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Should you invest in growth stocks for capital gains through price appreciation or dividend stocks for stable, reliable income? There’s no one-size-fits-all answer, but patient investors are crushing it with income strategies, earning significant returns through regular dividends.
About two months ago, a dividend investor shared his success story and earnings report on r/Dividends – a community of over 600,000 members on Reddit. The 48-year-old investor said he collected about $2,200 a month in dividend income from a portfolio worth $378,351. This gives the portfolio a solid dividend yield of more than 7%.
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The investor was asked about his expectations regarding the capital growth of his portfolio. Here was his answer:
“I expect it to grow between 5 and 7% annually without reinvesting dividends. Yes, I reinvest dividends. Now that the dividends are reinvested, I expect it to grow 8 to 10% annually.”
Based on the screenshots the investor shared publicly, let’s examine some of the biggest assets in this high-yield dividend portfolio.
Vanguard 500 Index Fund Admiral Shares
Vanguard 500 Index Fund Admiral Shares (MUTF: VFIAX) was one of the Redditor’s largest holdings, earning $2,200 per month in dividends. His portfolio screenshots showed that VFIAX represented approximately 34.5% of the entire portfolio. This fund tracks the S&P 500 Index, with approximately 79% of the portfolio consisting of large-cap stocks. The fund yields 1.3% and pays quarterly dividends.
Fidelity Total Bond K6 Fund (FTKFX) invests in U.S. Treasury bonds, investment grade corporate bonds, mortgage-backed securities and other debt instruments. The fund is suitable for investors who are looking for safer fixed-income investments instead of shares. FTKFX has a dividend yield of approximately 4.5% and pays monthly. About 32% of the investor’s total portfolio, which earned $2,200 per month, was invested in FTKFX.
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JPMorgan Nasdaq Equity Premium Income ETF
The Redditor, who earns about $2,200 in monthly dividend income on a $378,000 portfolio, had about 7.2% of his total investments in the JPMorgan Nasdaq Equity Premium Income ETF (JEPQ). This covered call ETF pays out monthly dividend income. It invests in Nasdaq companies and generates additional income by selling call options. The fund has a dividend yield of over 9%.
NEOS S&P 500 High Income ETF
According to the portfolio screenshots publicly shared by the investor, approximately 6.7% of the $378,000 portfolio, which generated $2,200 in dividend income per month, was allocated to the NEOS S&P 500 High Income ETF (BATS:SPYI). SPYI is a high yield covered call ETF that pays monthly dividend income. It invests in some of the top companies in the S&P 500 and generates additional income by selling call options on stocks, generating additional premium income for shareholders. SPYI has a distribution rate of over 12%.
Goldman Sachs Nasdaq-100 Core Premium Income ETF (NASDAQ:GPIQ) generates income by selling call options on stocks that make up the Nasdaq-100 Index. Apple, Nvidia, Microsoft, Broadcom and Meta Platforms, among many top technology companies, make up the fund’s largest holdings. The Redditor who earned $2,200 monthly had 6.2% of his total portfolio allocated to the fund.
Capital Group Dividend Value ETF
Capital Group Dividend Value ETF (NYSE:CGDV) is another dividend-focused ETF in the Redditor’s portfolio, earning $2,200 per month. The fund invests mainly in large-cap stocks that pay dividends. It pays quarterly dividends and is up 37% so far this year.
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The Simplify Volatility Premium ETF
The Simplify Volatility Premium ETF (NYSE:SVOL) accounted for about 3% of the Redditor’s total portfolio and generated $2,200 in revenue per month. SVOL, which has a yield of about 16%, generates income by shorting the CBOE Volatility Index (VIX) and betting that volatility will remain stable or decline. Because the broader market tends to move higher in the long term, investing in this ETF is suitable for those looking for stable income checks.
Roundhill S&P 500 0DTE Covered Call Strategy ETF
Roundhill S&P 500 0DTE Covered Call Strategy ETF (BATS:XDTE) generates income by selling call options on the S&P 500 Index that expire on the same day, also known as 0DTE options. The ETF is suitable for people who want to generate short-term income by focusing on daily market movements.
iShares 1-3 Year Treasury Bond ETF (NASDAQ:SHY) tracks the performance of government bonds with maturities between one and three years. Short-term bond ETFs like SHY are less vulnerable to interest rate fluctuations, providing investors with stability.
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This article by a 48-year-old who earns $2,200 a month in dividends with a $378,000 portfolio reveals his portfolio: The Top 9 Stocks and ETFs originally appeared on Benzinga.com
