Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Dividend investing is an efficient way to hedge against risk and market volatility. Data from Ned Davis Research shows that dividend stocks returned about 8.8% between 1972 and 2012, while their non-dividend stocks returned 1.6% annually.
But is it possible to earn a decent monthly dividend income for novice investors? Many investors achieve this by investing small portions of their savings or income in reliable and safe dividend stocks. Let’s take a look at a case study.
Don’t miss:
In May of last year, a dividend investor shared his detailed investment journey, income report and stock portfolio on r/Dividends, a discussion board with more than 600,000 members.
The investor said he had reached the milestone of $600 per month in dividend income and provided some key details about himself before sharing his portfolio details:
“I’m 32 years old, working in IT since university, currently living in Dubai, married and have no children. I started my portfolio in 2019 and only bought VT for a while, but then I switched more to dividend growth investing ( it feels more motivating and fun).”
He had a goal of $4,000 a month before he could retire. Would that be enough to retire?
“My current goal is 4K per month, assuming I won’t be living in Dubai when I retire (this place is quite expensive). I’m thinking maybe Spain or Portugal. I earn a decent amount of money and my husband is also working , so we are building our financial future together,” he added.
The investor’s portfolio screenshots showed that the total value of his portfolio was $145,828. He collected about $601 in monthly dividends or $7,216 per year. The investor said he added $2,500 in monthly contributions and expected that to increase over time.
Let’s take a look at some of the key investments in this dividend portfolio.
Schwab US Dividend Equity ETF
Schwab US Dividend Equity ETF (NYSE:SCHD) was among the Redditor’s top holdings. He earned $600 a month in dividend income on an investment of $145,828. He owned 513 shares of SCHD and his total stake in the fund was worth $36,195.
Schwab US Dividend Equity ETF (NYSE:SCHD) tracks the Dow Jones US Dividend 100 Index and provides exposure to top dividend stocks in the US, including Home Depot, Coca-Cola, Verizon, Lockheed Martin, Pepsi and AbbVie, among many others. 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 Total World Stock Index Fund ETF
Vanguard Total World Stock Index Fund ETF (NYSE:VT) provides exposure to the US, emerging markets, Europe and the Middle East stock markets. The fund pays a quarterly dividend and yields approximately 1.85%. The Redditor, who earned $600 a month in dividend income from a $145,828 portfolio, said he owned 419 shares of VT.
Popular: These Five Entrepreneurs Are Worth $223 Billion – they all believe in one platform that offers a target return of 7-9% with monthly dividends
JPMorgan Equity Premium Income ETF
According to the portfolio screenshots he shared publicly on Reddit, the investor had a $32,260 position in JPMorgan Equity Premium Income ETF (NYSE:JEPI), which yields about 7%. It invests in notable large-cap US stocks and generates income by selling call options. JEPI is ideal for those looking for exposure to defensive stocks. JEPI usually underperforms during bull markets, but protects investors from big losses during bear markets as most of the portfolio consists of large, defensive stocks such as Trane Technologies PLC (NYSE:TT), Southern Co. (NYSE:SO) and Progressive Corp. NYSE:PGR), among many others.
During the discussion, the investor shared more thoughts on JEPI:
“From my perspective, jepi can be okay in times like these. If the market is in a downturn, I get a decent cash flow out of it and buy more shares/VT.”
JPMorgan Nasdaq Equity Premium Income ETF
The Redditor who earned $600 monthly had a $558 position in JEPQ. JPMorgan Nasdaq Equity Premium Income ETF (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. As of October 25, JEPQ yields 9.2%.
AbVie
AbbVie Inc. (NYSE:ABBV) was a key stock in the investor’s portfolio, earning $600 per month in dividend income on a portfolio of $145,828. His initial investment in the company was $2,890, which increased to $3,705, according to the portfolio screenshots shared publicly by the investor. AbbVie has a dividend yield of 3.3%.
Ally financially
Detroit-based banking company Ally Financial Inc. (NYSE:ALLY) has a dividend yield of approximately 3.5%. The investor who earned $600 a month in dividends with approximately $145,800 invested owned 151 shares of the company, worth $4,067 at the time of his post. Ally Financial recently beat Wall Street estimates with its third-quarter results.
Church & Dwight Co., Inc. (NYSE:CHD), a home and personal care products company, has a dividend yield of just 1.1%, but has increased its payouts for 28 years in a row. The Redditor’s original investment in the company was $3,358, which increased to $3,662 according to his shared portfolio screenshots.
Real estate income
Realty Income Corp. (NYSE:O) is among the top monthly dividend stocks popular among investors for its stable and reliable payments. The company has increased its dividend for thirty years in a row. The Redditor who earned $600 a month in dividends had 62 O shares in his portfolio.
The current interest rate environment has created incredible opportunities for income-seeking investors to earn huge returns, but not through publicly traded REITs.
Arrivald Homes, the Jeff Bezos-backed investment platform, has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a net annual return of 7% to 9% paid out monthly to investors. In August it paid 8.1%. The best part? Due to high demand, the maximum investment amount is currently $5,000, with a minimum investment of ONLY $100.
Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener has the latest offerings.
Wondering if your investments could earn you a $5,000,000 nest egg? Talk to a financial advisor today. SmartAsset’s free tool matches you with up to three vetted financial advisors serving your region, and you can interview your advisors for free to decide which one is right for you.
This article 32-Year-Old Who Made $600 a Month in Dividend Income After 5 Years of Investing in Stocks Portfolio Details: Top 8 Stocks and ETFs originally appeared on Benzinga.com
