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Dividend investing hardly loses its appeal, but gains more attention when the Fed cuts interest rates. A recent report from Sterling Capital shows that dividend stocks outperform non-dividend stocks after the first rate cut. The report also states that dividend growers outperform high-yield stocks in this environment.
But for those who want to buy and hold dividend stocks for decades, these short-term trends may not matter. What is important for such investors is to choose reliable and safe dividend stocks and keep adding to them to achieve their financial goals.
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About six months ago, a Redditor shared his detailed dividend income report on r/Dividends – a community of about 600,000 members on Reddit. The investor, who said he is 53 years old, earned just over $48,000 in annual dividend income, according to portfolio screenshots he shared publicly. The total value of his portfolio was approximately $1.23 million.
The investor said he was “getting ready” to retire. When asked what he did for a living, here was his answer:
‘Retired soldier (registered). Woman works in technology and is retiring this year because she is annoyed that I go fishing while she works.’
He said he started investing when he was 26 (talk about long-term goals!).
“I lost most of our money three times ($20,000, $25,000 and $90,000) before I changed my investment strategy. When I stopped chasing high-flyers and went for the long-term plan, I started making money. When I was young, I kept trying to make a leap of faith with our retirement savings and it kept burning me. Slow and steady really works.”
There were approximately 23 ETFs and stocks in the portfolio. Let’s take a look at some of the largest holdings in the portfolio.
Schwab US Dividend Equity ETF
About 33% of the Redditor’s $48,000-a-year portfolio was allocated to Schwab US Dividend Equity ETF (NYSE:SCHD). He earned about $13,480 in annual income from the fund, according to portfolio records. Schwab US Dividend Equity ETF (NYSE:SCHD) tracks the Dow Jones US Dividend 100 Index and gives you exposure to some of the best dividend stocks traded 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.
The Vanguard High Dividend Yield Index Fund ETF
The Vanguard High Dividend Yield Index Fund ETF (NYSE:VYM) tracks the FTSE High Dividend Yield Index and offers investors exposure to high-yield US dividend stocks. The fund’s top holdings include Broadcom, JPMorgan, ExxonMobil and Procter and Gamble. VYM is up 15% so far this year. It pays quarterly dividends.
The Vanguard International High Dividend Yield Index Fund ETF
The Vanguard International High Dividend Yield Index Fund ETF (VYMI) was the 53-year-old Redditor’s third-largest holding, earning $48,000 a year in dividends. According to the publicly shared portfolio screenshots, he owned approximately $131,000 worth of VYMI stock. VYMI tracks the FTSE All-World ex US High Dividend Yield Index. It is a suitable ETF for those looking for exposure to non-US dividend stocks. Nestle, Novartis and Roche are the fund’s three largest holdings.
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SPDR Portfolio S&P 500 High Dividend ETF
The investor who shared his portfolio data claiming to earn more than $48,000 per year in dividends showed that 6.6% of his portfolio is allocated to SPDR Portfolio S&P 500 High Dividend ETF (NYSE:SPYD) and that the total value of the bet about $81,600. SPYD yields 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. The fund earned the investor approximately $3,600 in annual income.
The Fidelity High Dividend ETF
The Fidelity High Dividend ETF (FDVV) tracks the Fidelity High Dividend Index, which consists of mid- and large-cap dividend stocks. The fund’s main holdings are Apple, ExxonMobil, Nvidia and Broadcom.
Vanguard Dividend Appreciation Index Fund ETF
The Redditor who earned $48,000 a year in dividend income had a $40,000 position in the Vanguard Dividend Appreciation Index Fund (VIG). According to his portfolio screenshots, his annual dividend income from the fund was about $710. VIG is ideal for anyone looking for exposure to companies that consistently grow their dividends. The fund tracks the S&P US Dividend Growers Index. The fund’s portfolio consists of approximately 337 stocks, most of which are large companies. Apple, Microsoft, Broadcom, UnitedHealth, ExxonMobil and Procter & Gamble are among the ETF’s top holdings.
The iShares International Select Dividend ETF
The iShares International Select Dividend ETF (BATS:IDV) gives investors exposure to dividend stocks from developed markets outside the US. It tracks the Dow Jones EPAC Select Dividend Index, which includes dividend-paying companies from Europe, Asia and Australia.
Pfizer
The Redditor had a $27,800 position in Pfizer Inc. (NYSE:PFE), which has increased its dividends for 15 consecutive years. The stock earned the investor approximately $1,680 in annual income. However, PFE shares are down about 11% in the past year.
Reaves Utility Income fund
Reaves Utility Income Fund (UTG) earned the 53-year-old Redditor $2,300 in annual income, according to details he shared publicly on the social platform. The fund invests in utilities and infrastructure companies to generate monthly dividend income for investors. UTG yields approximately 8% and pays a monthly dividend. The fund’s top holdings include Talen Energy Corp., Constellation Energy, Vistra and CenterPoint Energy.
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.
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This article 53-Year-Old ‘Ready to Retire’ Makes $48,000 in Dividend Income Stock Portfolio: Top 9 Stocks and ETFs originally appeared on Benzinga.com
