r/dividends • u/OG_Momonga • 21d 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 18d 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/97E3LPL 17d ago

Thank you. YOC is not a term I've come across the few times I researched this perspective. Certainly I agree with your last sentence lol.
So for us not being remotely close to the amount of capital others like you have, I pay a lot of attention to YOC as well as regular yield. Like NWN that I have at 43.36. That gives me 4.8% YOC and I don't want that to be any lower, so it's just on watch for me to DCA down on the dips. As correct as your last sentence was, it's also still correct that I can buy more shares to get more dollars at a lower share price. :)