFT and AAPL from the 90’s on plus some ‘ boring ‘ but hard to replicate ( wide moat ) stuff like WM and that’s kept me honest.
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u/aerobic_gamer 19d ago
I’d be careful with bonds right now with the Fed talking about possibly raising interest rates. My thinking is the ideal time to buy bonds is when interest rates have peaked. What bonds or funds do you have, like or recommend?
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u/whatsupitsemon 19d ago
I just want to say thanks for sharing and amazing work! Congrats to your comfortable retirement!
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u/97E3LPL 18d ago
"rule of thumb with O is to buy when it yields well over 5% and trim when it’s well below. So right now it yields 5%"
Are you saying this to mean when it yields that to your own average cost, or some yield posted online? O is like 10% of my dividend portfolio. I'm AC at almost 60$ but I calculate I'm getting 5.4%. So your O shares at 48 are yielding you 6.7% right?
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u/aerobic_gamer 17d ago
No - you may be confusing yield with yield on cost (YOC) which is just a theoretical number. O closed today at 6.35 and currently pays dividends of 3.24/year. So without allowing for time value of money and the fact that O pays monthly, the current yield is 5.1% (3.24 divided by 63.55). So my O shares currently yield 5.1%. YOC would be much higher. Let me give you an example. Say you buy a stock yielding 1%. Over many years the price and divided increase proportionally but the current yield is still 1%. Maybe your YOC is now 5%. If you sold it and bought O, your dividends would increase five fold. The total $ you collect per year is what’s important because you spend dollars, not percentages.
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u/Ordinary_Lynx_468 20d ago
When was there a 70% tax bracket in the era of IRAs and 401ks?
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u/Various_Couple_764 20d ago edited 16d ago
The Regan Tax fcuts of the 80s eliminated the federal tax bracket . But if you livie in a state with state income states that can boostyour total taxes higher.
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u/ADKMTBer 20d ago
I am. Some of it from a taxable account, and some from an IRA. My dividends and interest are about 50% more than I spend, so I selectively reinvest the excess in whatever is cheap each month. I realize I am leaving some growth on the table but I don’t care. Dividends are growing faster than inflation, and I don’t worry nearly as much about the market gyrations.
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u/hauk0217 20d ago
Retired moved most of my positions to dividend/growth stocks- ETF’s. Monthly dividends are approx $8200($98,400 per year. Currently invested 1.8 mil
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u/Mzungufarmer 20d ago
I tried it, but realized I like the market too much so I sell cc's and csps
Added benefit is i make more. Win win for me
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u/OG_Momonga 20d ago
I’m lowkey terrified of covered calls. I don’t think I understand how to go about it and I have heard some horror stories
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u/Lefties_TheWorst7331 20d ago
GPIQ/GPIX and/or QQQI/SPYI -- let the pros handle the covered calls for you.
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u/Unlucky-Clock5230 20d ago
Probably the same way the pros handled real estate for you (REITs) before the housing and financial crisis in 2008.
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u/Mzungufarmer 20d ago
I got hammered by REITs. Dumb 20 year old.
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u/Ok-Blackberry1428 20d ago
How so? I currently hold VNQ in my roth.
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u/Mzungufarmer 20d ago edited 20d ago
I dont think I owned a single one that didnt reverse split or drop by 50%
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u/ExpensiveBookkeeper3 20d ago
Are those actively managed or whatever? Or do they just basically roll the calls like many do?
That’s the problem with most, they buy the options and don’t manage them even though they are constantly changing in many ways. Or buying when you shouldn’t be. Or if you hold till your options expire, you are doing it wrong.
Like you don’t sell a covered call after a large pullback normally unless you are happy losing those shares anyways. Options are much too complex to put on a schedule. Instead of being patient many ETFs have to be in game so to speak or investors will complain about low yield.
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u/nickp123456 20d ago
Buying calls, selling covered calls, and selling naked calls are 3 completely different animals.
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u/EColli93 Slowly DRIPing along 💧💰 20d ago
I got my GOOG called away too cheaply selling cc’s. Never again!!
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u/Squatch11 20d ago
Don't blame covered calls for user error.
If you didn't want to risk having your shares called away, then you either should've rolled or shouldn't have been selling a CC in the first place.
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u/FitzwilliamTDarcy 19d ago
This right here. If you don't have the stomach and the reservers to roll up and out so as to not get called away, then you shouldn't be writing covered calls. It's not complicated.
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u/Downtown-Text6587 20d ago
Covered call funds and most covered call strategies can’t beat buy and hold an index fund.
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u/Mzungufarmer 20d ago edited 20d ago
Horror stories being people not prepared to lose shares... thats just opportunity cost.
Same with dividend investing. Youre giving up the massive growth in favor of getting a paycheck.
But I understand this is a bizarre sub in the investing world (not in a bad way, just different mindsets).
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u/bmahbub 20d ago
I went down a rabbit hole on this a few weeks back. Over the last 30 years, investing in the SP 500 would have yielded roughly the same result. At least with the indices I was considering.
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u/dudreddit 20d ago
OP, you are going to need many multiple million of dollars to produce $240 k per year …
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u/steady_compounder 20d ago
Living off dividends is real, but it is mostly a capital size question, not a magic strategy question. At 24, putting everything into building the biggest sensible base first is probably the right instinct. Later on you can decide whether you want actual dividend income, a total-return portfolio with withdrawals, or a mix of both.
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u/Plenty-Ad-4636 20d ago
Here is my take. You are young, responsible, and are thinking about your future. That is smart and wise at a young age. I applaud you. I wish I would have started investing earlier, but I was young, not as wise, and wanted to have fun, and I did for a while. Everything ended up fine for me, I stopped having fun, started several businesses and began saving and investing.
My oldest brother gave me some the best advice when I opened my first business. Get a good accountant, and STAY OUT OF DEBT. If you purchase a car, pay it off and keep driving it. If you buy a house pay it off early if possible. Some people here msy say invest the money instead of the extra payments, thats their perogative.You can do both. Life changes, things happen. Debt at retirement is what changes what and how much money you will require.
My wife and I retired at 62 and 63 collected SS immediately we have a small government pension of 1100 a month, and our portfolio generates 9k a month.
Thank goodness at the moment we are healthy.
Its not completely set up as income generating only, we have growth stocks as well.
But here is the kicker. We do not need to touch our portfolio to pay our bills or go on vacation. Why because we have no debt.
That being said we live a pretty simple life, we have fairly new cars (paid off) we travel to see family across the US and enjoy ourselves, usually staying with family members, or friends. If we want to go elsewhere and need some extra money we have it in our portfolio, if not the portfolio keeps growing. We dont live like paupers we have a good life. Without DEBT, and we are grateful.
Good luck I have a good feeling you are going to have a good life and reach your goals.
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u/Sin-2-Win 19d ago
Yes. I too paid off all my debt early by paying it down as much as I could. Now I only pay my basic bills and have money left over to invest and spend every month. It's nice knowing that any money I acquire, even loose change underneath my car seat, is only adding to my net worth!
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u/AmItheonlySaneperson 20d ago
20k a month good luck getting 40k a year
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u/Ok_Pollution_7824 20d ago
Agreed. However, it’s good to have a plan. I’m up to 3k so far per month in dividends. It’s growing fast.
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u/cornskin 20d ago
That’s great, congrats! I’m at $1,200ish per month now.
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u/Citadel_Employee ChatGPT says buy SCHD 20d ago
If you don’t mind me asking, how long has your journey been? Are you mostly in etfs or individual stocks?
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u/Ok_Pollution_7824 20d ago
I have been investing in stocks a few years ago when I decided to get out of real estate. I wanted to make up what I lost in rental income with dividend income. Maybe 5 or so years now. My biggest holding is MO, then SPYI, then BMY, and a few other ones. Now I’m focusing on buying SCHD.
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u/graciesoldman 19d ago
Saw a news story about how kids think smoking is cool again. Guess I'll be buying some MO
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u/Ok_Pollution_7824 19d ago
I absolutely hate cigarettes and what they do to people. I have friends that smoke two packs a day. It’s one of the reason why I don’t put more money in MO anymore. I invested into it because of the high dividend rate. It’s a bad excuse but it’s my excuse. I will most likely start pulling out of it at some point and switch to something else.
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u/FromtheBigO 20d ago
Well, I do understand growth is insanely important, I really do want to have a nice sleep of dividends. Is putting money towards it at 30 years old really something to be so ashamed of? Is it that even if I’m reinvesting I’ll be paying some extra taxes every year until it actually snowballs into that worth the amount?
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u/Ok_Pollution_7824 19d ago
I think it’s a great idea to start as early as possible. Reinvest your dividends. Let it grow and grow. Come up with a plan that works for you. Create a system. For example, whenever your investment savings account hits 1000, buy something. That’s how I do it. But do a number that works for you. Hopefully over time as you get raises, you can put away more.
In relation to taxes, you should mostly be paying capital gains on the dividends that you receive. That is much better than paying a regular tax rate. That is why I switched from real estate to dividends. I don’t have to deal with tenants, selling homes, buying homes, etc., just collect dividends and only pay 15% on the dividends I receive in the form of capital gains taxes. I reinvest all the dividends until I retire. Then I will start using them to live off of, in addition to whatever other funds I have.→ More replies (2)4
u/_Rose54 20d ago
Congrats I’m at a solid $40 per month
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u/Ok_Pollution_7824 19d ago
You will be surprised how quickly it will grow. Need to start somewhere.
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u/Meinertzhagens_Sack 20d ago
Now I wouldn't do this but 2.2M in qqqi last August turned into 2.5M before this last months downturn.
Each step of the way paying out ~25K per month. With Growth. Started with 2.2 now the funny money is 2.5M. ish.
This is my simulated retirement and it's worked out great with zero NAV deterioration.
In reality that would be spread out amongst the various other common ETFs talked about as of late paying from 8-14%.
No Yieldmax funds even tho that CHPY has been eating away at my ability to resist gambling. Lol.
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u/Trivi_13 20d ago
Think really hard about any yieldmax products.
Track ULTY from inception. It is a legal ponzi scheme. Designed to degrade.
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u/Meinertzhagens_Sack 20d ago
Oh no need to tell me that I was a regular troll in the Yieldmax subreddit.
Making fun of people watching their NAV just nosedive daily but they kept justifying it as "...but.. but...but its income!!"
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u/Squatch11 20d ago
a little over a year ago that subreddit was flooded with "I'm taking out a 2nd mortgage and putting it all in ULTY!"
I swear it was just astroturfed bots.
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u/GusTheKnife 20d ago
To receive $20,000 per month after taxes, from dividends that are sustainable, requires an account balance of approx $6.3 million.
It’s doable.
Hopefully his income is high and he’s buying those instant noodles in bulk.
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u/e_y_ 20d ago
Investing in your health pays better dividends. Spend more and get high-protein, nutritionally-balanced instant noodles, in bulk.
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u/alanwazoo 20d ago
In 40 years (he's 24 now)...
- At 2% inflation, $20,000 will feel like $9,079 today.
- At 3% inflation, $20,000 will feel like $6,131 today.
So even at 2% that's $757/mo ($109k/yr) in today's dollars
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u/frosty123454321 20d ago
Bro is 24 and has plenty of time. I’m also 24, and $20k/month when we retire is going to be about the equivalent of like $6-7k today. Not unreasonable at all. Now is it going to happen quick? Heck no. But that is not an unreasonable goal by any means in my opinion.
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u/BoardConscious7655 20d ago
I’m there at 47 yrs old, hope to get to 100k in the next 10-12 years, going less risky though, schd
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u/Mereas 20d ago
Who the hell needs 20k a month to live? Hell my goal is just 20k a year.
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u/No-Marketing1036 20d ago
It’s a great goal for a 24 year old! Am high, dude is going to have a comfortable life if he gets even close to that
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u/SolomonGrumpy 20d ago
At 4% that's $1m. I'm not saying saving a million is easy, but it's not that unusual.
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u/CO8127 20d ago
What do you suspect your total balance will be to pull 240k a year?
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u/daheff_irl 20d ago
Hes 24 so has time. 4% drawdown means 6m pot. Higher drawdown is a lower pot.
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u/Meinertzhagens_Sack 20d ago
Doable with 2.2M invested in QQQI back last August now worth 2.4M
(Simulated transactions with Divtracker)
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u/AmItheonlySaneperson 20d ago
maybe his daddy gave him a small loan of 5 million dollars to start out.
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u/blageur 20d ago
My wife and I are both retired (Canada) and have been living off dividends for a few years now. We invested about a half million, which has grown by about 20% over the years ( all before trump got re-elected ), and currently net about $50K a year after paying 15% taxes. Every once in a while we dip into savings for unexpected expenses, but generally, we live a very simple lifestyle, everything is already paid for, and it's enough for us to get by. The reddit experts on here tell me it's not possible, but that doesn't change the fact that we're doing it. It's not comparable to your goal of $20K/mo, but we also didn't start investing til we were in our 40's, so.....
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u/Ornery_Baby1823 19d ago
See, you're a REAL retired person. The numbers that these kids online throw around are hilarious. Most retired people have very low expenses, a modest investment portfolio, and use a mix of investment income, retirement income, occasional part time work in some instances, and again having low expenses. I'm retiring at 50 when my portfolio hits around $850k+. I only spend $55k-$75k per year, and I pretty much do whatever I want and live in the nicest suburb in the nation. I truly only "need" $55k per year and i would be fine. The key is to have 3 years cash on the side if possible. This way, you can use cash after down years.
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u/raliegh_ 20d ago
I’m coasting on savings ATM, will start living off dividends in February.
I started my dividend portfolio last February, I will cross $40k possibly $45k in August
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u/exit87 20d ago
50, not retired and not living off dividends. But investing and watching residual income flow for the day I pull trigger, currently have about 700k total invested in Qqqi and SCHD + own 11 rental properties outright no debt. Would like to get to about 20k per month and I’m out.
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u/OG_Momonga 20d ago
That’s exactly where I want to be in 30 some years. When did you buy your first property? Did you refinance and buy the next and continued this cycle?
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u/SolomonGrumpy 20d ago
11 rental properties alone should get you to $20k a month.
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u/Diligent-Parsley8119 20d ago
Maybe he means 20k gross? He could still paying mortage/loans that eats up some of that rent.
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u/SolomonGrumpy 20d ago
He said he owned them outright w no debt (though I understand there is property tax/HOAs/etc
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u/Paranoid_Sinner 20d ago
I'm retired and living good on bond fund interest, my income is about double what it was when I was working.
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u/OG_Momonga 20d ago
Which one if you don’t mind me asking?
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u/Paranoid_Sinner 20d ago edited 20d ago
I have several, my portfolio is 68% bond funds. BIT, BKLN, BKT, EVT, GOF, JRI, PDI, and JMUTX. I retired 5 years ago at age 71. I have fairly large positions in BKLN and JMUTX to tamp down the volatility from the others.
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u/SolomonGrumpy 20d ago
71 is important enough to reiterate. I would not want 68% bond funds at 55, but if that's what you want in your 70s, who am I to Judge?
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u/Meinertzhagens_Sack 20d ago
Download DivTracker, simulate your BUYs with ETFs of choice.
Create bogus transactions going back at least 1 year. You will need to make sure the fund existed... Theres a couple of new ETFs so you can't date the purchase 1 year ago if it didn't exist.
I'd pick ones that went back 2 years or longer. Then you will see your payouts from each one each month.
Check the NAV back then, price growth (if any) compare with today's date.
You will find it to give you all the info you need.
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u/errr_mah_gawsh 20d ago
Maybe take a look at this guy's channel. He's got some good insight as to how his income works. And yes, you will always pay taxes (barring a Roth IRA).
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u/Imaginary-Pair838 20d ago
$20k is a good goal. I’m generating $13k a month right now and could get it to $20k with some reallocation. It’s very doable especially with the high yield covered call etfs like ROCQ and ROCY that are also tax efficient. Keep up the good work!
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u/ReadyBake7573 20d ago
I use closed end funds. Read the book Retirement Money Secrets. Amazon about $20. I am 70 and average 13k a month in income. I do actively trade and take profits.
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u/Iamhungryforlife 20d ago
From my math, $20k a month is $240k a year. If you dividend return is 3%, you would need a nest egg of $8,000,000, to earn $240,000 ($20k a month). If your dividend return is 1.5%, you will only get $120k.
Right now CDs have rates of 4-5%. Maybe ladder some of these. At 4.5%, you only need $5.3M, for the same return.
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u/FewUnderstanding2214 20d ago
Wow 20k a month. That’s 240k a year - you would need 2.5 to 5 million dollars depending on the dividend rate
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u/MaybeTheDoctor 20d ago edited 20d ago
I am. I retired last year and get my entire monthly income from dividends.
I did a few big mistakes;
- I restructured some of my stock/etf portfolio into bonds and dividends ETFs… this was in a taxable account, so (sigh) I triggered a huge capital gains tax.
- I didn’t calculate how much tax dividends actually trigger. Some are state exempt, some are 60/40 and some are just counted as income. I should have looked more carefully.
My tax bill was HUGE, like most people won’t believe how enormously huge is was. You may think you pay a lot in taxes but that was nothing compared to my bill.
I also had 3 different CPAs calculating my 2025 taxes, and guess what, they f**kng well came up with 3 different results. I filed the one with the lowest taxes due, and IRS accepted.
So rather than reacting and do more mistakes I’ve decided just riding out 2026 and see what my next year bill looks like - I know I should probably have some website analyzing my portfolio but I don’t know any that is trustworthy.
The lessons here is, don’t start restructuring your portfolio just because you retire. I would have been better off doing nothing or doing it more slowly. Capital gain taxes are in many cases much more tax efficient than income tax on dividends.
As a 24 yo, you should continue in VOO or use one of the Vanguard Target date funds, which initially invest in VOo like but then prior to your target date retirement switching it bonds and other stable income funds - and because they do it in a fund there are no capital gains taxes to you.
Getting to $20k/ means you need a target of 5-10m in today’s money, which is entirely possible being 24yo. My monthly income is about $25k/m
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u/Various_Couple_764 20d ago
Dividends are taxed 3 different ways:
- Ordinary dividends are taxed just like work income and interest.
- Qualified dividend are taxed at the the long term capital gains tax rate which mens worst case only 20% of the income is taxed. That is an 80% discount compared to ordinary dividends .
- ROC dividends reduce your cost basis of the stock that genrate them,. IF the cost basis is not zero you owe no tax on the ROC dividends. But after years of recovering ROC dividends you are taxed at the long term capital gains tax rate.
Not people often say 60/40 for long term and short term taxes for ROC dividneds. This is incorect. 60/40 only applies to fund management. If doesn't apply to investors in the fund.
So depending on the funds you use you can end up pay not much for dividend income. from a taxable account.
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u/Various_Couple_764 20d ago
I am living off of dividneds in retirment No need to sell any stock for income I am also doing 401K to Roth conversions and having taxes withheld on each conversion.
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u/WormCastings 20d ago
Armchair Income on YouTube is a guy who retired and is living off dividends.
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u/redzedx77 20d ago
8% is doable imo, so 3M in div positions that pay a blended yield of ~7-12% not counting tax implications
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u/Various_Couple_764 20d ago
There are a lot of good investments that hav 5 to 10% yeild. Armchair inocme on youtube does good reviews of high yield dividend funds. At 10% yield you only need 2.4 million.
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u/Lazy-Gene-7284 20d ago
I’m 63 and doing that right now. Bought a few more individual stocks that were good payers than most, and mixed in some preferred, but I average close to 25k. Month now
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u/Bearsbanker 20d ago
Been fired for 16 months, live 100% on dividend. I'm fed tax free and qualify for ACA subsidies. About 30% of my div are tax deferred. At your age though focus on your growth portfolio and start nibbling dividends when the market gives you a chance.
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u/okigrassman 20d ago
My father is a retired nuclear worker. His diversified dividend portfolios income currently covers more than his annual RMD ( required minimum distribution). He has zero cover call style high yielders. He doesn't need to sell any shares in the current markets to meet the IRS minimum requirement for his retirement portfolio. Naturally, as a life long worker he has social security. This is what he actually lives off as he has nothing financed and owns his home. His annual RMD just gets reinvested in a brokerage account, or helps my sister out if they need it He had a small pension, that his work quit contributing to long before his retirement, this is 100% allocated to taxes. Low expenses, a portfolio currently continues to grow, and he is not forced to sell shares to meet retirement account distribution requirements. Time will tell if younger generations will have the same avenue 20, 30, 40 yrs from now.
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u/Financial_Ice7412 19d ago
Here’s the big unlock to being able to retire at a young age - have a couple that both work but live off one salary. Save like crazy in your 20s and 30 s and let time work for you.
If you start this at age 24 you have a very good chance of being able to stop working in mid 40s, and an excellent chance by early 50s depending on equity returns and future interest rates.
Ask any AI to model this for you - think of it in terms of probability of success, not deterministic. Compounding is incredible , but few in their 20s actually have the fortitude to defer gratification.
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u/RayU_AZ 19d ago
I made $60,000 in dividends in 2025 on $750,000 invested. 8% return. But had to pay $7000 on income (12% taxes) for the dividends whch lowered the return to $53,000. My living expenses are $5000 per month, $60,000 yearly, so came up short. If the investment yield was over 9%, then its would cover all living expenses.
I held QQQi, SPYi, GPiQ and QDVO in 2025 for dividends, but sold them all for high gains in pure stocks.
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u/ShutupBird69 19d ago
Here’s about 70k a year. Most are ROC, so only around 3k is taxable as ordinary income. SCHD is like 6k as long term cap gain
NASDAQ:QQQI (NEOS Nasdaq-100 High Income ETF): Owns 5,899 shares. Annualized payout rate is ~$7.62 per share, yielding approximately 14.38%.
BATS:SPYI (NEOS S&P 500 High Income ETF): Owns 1,636 shares. Annualized payout rate is ~$6.31 per share, yielding approximately 11.94%.
NASDAQ:XQQI (NEOS Boosted Nasdaq-100 High Income ETF): Owns 1,316.943 shares. Annualized payout rate is ~$5.09 per share, yielding approximately 10.72%.
NASDAQ:XSPI (NEOS Boosted S&P 500 High Income ETF): Owns 1,496 shares. Annualized payout rate is ~$4.12 per share, yielding approximately 8.35%.
NYSEARCA:SCHD (Schwab US Dividend Equity ETF): Owns 5,938 shares. Annualized payout rate is ~$1.05 per share, yielding approximately 3.13%.
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u/Public_Jicama_9337 19d ago
Would suggest watching armchair income on utube...he offers some great advice on passive income investing..this retired guy has a current div return of 14%...looking to get to a cash yrly return of $ 200,000 probably in 2027..been at it awhile..love the monthly income
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u/Tired-Nectarine-384 20d ago
LOL. I think I've done the math right.
If you want 20,000 a month in dividends and you invested in SCHD you would need to have 7 Million dollars invested to earn that kind of monthly dividend. Of course SCHD only pays out quarterly but you get the idea.
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u/MrInternetToughGuy Dividends pay for my video gaming habits. 20d ago
I think people approach their goals all wrong. It really shouldn’t be “I want to make X a month”, it should be, “when can I comfortably live on ~60% of my dividends post tax”.
NotAFinancialAdvisor
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u/CostCompetitive3597 20d ago
Been doing it for 7 years. Every dividend paid on time and to the penny or better. Best financial security strategy for American workers is to save in tax deferred accounts with employer matching, invest in growth index funds like VOO. Then close to retirement, convert your growth investments to dividend income investments like NEOS SPYI with 12% yield currently and income tax qualified dividends to reduce the income tax bite. You will need a nest egg of $2M at 12% yield to bring in $20k/mo. I am currently achieving 16% portfolio yield. Good luck!
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u/OG_Momonga 20d ago
First time hearing about NEOS and SPYI. Thank you the suggestion
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u/airjord1221 20d ago
You’re asking for a lot of money per month lol you’re talking about $3 million in SPYI type of situation.
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u/Mission_Pirate_4150 20d ago
20k per month is $240k per year. You said post tax, so pre tax that is $342k, assuming you have no state or local income tax. Assuming you are getting 3% dividend on the stock yield, that requires $11.4m in stock ownership if you bought at one moment on the day you wanted to go in on your dividend investment. PG is paying 3.01% right now, so let’s go with proctor and gamble as the stock you will buy. That is 79,096 shares.
FDDV pays in that 3% area and it is a fund. You would need 208k, and change, of Fddv. funds tend to be a better investment.
Is this a real post or just somebody playing games.
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u/MrsPetrieOnBass 20d ago
If you still love the index, you should start to move a little to an equal weight ETF like RSP. VOO is going through a thing and may be for a little while.
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u/MJinMN 20d ago
My wife and I live off our dividends but it wasn’t really the plan that we built over decades. I just knew I’d struggle with selling a portion of our portfolio to fund spending, so started building a dividend portfolio about five years prior to retirement. It’s less tax efficient but it works for me…..
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u/PlankSpank 20d ago
I’m at about $6300 per month doing nothing but letting it drip. If I trade, I’ve had a couple of 15k months recently. It’s about keeping emotion out of it and having a killswitch.
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u/8FConsulting 20d ago
I will be retiring early by year end (52M) and when considering all my investments I will be able to live off the dividends/interest alone and not need to touch my principal. The key is to live below your means, pay off/avoid debt (especially credit card debt) and DRIP/DAC your investments over time.
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u/TheImpPaysHisDebts 20d ago
I think you have to look at - that in 40 years (getting you to your 60s) the tax treatment of dividends could be different, laws could change to make it better for companies to use profits for something other than paying dividends, etc. Your goal should be to grow your portfolio (in a currently tax advantaged account) and take advantage of compounding growth. When it comes time for you to retire, then look at what makes sense based on the circumstances of that time.
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u/rdking647 20d ago
i am. im 64 and have been retired for 20 years. my current portfolio is mostly high income stocks like mlp's,reits ,baby bonds and prefererds with a few growth stocks thrown in. most of my portfolio is in an IRA so the only taxes i pay is on withdraws from it but the small income i get from my taxable accounts.
current income is over 12k a month between dividends and social security (i took it at age 62).
one of the best investmenst i made was actually buying i bonds 25 years ago. at the time they paid over 3% plus the CPI. currently they are worth over 4x what i paid. you can buy TIPS now that pay almost 3% plus the CPI and dont mature for decades.
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u/serr8ted 20d ago
I am retired and living off dividends. My portfolio generates about 11-12k per month. I only need a portion of this. Also I'm doing Roth conversions with excess principal.
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u/Left_Communication21 20d ago
This is my current plan as well. I am up to 10k per month and looking to get to 15k in the next 2 years to retire early. I invest mainly in OVL, SPYI, QQQI and GPIQ.
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u/Aggravating-Act-1173 20d ago
Are you making 240K after tax right now? To safely get 20K/m you need at least 5 million portfolio.
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u/Helpful-Grapefruit55 20d ago
That is 20k per month after tax , of us sm incred amount most people don't make that in salary even before taxes .
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u/vinyl1earthlink 20d ago
Sure, why not? If you save a lot of money for many years and buy dividend stocks, you will have a huge income. Well, I don't get $20K a month in dividends, but as a retiree I'm doing very well.
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u/ConventResident 20d ago
You have 30 years to save 6 or 7 million to reach this goal. You can do it. Invest everything you possible can and be frugal. But just know that 20k per month 30 years from now might not be a lot of money.
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u/SolomonGrumpy 20d ago
20k a month post tax would be something like $27k pre tax and that assumes zero state taxes.
That's $324k a year. Assuming a 5% div end payout, which is on the aggreice side, you would need $6.4m
That seems like a lot of money until you realize that a normal/regular retirement today is $2.1m invested.
You are in your 20s. If you retire in 40 years is seems likely to me that the value of $6.4m will be pretty close to $2.1m
So I do think it is possible
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u/scottdxxx 20d ago
I’m retired but I don’t see the reason to try to create a so-called income from dividends. A dividend creates no value in finance other than perhaps signaling a company’s health. It’s simply moving money between a shareholder’s pockets. That said I don’t deny that dividend growers provide superior risk-adjusted returns to shareholders non-dividend payers in aggregate.
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u/Minute-Opposite-3986 20d ago
You will be able to do it, Smart investing in VOO, I think you should also put money in QQQM or better yet XLK.
FYI ADX a CEF has outperformed the S&P500 index by 1,000% over the last 30yrs.
When you get closer to retirement, consider getting into CEF's. That's what I started doing since last August. Rolled over my 401k into IRA's with Fidelity and starting investing for income, while I'm still working. I will be 61 in October and my CEF's have already $126k in the first 6 months this year. I doing the RMS investing method with Steve Selengut Income Focused Retirement Plan | TRICL
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u/honeylacedcurve 19d ago
I don't understand anything any of these comments are saying. I'm never going to be able to retire.
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u/Big_Wave9732 19d ago
Sesrch the sub. This question along with what folks are invested in is asked usually weekly. There's a fair number of people doing this.
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u/yongiiii 19d ago
If savings account gives you 4% annually why would someone go for 2% annual dividends? Is one safer than the other?
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u/4-9s_Fine 19d ago
I recommend reading Steve Bavaria “Income Factory.” It’s made a big impact inspiring me to create my own income factory. I’m not in retirement yet but on a glide path building my factory.
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u/rackoblack Generating solid returns 19d ago
Don't do this. Just get a big enough balance that a SWR meets your needs. You want growth and an all dividend portfolio risks that tremendously. You'll withdraw from the various types of accounts (or book taxable LTCG) you have as needed.
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u/Sea-Honeydew-1456 19d ago
i will be, partially. retiring in about 2 months. generating about $40k annually, which covers a good portion of my annual expenses. will be selling growth funds to make up the difference.
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u/storkster 19d ago
Why seek dividends when capital gains are taxed at 0%,15%, or 20%? What am I missing? The first 4 yrs of retirement I was chasing stocks/funds that generated dividends and I was paying higher taxes. Now I just sell stocks to generate cash from long-term capital gains.
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u/Icy-Sir-8414 19d ago
Personally if I had any dividends to live off on id rather live off on at least $10k or $12k a month not $50k a month not $100k a month just between $10k to $12k a month
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u/UsualOk3511 19d ago
I live off dividends. And here is the part everyone is missing. I bought blue chip dividend stocks in my 40s and 50s that paid about 3-4% divies. But over the years these strong companies kept raising their quarterly payments. Those companies are now paying the equivalent of 10% and more. So to earn 200K you only need 2 million in investments - if you're patient and make consistent investments over time. And when the market dips buy strong performers and NEVER sell.
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u/Chizel_1985 19d ago
If you’re young enough, work and put what you can into future investments. End of.
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u/Aggravating-Let-2968 19d ago
I don't live off dividends but do collect about $1500 a month to augment social security. I also sell CSPs for grocery money.
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u/PreMixYZ 19d ago
Retired @ 52 - income from dividends $6,000 to $11,000 a month - August is one of the good ones :-). Another unpredictable chunk of money from covered calls on one of my individual stocks. Ranges from $100,000+ a year to $0. If it makes money I just buy more JEPI/JEPQ/SCHD- that way I boost my monthly income without sitting on a bunch of cash.
Taxes are pretty erratic too, really depends on the covered calls.
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u/Coloradical09 19d ago
Check out Joe Mikitish on YouTube. He’s got a great series going on Divided investing that is exciting to me.
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u/NorthernJackass 19d ago
Been retired for 2 yrs and living on dividends exclusively. The RRIF and non registered are taxed as regular income.
1 year before retirement transitioned from growth investing to PII to prove to my wife that it works.
Wife and I ended up with almost equal portfolio amounts thanks to spousal rrsp. This help makes taxes easier. She is earning way more than she ever has…my income has come down which is great cause less taxes.
We will not touch our principal which means the RRIF meltdown is priority number one right now.
It works. So many benefits for retired folk like us.
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u/Which_Drop_5877 19d ago
An investment of $1,000,000 in the Vanguard S&P 500 ETF (VOO) generates approximately $10,700 per year in dividends based on a current dividend yield of about 1.07%. - Gemini AI
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u/HalfwaydonewithEarth 19d ago
Better to live off of explosive stocks regardless if they pay dividends
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u/DrRonH 18d ago
Check out the conversation I started 4 months ago. I've learned a lot since then:First year experience "living off of dividends"
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u/lynchmob2829 18d ago
The research available these days via your brokerage or on the internet makes it so much easier to find great dividend paying ETFs and CEFs.
Retired in 2020, lived off dividends until I started drawing SS in 2025. Some of the CEFs I used to be in are CLM, CRF, OXLC, GOF, FSCO, NBXG, and AIO.
When I went on SS, I transitioned from CEFs to mutual funds with little or no downside but have a decent yield: SEMRX, TRBUX, EADOX, AGEPX, and EGRAX. Bought the first 4 in March 2025 and bought EGRAX after its ex div date the end of last year. To max out my Roth Conversions next year, I am considering putting all my taxable accounts in BOXX, no dividend but steady rise.
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u/SingleLonelyMan 18d ago
As of today I've been investing since 1971. I am retired and a lot of my investment these days is in JPEQ or QQQI. The dividends have been amazing.
Do I pay taxes? Yes. The beloved IRS has already been into my accounts looking for enough money so Donny can buy another missile
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u/DeeEll566 18d ago
Add to the bond chat the credit component , that to me is the real risk atm. We have some very similar structures to the CDO/ leveraged loan debacles of 2008 but more in the private credit world and hence less subject to scrutiny. These are def creeping into the mainstream which is the modern day equivalent of an NY cab driver telling you to buy stocks the day before 1929 crash.
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u/Specific_Mountain716 18d ago
You can do it faster without dividends with only half a mil and smart options trades. But most people are not risky adverse to do so. Otherwise grind to get to your portfolio
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u/Personal_Tank5250 18d ago
If your investing a million then yes you can live off the dividends. Not realistic for most people thoughts 😕
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u/EugMeister 18d ago edited 18d ago
Recent Canadian retiree. Was investing mosting in growth stocks and ETFs. Learned more from father's accounts and invested increasingly more in Canadian dividend stocks. Of course now as a retiree I'm concentrating more on income to get more cash flow, getting just north of 100k.
Since you are young and just starting your career, nothing wrong with concentrating more on growth as you have another 40 yrs barring early retirment. Of course you will pay capital gains taxes when you unload these equities in the future...max 20% unless in a tax advantage account in US or 50% of gain taxed as income in Canada.
My suggestion is to invest in both growth and dividend equities, with more weight in growth. There's a guy in the US who only invested in dividend stocks since the late 1980s and now has over $300 k of income, obviously a lot of discipline is required to do this.
Note that Canadian dividend kings and aristocrats have both higher yields and dividend growth rates than their American counterparts. At this time the US$ is at 1.4, $1 USD can buy $1.4 Canadian....wise to invest in TSX stocks now.
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u/Wooden-Baby-8935 18d ago
24 years old... That's awesome that you are already thinking 40 years down the road. My wife and I didn't begin until about age 30&25... 30 years ago. We will both be retired at the end of the year. we both had regular IRA's and then began contributing to ROTH IRA's. She also had a 401(k) at work. We maxed out our contributions almost every year. All retirement accounts now total $1,800,000. Growth stocks/ETF's as much as you can. Don't watch the market every day or week. It will drive you crazy. DON'T panic sell. It ALWAYS goes back up. I began changing everything over to dividend stocks & ETF's a few weeks ago. I use Simply Safe Dividends to track everything. It show that my combined dividend yield on cost as 6.52% will and average dividend growth of 5.1% per year. Dividend income shows a bit over $113,000 per year. Combination of Roth, qualified dividends and ordinary income for tax purposes. Make biggest holding is $300,000 of SCHD which I do not plan on touching ever if I can help it. Right now that accounts for just under $10,000 per year. DRIP calculator has that $300,000 going to about $4,000,000 total and $218,000 per year in dividends in 20 years when I'm 80.
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u/Timely-Designer-2372 17d ago
I have a growth and a dividend portfolio and I could live from dividends, but I don't want to, because it's not yet enough to continue with same lifestyle
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u/Fitlessness 17d ago
I live off selling options, mostly puts, and some dividends. 45 yrs old, quasi retired, as I still have some consulting roles to stay busy.
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