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Millions of Americans dream of early retirement, but it is becoming increasingly difficult to leave the workforce due to rising costs and a lack of savings. A national survey shows that about 55% of Generation X – people between the ages of 44 and 59 – feel they cannot prepare financially for retirement.
However, with planning, consistent savings, and wise investments, you can retire earlier and take control of your time.
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In January of this year, someone in Reddit’s r/Dividends community of over 600,000 members asked if there are people who live entirely on dividends, what it’s like to live such a life, and how they spend their time.
The survey received hundreds of responses, with many interesting success stories and insights.
‘We travel around the world full-time’
One Redditor said he and his wife lived solely on dividends. He, 42, retired in March 2022, while his wife, 47, retired in August 2021. The investor said he earned about $74,824 a year in dividends.
“We travel the world full time. We use the standard 90 days that most countries allow on a tourist visa and then move on to the next country. We are currently in Porto, Portugal and have been here since November 30th. We will then move on to Montenegro for three months,” he said.
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‘Always lived quite frugally’
The investor was asked how he could accumulate wealth for his initial investment. He said he and his wife had careers in finance.
“We worked in the financial industry before our careers. I started at a local credit union right out of high school and have worked for a total of two credit unions and five banks during my career, and my wife has worked at three banks during her career “We’ve always lived pretty frugally, maxing out Roths since 2002 and maxing out our 401(k)s since 2005.”
Never made much money compared to friends, but still retired early
He said he and his wife were “fairly aggressive” in increasing their taxable real estate holdings. According to the investor, he didn’t make a “ton of money” compared to his friends.
“My best year was my senior year, 2021, and I made $85,000. Her best year was just under $100,000, but that was in 2013. Starting in 2016, she had two one-year breaks in her job and only made about $48,000 at the time and The last two years of her employment were in 2020 and 2021 $66,000.”
Portfolio breakdown
The retired investor gave a nice overview of his total assets and investments. He said about 8.92% of his total assets were in fixed income securities (CDs and T-Bills), while 91.08% were invested in equities. Of this, 52.86% was in ETFs, while the rest was in individual stocks. He said the total value of his portfolio as of Jan. 30 was about $2.03 million.
During the discussion, the investor shared the names of the dividend ETFs he had invested in. Let’s explore this one.
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Schwab US Dividend Equity ETF
Portfolio weighting: 31.923%
Schwab US Dividend Equity ETF (NYSE:SCHD) was the largest holding in the investor’s portfolio, generating $74,800 per year in dividends. The fund accounted for approximately 32% of the total portfolio. The ETF tracks the Dow Jones US Dividend 100 Index and provides exposure to some of the top dividend stocks traded in the US, including Home Depot, Coca-Cola, Verizon, Lockheed Martin, Pepsi and AbbVie. Because SCHD’s investments tend to be conservative dividend payers, it is suitable for investors who are close to retirement and looking for consistent dividend income.
Vanguard Real Estate ETF
Portfolio weighting: 5.009%
The Vanguard Real Estate ETF accounted for about 5% of the total portfolio. VNQ invests in REITs and has a dividend yield of approximately 3.9%. It pays quarterly. Some of the largest holdings in the fund’s portfolio include Prologis, American Tower, Equinix, WellTower, Digital Realty and Simon Property. VNQ is up 7.5% so far this year.
Vanguard Total Stock Market ETF
Portfolio weighting: 6.052%
Vanguard Total Stock Market Index Fund ETF (NYSE:VTI) was the investor’s third largest holding. It made up about 6.05% of the total portfolio. VTI tracks the overall stock market and exposes investors to small-, mid- and large-cap stocks. About 69% of the fund is allocated to large-cap stocks. The portfolio includes more than 3,600 stocks. The ETF’s top holdings include Apple, Microsoft, Nvidia, Meta Platforms and Amazon. VTI has a dividend yield of approximately 1.3%.
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Vanguard S&P 500 ETF
Portfolio weighting: 6.173%
The Vanguard S&P 500 ETF (NYSE:VOO) accounted for about 6.2% of the total portfolio. VOO exposes investors to the 500 largest US stocks from the technology, consumer discretionary, staples, energy, healthcare and materials sectors. Microsoft, Alphabet, Berkshire Hathaway, Broadcom, Nvidia, Meta Platforms and Apple are among the fund’s top holdings.
VOO has a dividend yield of 1.3% and pays out quarterly.
SPDR Portfolio S&P 500 High Dividend ETF
Portfolio weighting: 3.611%
The investor who shared his portfolio details and claimed to earn more than $74,800 per year in dividends said about 3.61% of his portfolio is allocated to the SPDR Portfolio S&P 500 High Dividend ETF (NYSE:SPYD). The fund delivers a return of over 4% and tracks the total return performance of the S&P 500 High Dividend Index. The fund’s top holdings include Kellanova, Public Storage, Hasbro and Simon Property.
Target 500 ETF (STRV)
Portfolio weighting: 0.084%
Strive 500 ETF (STRV) offers investors exposure to 500 of the largest U.S. stocks by market capitalization. The fund tracks the Bloomberg US Large Cap Index and has a dividend yield of approximately 1.2%. Apple, Nvidia, Microsoft, Amazon, Meta Platforms, Tesla and Alphabet are among the fund’s largest holdings. STVV is up 29% so far this year.
JPMorgan Equity Premium Income ETF (JEPQ)
Portfolio weighting: 0.006%
JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is a high-yield covered call ETF that pays monthly dividend income. The ETF invests in Nasdaq companies and generates additional income by selling call options. JEPQ has a dividend yield of just over 9%.
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This article 42-Year-Old Lives Entirely on Dividends, Earns $74,800 in Stocks His Top 7 ETF Picks – ‘We Travel The World Full Time’ originally appeared on Benzinga.com
