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While big AI stocks like Nvidia are taking a breather due to valuation concerns, investors are looking for new opportunities as we close out 2024. Matt Powers, managing partner at Powers Advisory Group, recently said during an interview on CNBC that dividend stocks could make a comeback in 2024. 2025. Powers said dividend growth stocks tend to perform well in the early stages of rate-cutting cycles, while cash on the sidelines is also a could be a catalyst for dividend-paying companies.
“Assets and money market funds have continued to grow throughout the year. It’s no mystery that investors have taken advantage of the higher interest rates with low risk. We see a possible shift toward dividend stocks as a relatively conservative way to gain exposure.” , the analyst said.
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About two years ago, someone on r/Dividends – a Reddit discussion board with over 620,000 members – asked if anyone could retire using dividend investing strategies. The response to the question was overwhelming, with several success stories of people living off dividends after retirement. One story stood out and caught our attention.
One investor said he retired with his wife at age 57 and had about $2.5 million in retirement funds. His annual dividend income was about $170,000 and his portfolio consisted mainly of bond funds.
“Right now we’re only withdrawing money from my 401(k) ($1.2 million), about 10,000 a month. We’re both 60. My portfolio is mostly bond funds paying 5%-6%. The stock price has fallen , but that doesn’t change the amount paid each month. Her 401(k) is paid through Vanguard’s institutional funds, which are not available to individual investors. Our retirement principal has increased about 10% since my retirement in 2020.”
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He also gave some advice for younger investors looking to retire early:
“It was 2009, a bad market year, but I had about $500,000. I invested the most in 401(k) and my IRA every year I worked. Pay yourself first! You can’t borrow to retire! Don’t go Chase the market or try to time it!”
The investor was asked to share the names of the bond funds in his portfolio. He said there were five core bond funds in his portfolio. Let’s take a look at them.
PGIM High Yield fund
PGIM High Yield Fund (PHYZX) invests primarily in high-yield bonds rated Ba or lower by Moody’s or BB or lower by Standard & Poor’s. In the third quarter, the fund outperformed its benchmark, the Bloomberg US High Yield 1% Issuer Capped Index, before fees.
Virtus Seix High Income Fund with variable interest
Virtus Seix Floating Rate High Income Fund Class I (SAMBX) invests in floating rate leveraged loans and seeks to earn more interest through its investments than the LIBOR benchmark. In the third quarter, the fund returned 2.36%, compared to the benchmark return of 2.08%. SAMBX has a distribution rate of approximately 8%.
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PIMCO Income Fund
PIMCO Income Fund Class A (MUTF: PONAX) generates income by investing in a diversified portfolio of fixed income instruments. It also invests in high-yield securities rated below investment grade by Moody’s, S&P or Fitch.
Cohen & Steers Preferred Securities and Income Fund
Cohen & Steers Preferred Securities and Income Fund (CPXAX) invests in preferred securities and debt securities issued by US and non-US companies. The fund’s distribution rate is approximately 5%.
Thrivent High Yield Fund
Thrivent High Yield Fund Class S (LBHIX) invests in corporate bonds that are unrated or rated as junk bonds. It has a return of more than 6%.
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This article 60-Year-Old Retiree Earns $170,000 From Dividend Stocks Top 5 High-Yield Bond Funds In His Portfolio – ‘Don’t Chase The Market’ originally appeared on Benzinga.com
