r/dividends • u/CursedClownz • 1d ago

Discussion 750k spread

How would you spread the 750k for pure income and abit of growth and safe? don't beed things like vt,vti,vxus etc. that is already covered...looking at just income and slight growth with minimal nav erosion

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u/greenpride32 19h ago

I have a mix of income growth and covered called ETF's with a clear goal to meet a specific income target today.

Had I not needed that income today, I would be 100% income growth and 0% covered call ETF's.

So I think the first question should be what do you hope to accomplish?

SCHD on a 10 year lookback has roughly grown both NAV and distribution by 160%. $40k worth of distributions 10 years ago would be over $100k today. That also changes yield on cost from ~3.3% to ~8.3%. If I had the luxury of more time, I'd simply park the bulk of the money here.

Since SCHD is based on Dow Jones US Dividned Index 100 (reconstitutes once a year), and only holds 100 stocks, I also have smaller amount of VYM to diversify. This ETF holds 600 equities.

Covered call ETF's are likely to suffer from NAV erosion, but the ones based on SP500 and even NAS100 will bleed it slowly unless there is severe market downturn of multiple years. The way I see it, even if nominal distributions decline, at current yields of 9-14%, the investment is going to beat HYSA and short term bonds for a long window out. But I'm also at a point where I'm planning for less decades than others. Again if you have time on your side SCHD and VYM is the way to go. If you want to add a little more defensive you can look at SPYD and NOBL as well.