I genuinely mean it when I express my stress and concern regarding the market crash and high inflation, particularly in relation to my retirement. I have been experiencing losses for quite some time, and while some may argue that crises can present opportunities, I am feeling overwhelmed. However, I understand that investing is a long-term endeavor, and it is crucial to maintain focus on the bigger picture and the long run...
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $760k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns....
Just wanted to share. I am 22 watching your channel, trying to reach financial independence ASAP regardless if that means if I retire or not. Just the security is enough for me. The majority of my portfolio is in S&P500 index funds with low fees, and growth stocks. I do have a portion as cash as an emergency fund in a HYSA, and probably around .3% of my portfolio I set aside to mess around in crypto currency and options. I agree a dividend portfolio isn't worth it while young, sacrificing growth will slash your compound interest over the next 40 years, and at this age you really shouldn't be living a lifestyle where you need supplemental income from your investments. Thanks for sharing Azul!
Hello Azul, as a retired financial adviser, RIA etc, I’m enjoying your videos and think you’re providing a worthwhile service to the general population. I encourage you to explore areas where you might find much higher dividend opportunities without substantial increases in risk. (REITS, baby bonds, preferred stocks etc.). Keep up the good work.
Thanks Azul. Would love to hear about strategies for Roth Conversions for those who have large balances in traditional IRAs and 401ks. This affects many of us nearing retirement since Roths were not available until relatively recently. Thanks!
I'm 43 and plan to retire before 50 with this strategy. Thanks for making the video. One thing I will recommend is to get a microphone with a wind sock. A lot of youtubers use Rode brand. It will take out the wind noise.
SCHD currently pays a dividend yield of 3.6% so for $40K per year you would need $1.11 million of SCHD. Cool thing is dividend growth historically has significantly outpaced inflation, and over the past 5 years, SCHD has outpaced the S&P500 when dividends are included.. It is a Morningstar 5 star rated ETF with low risk and higher growth.
All my stocks are dividend paying stocks. I have a few ETFs VYM, SCHD and VIS. they average aprox. 3.6% a year . I’m retired and I reinvest 80% back in to market. I find this works very well for me.
Average dividend income can be great passive income and as you say; Never touch the principal and portfolio could actually grow if never forced to sell. I personally keep the setting the bar higher and higher for what is possible!
Great videos. Just wondering what your thoughts are on a draw down strategy- for those of us that do not have the need or intention to leave “legacy” capital behind. Would a strategy involving dividends and a slow draw down of assets work with a much smaller original amount?
This was encouraging. When I retired at the end of 2018 at 59 everything was rolled into three bond funds with Vanguard. This provided me with most of my income needs. Beginning with the pandemic drop I exchanged 1/2 of a position in a long term investment grade bond fund for a dividend equity fund and finally liquidated that bond position in December of this year. Once I file for SSI next year my inflation projected income needs will be covered without asset sales beyond age 85.
Qualified dividend: Taxed at the long-term capital gains rate, which is 0%, 15% or 20%, depending on an investor's income level. Nonqualified or ordinary dividend: Taxed at an investor's ordinary income tax rate, which can range between 10% and 37%, depending on income level. If you are invested in a S&P fund in the long run it will appreciates faster than inflation. You need to rebalance in good times and scrap some off and put it in a fixed income vehicle. Good discussion and good advice all around.
Thanks for sharing that clarification Stan. I agree, it is important that dividend investors understand that difference. Thanks for taking the time to provide it for the community. 🙏 Azul
Love your videos! Wanted to point out one thing your missing with a dividend portfolio of stocks. Most companies grow their dividends over time, I have one stock that I bought very cheaply during 2020 sickness, yields 13.5% now. my Enbridge stock same thing, bought at $36 share, now yields 8.7%.
I turned 40 this year and had a “take two steps and look at the big picture moment”. I quit drinking, do intermittent fasting, and been learning more about investing and quality of life in general. I love this channel for the straight forward and easy to digest information. Good stuff! Thanks Azul! Catch you on the next one!
Love the content Azul! In my 50's and at the very least, your planning ideas align with a lot of mine, so it's a great sanity check or comfort, haha, for me to see nothing I've done or am doing, is waaaay off base. Keep up the great content, even if this is an older post, lol
I own an ETF just in US Dividend Equity. and it provides a 3.5% yield. very happy with it. Obviously you need a lot of cash to have a significant dividend payout per quarter.
How do you feel about MLP's? Tax advantaged, return on investment. Regular payouts. Not technically a dividend but may have a place in a diversified portfolio. Interested in what you think.
THere about 60 stocks known as the Dividend Aristocrats. These companies have increased dividends for 25 years. About 3% yield... Turn it into a conservative 9% with Covered Calls.
Azul, thanks for another excellent video. I wanted to comment because if you look at the current situation on the stock markets in the US, we have an inverted yield curve, possibly increasing interest rates, some stocks have been hammered but others with p/e ratios exceeding 35 or more, a buffet indicator of 168% -(1.3 standard deviations above the trend line), meaning the market is overvalued, and we have yet to digest the fast pace of interest rate hikes. History shows that the market tends to correct after the fed pivot which has not happened yet. Depending who you listen to, predictions of a market crash/correction are anywhere from -20 to -50%. If a person invests their nest egg into the market right now for dividend income, they could see it cut in half in the next couple of years. They might still get their 4% dividend but it would be 4% of a smaller number. I think its important to point out that people need to be keeping an eye on the big picture and not jump in because they turned 62 or 65. Also, if a person digs into it deeply they'll find a fair number of closed ETFs with solid historical records that pay in excess of 6% (although I would not touch a commercial property/mortage ETF with a 10 ft pole). When the timing is right a person is essentially paying a professional management team to pick your portfolio for you. It's not surprising that a team of seasoned professionals could make a few percent more than any specific company or retired person doing it themselves - regardless of how sharp they are. This is my plan but for now, the market is on the precipice of change and we don't know which direction it's going to take. It's not worth the risk when short term t bills and CDs are over 4%.
Can you comment on reinvesting dividends within a brokerage account? I’m retired with a pension and currently don’t necessarily need the dividend cash flow. But if up to $40,000 is tax free maybe I should take it as cash flow as opposed to reinvesting. Thanks!
After 30 years at the same company I was let go yesterday in a restructuring. In an attempt to retire at 54, I want to consider dividend stocks. Could you explain why we should or shouldn't simply put cash in a high interest savings account while the interest rate is higher than safe dividend stocks? I have to some cash in a 5% savings account.
Challenging to find what companies offer 'Qualified' dividends. all of mine show 'Regular' dividend.....Not sure how to determine which companies offer Qualified dividends
Hi Azul - I just found your videos and find them very interesting. I am single, 63 and worried about the ability to retire. I have a home almost paid for and all my other money is in a 401K. I am afraid I won’t be able to find a fee only financial advisor that I trust and I don’t have much investing and tax knowledge. Also what is the fee to expect to pay if you have $320,000 total in 401K?
Stock dividends as passive retirement income is a great idea but should be combined with another stream of income wether that be pension, real estate or drawing from growing capital appreciation in retirement. I only say this because companies can decide what to do with their dividend at any time, meaning you ideally need to have dividends coming from multiple different stocks across different asset classes. I’d rather have 60,000 a year in dividend income coming from 6 different stocks rather than 120,000 coming from two.
Retired early here. Portfolio generates nice income for me. No bonds or mutal funds in my portfolio. Use buy and hold strategy. All stocks pay dividends in my portfolio of 53 stocks. Took early social security. Manage my own stocks and never use a financial planner. Always live below your means as they say. You will never 10:22 get in trouble. Single....debt free.... happy.
Think a dividend portfolio should be a part of everyone's plan. Obviously, how one approaches it depends on his or her age. If I were still in my 20s I'd be buying strong companies with lower dividends and proven dividend growth per year of 8 per cent or more. Older folks like me should be buying stocks with good dividends and still decent prospects of growing the dividend. And in all cases, I would never buy a dividend stock without looking at the ratio of the annual dividend amount per share to free cash per share. "Earnings" as reported by companies are easily manipulated -- free cash flow is not. A company needs cash in the bank to service the dividends - GAAP accounting tricks don't pay the dividend. And never chase high yield just for the yield -- more often than not the dividend won't last nor will the underlying stock price. Also, for older investors, I would make sure I understood how any individual dividend stock I am thinking of buying held up during the 2008 financial crisis and the pandemic to avoid disruptions in retirement income cash flow.
Thank you for the great videos. Your giving me hope that retirement at 60 is possible. I’m 3 years from the goal and have been worried about making the wrong decision. Still more research to do, but thank you.
If you’re in the United States, there’s a very good chance that in three years, the retirement age will be raised, for minimum retirement to 65 or 67 years old and that’s for minimum age. Look what they did to those poor people in France raising the minimum age from 62 to 64. They were people 60 years old, planning and waiting and just about to turn 62 and the rug was pulled right out from under them and now they have to wait another two years!! It’s terrible what the government did and don’t think for one second that won’t happen in the United States because there’s already talk about it. My point, take it the very day you are eligible and get a side hustle to make up the difference unless you plan on working until you’re 67.
Capital appreciation / depreciation must be taken into account regarding a dividend strategy. My investment strategy is taking 25% of stock profits and place this money into a bond ETF for safety, .
A little cash to have available is also nice. Those months and or years that you do very well in the stock market doesn't mean you need to go spend it all. Save some for the months where the stock market isn't good. just my opinion.
If your creating a portfolio of dividend paying stocks you want to only buy stocks in companies that have a history of growing a distribution over long term will beat inflation. Its also a better strategy to combine a diversified basket of dividend growth stocks and current high yield quality closed end funds.. That way you have dividend growth and a current higher income yield with the quality closed end funds. The dividend/ income investing strategy is basically a way to create your own lifetime annuity while owning the liquid asset vs. actually buying an annuity from an insurance company.
Hi Azul! Enjoying your channel. I've been contributing to various retirement accounts for about 30 years...managed on my own via a mix of index funds (stocks and bonds). I would like your thoughts on the index strategy. I have no complaints regarding returns so far. Thanks in advance! Best wishes from Indianapolis, Indiana.
I plan to retire on a FIXED income scenario.. so I have no risk or sequence of risk.. I’d love to see a retirement income plan that is all about fixed income.. I know a financial planner does not want to do that cuase they only make money on portfolio mangement in stocks/bonds…. but would enjoy seeing no sequence of risk fixed income retirerment plan income… which is my plan….
I'm in my 50's and have started the dividend portfolio to test if I can live off them while working for income. it's been working... and I have the choice of buying what's low each month/quarter.
This is a good strategy, buying dividend stocks. But there are risks. I bought AT&T years ago for the dividends, but the stock price has tanked so much that I am in the red, even with the higher %. Dividends, like stock price, can drop when a company hits a rough spot also. I guess I care about dividends every year if I am using them as income, while I care about stock price only when I want to retrieve some of my investment. One good thing about dividends is they help me rebalance the portfolio without selling stocks.
That sounds like a great strategy! I wonder how do you get the individual stocks into one of the companies that you mentioned? For instance if you have all your assets with Vanguard and are in mutual funds (technically they have pressured shareholders to convert to a brokerage account in the last year) but they are still calling them funds. They wanted to do away with the original mutual fund class that long timers like me still had. Do they sell the individual stocks and can you use the assets in the 3 different categories to buy them? You wouldn't need to sell assets from your IRA, SEP IRA, or ROTH IRA to buy them I hope! That sounds like a tax nightmare in the making if it was required.
If you have a 401k, you can roll it over to any custodian like Schwab which will in turn make the rollover a TRADITION IRA which can be converted a ROTH IRA. You can buy whatever stock you want with whatever assets you hold. If your majority assets are in an IRA and your at or close to retirement than you can convert those assets (ie open end mutual funds) to individual dividend growth stocks. You can take out only the dividends as distributions and leave the holdings in the account to generate dividend income into perpetuity. I would recommend those seeking current income from dividends to create a basket of dividend growth stocks to keep up and beat inflation and another basket of QUALITY higher yield closed end funds (in the 7-11% yield range) which will juice your current income.
@@polster2 Thanks for taking the time to respond! I originally had some stocks and funds elsewhere and eventually consolidated to Vanguard. They did the IRA conversion directly. I don't think that ROTH's were even available yet. I had the stocks in DRIP plans held directly by the companies (if you can remember them) that I sold and put in taxable accounts as funds when they started using 3rd parties with fee's. I have traditional IRA's, SEP IRA's and a ROTH IRA all with Vanguard. The tax deferred accounts are just over half of all IRA's including the ROTH. What I'm wondering is if Vanguard will sell individual stocks or do I need to have a different company to do that? And I guess that having some in each account type would be a good idea. My taxable account has gotten a bit low now or some of those in that account would be a good idea as well.
@@MILGEO If Vanguard is your custodian on the accounts than you should be able to buy or sell whatever you want including funds or stocks. Vanguard or Schwab, or Fidelity are just custodians (brokerages) of your holdings. You can do whatever you want with your assets unless your using an advisor which will do it for you for a fee. In a taxable account its good utilize qualified dividend paying stocks or muni funds to get the best tax treatment on distributions. You can always hold Bonds, REITS, BDC's in a tax differed account.
@@polster2 Thanks again for taking the time to respond.I already have Bond and REIT index funds in my tax deferred accounts along with Dividend Appreciation, Capital Appreciation and a few other funds. I don't know what BCD's are though. I had some unexpected expenses in the last couple of years that really caused me to sell more of my taxable assets than I would have liked. I also have paid the taxes on ROTH conversions from it. It's hard to replenish those funds at this point but I'm trying!
@@MILGEO BDC's are Business Development Companies and are in the asset class that's not tax beneficial for a taxable brokerage account in that the dividends are considered ordinary income. So BDC's REITS, BOND and Bond Funds (outside of MUNIPICAL BONDS) are taxed at ordinary income and are better utilized in a tax deferred account like an ROTH IRA. If you want to live off the dividend and not take out the principal asset I recommend buying a basket of quality closed end funds (different than open end funds) and quality dividend stocks that have a long history of paying and increasing distributions. You can live of the dividends while never selling the underlying assets. Index funds while are more risk averse do not pump out a high enough yield to make a significant income from the underlying dividend on the index fund.
Great video on dividend stocks and how to play them out in retirement. Im in my mod 30s, however, I am diversified into growth and dividend stocks. I am thinking that between social security, my 401k, taxable accounts, and my Roth that I'll be perfectly fine financially.
I’m a federal employee. I realized a long time ago between my pension and the TSP (federal employee 401k), I wouldn’t be able to survive. So, I started investing in good dividend paying companies. Dividends won’t be 100% of my retirement. Dividends, pension, TSP, and social security will all be part of my retirement cash flow.
I’m 66 have an annuity and ss. My financial advisor specializes in dividend and interest that’s why I went to him. As he says eat the eggs not the chicken. Get 5% a month off my invested money
Good stuff, keep it coming! Curious to know: if Dividend paying stocks sit well for your taxable brokerage bucket, what's your focus for the tax me later and tax me never buckets?
A couple can make upt to $80,000 in taxable income which would be SS, pensions and RMD's minus deductions, and make all the qualified dividends and capital gains they want, Federal tax free. More than 1/2 of our income is from qualifies dividends. . It's not your net worth, or what you make; it's what you keep.
I’m living off my dividends right now until I hit my max SS IN 2 years. No side hustle. I’ve been investing since the 1980’s. Don’t sell the chicken that lays the egg. Just eat the eggs , dividends.
Hi Azul. Great Video. I love the Div investing strategy for retirement. I have my whole Roth IRA in Div stocks with a drip. Then I hedge that with my pre tax 401k invested all in the total stock market index an eventually will use the 4% rule with that account. I'm 48 and should have the option to retire at 55 using some creative withdrawal strategies from my retirement accounts to avoid penalties.
Your videos are very good. You seem quite firm on the fee only advisor . I currently have about 1/3 of my liquid assets with Edward Jones and the rest in my company 401k. I'll be retiring in couple years and I'm questioning whether or not to move the entire thing to Edward Jones. I've heard criticisms that the organization is quite expensive (1.0 % "under management". Would you be willing to make a video on comparing and contrasting the fee only versus a company like Edward Jones?
Thanks for the idea Drew. I am a big believer that financial advisers should be fiduciaries to their clients 100% of the time - just like your physician, accountant and lawyers. I’ll think about doing a fiduciary vs non-fiduciary vid sometime soon. But, i like to keep me videos with a positive vibe … 😎 Azul
It is better to start with a growth portfolio in your 20s and early 30s and if it works out, the same portfolio may become your dividend portfolio in your 50s or 60s even if it’s having a yield of 0.5 to 1% but because of its much higher corpus.
Azul do you think bonds will be getting back in the mix? I’m 52. Dividends sound good now. I wonder if ten years from now bonds will be good to mix in. Fir added income.
If you don't need the money (e.g. in the accumulation phase of your portfolio), you should reinvest the dividends, either in the same stock or in a different security. Some brokers even allow you to automatically reinvest dividends. In a taxable account this can be cumbersome, because of the need to take the cost basis of each lot, so I never auto-reinvested, but let the money accumulate for a few weeks of months and then purchase a stock/ETF that looked attractive at the time.
Qualified dividends earned from a retirement account are considered ordinary income. These dividends stocks need to be in your brokerage account to receive the LTCG tax treatment rather than a 401k/Traditional IRA account.
Keep in mind that for purposes of "affordable care act', income tax bracket, 401k distributions are taxable income (but not social security). Don't take out more than you have to or you might run into some unintended consequences. Remember that you want as much of it to grow for as long as possible and it can't do that if you paid it to the IRS after taking a distribution. Obviously there will come a time when you have to take it out but until then, leave it as long as you can in an IRA rollover account.
When my mutual funds declare a dividend the share price immediately declines. So... I receive the profits as dividends. If there's no dividend my profit is in the form of capital gains. I just don't see the attraction of dividend payments.
If you own a stock the price can go down around the ex date but eventually the stock price goes back up plus the div is paid so it's a win win! Over time this adds up. I would think mutual funds behave similarly?
@@hastycontemplation Its basic math. I believe in Total Return investing. When a company gives me a one dollar dividend, the company is worth one dollar less and the value of a share should also go down. When you do see the stock continue to rise, it is due to other factors. In fact the stock may well rise even faster if they had not given the dividend.
@@31martycEasy to answer that yourself with an hour and a few TH-cam searches. Once you replace your current expenses, you don’t have to work again ever.
I genuinely mean it when I express my stress and concern regarding the market crash and high inflation, particularly in relation to my retirement. I have been experiencing losses for quite some time, and while some may argue that crises can present opportunities, I am feeling overwhelmed. However, I understand that investing is a long-term endeavor, and it is crucial to maintain focus on the bigger picture and the long run...
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $760k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns....
STEPHANIE KOPP MEEKS, that's whom i work with look her up and thank me later..
You are losing money in this stock market?? 😂😂😂 ok, guy.
Just wanted to share. I am 22 watching your channel, trying to reach financial independence ASAP regardless if that means if I retire or not. Just the security is enough for me. The majority of my portfolio is in S&P500 index funds with low fees, and growth stocks. I do have a portion as cash as an emergency fund in a HYSA, and probably around .3% of my portfolio I set aside to mess around in crypto currency and options. I agree a dividend portfolio isn't worth it while young, sacrificing growth will slash your compound interest over the next 40 years, and at this age you really shouldn't be living a lifestyle where you need supplemental income from your investments.
Thanks for sharing Azul!
Back in 2009 I bought 2K shares of AEP. 2K shares Of SO, 2000 shares Of Cat, 2000 shares of DUKE. It has been a steady income
Hello Azul, as a retired financial adviser, RIA etc, I’m enjoying your videos and think you’re providing a worthwhile service to the general population. I encourage you to explore areas where you might find much higher dividend opportunities without substantial increases in risk. (REITS, baby bonds, preferred stocks etc.). Keep up the good work.
Thanks Azul. Would love to hear about strategies for Roth Conversions for those who have large balances in traditional IRAs and 401ks. This affects many of us nearing retirement since Roths were not available until relatively recently. Thanks!
I'm 43 and plan to retire before 50 with this strategy. Thanks for making the video. One thing I will recommend is to get a microphone with a wind sock. A lot of youtubers use Rode brand. It will take out the wind noise.
This is my strategy. SCHD is a great base.
SCHD currently pays a dividend yield of 3.6% so for $40K per year you would need $1.11 million of SCHD. Cool thing is dividend growth historically has significantly outpaced inflation, and over the past 5 years, SCHD has outpaced the S&P500 when dividends are included.. It is a Morningstar 5 star rated ETF with low risk and higher growth.
All my stocks are dividend paying stocks. I have a few ETFs VYM, SCHD and VIS. they average aprox. 3.6% a year . I’m retired and I reinvest 80% back in to market. I find this works very well for me.
Average dividend income can be great passive income and as you say; Never touch the principal and portfolio could actually grow if never forced to sell. I personally keep the setting the bar higher and higher for what is possible!
What about Jepi? It pays higher dividend. What about Schd? Thanks
JEPI 80%+ non-qualified dividends. Taxed at your regular rate.
Great videos. Just wondering what your thoughts are on a draw down strategy- for those of us that do not have the need or intention to leave “legacy” capital behind. Would a strategy involving dividends and a slow draw down of assets work with a much smaller original amount?
This was encouraging. When I retired at the end of 2018 at 59 everything was rolled into three bond funds with Vanguard. This provided me with most of my income needs. Beginning with the pandemic drop I exchanged 1/2 of a position in a long term investment grade bond fund for a dividend equity fund and finally liquidated that bond position in December of this year. Once I file for SSI next year my inflation projected income needs will be covered without asset sales beyond age 85.
I really enjoyed this video! My wife and I retired from our jobs at 28 with a mixture of dividend stocks and real estate. New Subscriber!
Qualified dividend: Taxed at the long-term capital gains rate, which is 0%, 15% or 20%, depending on an investor's income level.
Nonqualified or ordinary dividend: Taxed at an investor's ordinary income tax rate, which can range between 10% and 37%, depending on income level.
If you are invested in a S&P fund in the long run it will appreciates faster than inflation. You need to rebalance in good times and scrap some off and put it in a fixed income vehicle.
Good discussion and good advice all around.
Thanks for sharing that clarification Stan. I agree, it is important that dividend investors understand that difference. Thanks for taking the time to provide it for the community. 🙏 Azul
Please give examples of what a good dividend portfolio earning ~4%/yr looks like? Which tickers for funds, ETFs, and/or stocks?
SCHD
Love your videos! Wanted to point out one thing your missing with a dividend portfolio of stocks. Most companies grow their dividends over time, I have one stock that I bought very cheaply during 2020 sickness, yields 13.5% now. my Enbridge stock same thing, bought at $36 share, now yields 8.7%.
You speaking about stock picking for dividend stocks, would your strategy work with mutual fund/ETF?
I turned 40 this year and had a “take two steps and look at the big picture moment”.
I quit drinking, do intermittent fasting, and been learning more about investing and quality of life in general.
I love this channel for the straight forward and easy to digest information. Good stuff!
Thanks Azul! Catch you on the next one!
Love the content Azul! In my 50's and at the very least, your planning ideas align with a lot of mine, so it's a great sanity check or comfort, haha, for me to see nothing I've done or am doing, is waaaay off base. Keep up the great content, even if this is an older post, lol
I own an ETF just in US Dividend Equity. and it provides a 3.5% yield. very happy with it. Obviously you need a lot of cash to have a significant dividend payout per quarter.
One of your best videos Azul. Thank you!
Great video! Im building a divident portfolio x the past 20 yrs. Agree with everything you say.
How do you feel about MLP's? Tax advantaged, return on investment. Regular payouts. Not technically a dividend but may have a place in a diversified portfolio. Interested in what you think.
THere about 60 stocks known as the Dividend Aristocrats. These companies have increased dividends for 25 years. About 3% yield... Turn it into a conservative 9% with Covered Calls.
Azul, thanks for another excellent video. I wanted to comment because if you look at the current situation on the stock markets in the US, we have an inverted yield curve, possibly increasing interest rates, some stocks have been hammered but others with p/e ratios exceeding 35 or more, a buffet indicator of 168% -(1.3 standard deviations above the trend line), meaning the market is overvalued, and we have yet to digest the fast pace of interest rate hikes. History shows that the market tends to correct after the fed pivot which has not happened yet. Depending who you listen to, predictions of a market crash/correction are anywhere from -20 to -50%. If a person invests their nest egg into the market right now for dividend income, they could see it cut in half in the next couple of years. They might still get their 4% dividend but it would be 4% of a smaller number. I think its important to point out that people need to be keeping an eye on the big picture and not jump in because they turned 62 or 65. Also, if a person digs into it deeply they'll find a fair number of closed ETFs with solid historical records that pay in excess of 6% (although I would not touch a commercial property/mortage ETF with a 10 ft pole). When the timing is right a person is essentially paying a professional management team to pick your portfolio for you. It's not surprising that a team of seasoned professionals could make a few percent more than any specific company or retired person doing it themselves - regardless of how sharp they are. This is my plan but for now, the market is on the precipice of change and we don't know which direction it's going to take. It's not worth the risk when short term t bills and CDs are over 4%.
Thank you for this video! This is what I had thought but there are a lot of people out the poo pooing divided stocks.
As he said, check w/ your accountant. Not all dividends are qualified. Some are treated as ordinary income. Very common on dividend paying ETFs.
Just read the docs on the website from the company you buy. SCHD is 100% qualified. Takes about 2 minutes to find it on Schwab.
This is exactly My strategy!
Can you comment on reinvesting dividends within a brokerage account? I’m retired with a pension and currently don’t necessarily need the dividend cash flow. But if up to $40,000 is tax free maybe I should take it as cash flow as opposed to reinvesting. Thanks!
After 30 years at the same company I was let go yesterday in a restructuring.
In an attempt to retire at 54, I want to consider dividend stocks.
Could you explain why we should or shouldn't simply put cash in a high interest savings account while the interest rate is higher than safe dividend stocks?
I have to some cash in a 5% savings account.
What's your take on REITs right now...the dividends (and cover ratios) looking promising...Thanks
Hi there , any videos of nut just living of dividends but also selling some stocks every other years , selling only the gains ? thank you
Challenging to find what companies offer 'Qualified' dividends. all of mine show 'Regular' dividend.....Not sure how to determine which companies offer Qualified dividends
SCHD
Hi Azul - I just found your videos and find them very interesting. I am single, 63 and worried about the ability to retire. I have a home almost paid for and all my other money is in a 401K. I am afraid I won’t be able to find a fee only financial advisor that I trust and I don’t have much investing and tax knowledge. Also what is the fee to expect to pay if you have $320,000 total in 401K?
Thank you. Very interesting and helpful.
As my Father-In-Law likes to say "drink the milk do NOT eat the cow"
I’m totally using that!
Yes, the dividends are the fruit from the tree which is the div stock. Don't cut down the tree.
Stock dividends as passive retirement income is a great idea but should be combined with another stream of income wether that be pension, real estate or drawing from growing capital appreciation in retirement. I only say this because companies can decide what to do with their dividend at any time, meaning you ideally need to have dividends coming from multiple different stocks across different asset classes. I’d rather have 60,000 a year in dividend income coming from 6 different stocks rather than 120,000 coming from two.
As always, solid and concise verbiage advice. Thank you sir.
Retired early here. Portfolio generates nice income for me. No bonds or mutal funds in my portfolio. Use buy and hold strategy. All stocks pay dividends in my portfolio of 53 stocks. Took early social security. Manage my own stocks and never use a financial planner. Always live below your means as they say. You will never 10:22 get in trouble. Single....debt free.... happy.
Think a dividend portfolio should be a part of everyone's plan. Obviously, how one approaches it depends on his or her age. If I were still in my 20s I'd be buying strong companies with lower dividends and proven dividend growth per year of 8 per cent or more. Older folks like me should be buying stocks with good dividends and still decent prospects of growing the dividend. And in all cases, I would never buy a dividend stock without looking at the ratio of the annual dividend amount per share to free cash per share. "Earnings" as reported by companies are easily manipulated -- free cash flow is not. A company needs cash in the bank to service the dividends - GAAP accounting tricks don't pay the dividend. And never chase high yield just for the yield -- more often than not the dividend won't last nor will the underlying stock price. Also, for older investors, I would make sure I understood how any individual dividend stock I am thinking of buying held up during the 2008 financial crisis and the pandemic to avoid disruptions in retirement income cash flow.
Thank you for the great videos. Your giving me hope that retirement at 60 is possible. I’m 3 years from the goal and have been worried about making the wrong decision. Still more research to do, but thank you.
If you’re in the United States, there’s a very good chance that in three years, the retirement age will be raised, for minimum retirement to 65 or 67 years old and that’s for minimum age. Look what they did to those poor people in France raising the minimum age from 62 to 64. They were people 60 years old, planning and waiting and just about to turn 62 and the rug was pulled right out from under them and now they have to wait another two years!! It’s terrible what the government did and don’t think for one second that won’t happen in the United States because there’s already talk about it. My point, take it the very day you are eligible and get a side hustle to make up the difference unless you plan on working until you’re 67.
Azul,
Enjoy your content. What’s your take on LTC policies?
I never liquidate holdings. Interest, dividends, pension, Soc Sec, Annuity keeps us very comfortable...
I’d be curious what your thoughts are on converting some 401K money to an annuity as you approach retirement. I really enjoy your videos… thanks.
Dividend is technically a sale of the stock
Capital appreciation / depreciation must be taken into account regarding a dividend strategy. My investment strategy is taking 25% of stock profits and place this money into a bond ETF for safety, .
This is my goal!
A little cash to have available is also nice. Those months and or years that you do very well in the stock market doesn't mean you need to go spend it all. Save some for the months where the stock market isn't good. just my opinion.
Looks like you are in gig harbor. Thanks
Excellent video… very well explained.
If your creating a portfolio of dividend paying stocks you want to only buy stocks in companies that have a history of growing a distribution over long term will beat inflation. Its also a better strategy to combine a diversified basket of dividend growth stocks and current high yield quality closed end funds.. That way you have dividend growth and a current higher income yield with the quality closed end funds. The dividend/ income investing strategy is basically a way to create your own lifetime annuity while owning the liquid asset vs. actually buying an annuity from an insurance company.
What are your thoughts on when to stop reinvesting dividends? I believe you mentioned in a video comes a time to stop investing.
Hi Azul! Enjoying your channel. I've been contributing to various retirement accounts for about 30 years...managed on my own via a mix of index funds (stocks and bonds). I would like your thoughts on the index strategy. I have no complaints regarding returns so far. Thanks in advance! Best wishes from Indianapolis, Indiana.
Damn! Your the bomb 💣 tell us more about your dividend investing and landlord portfolio cash 💵 flow please 🙏
I plan to retire on a FIXED income scenario.. so I have no risk or sequence of risk.. I’d love to see a retirement income plan that is all about fixed income.. I know a financial planner does not want to do that cuase they only make money on portfolio mangement in stocks/bonds…. but would enjoy seeing no sequence of risk fixed income retirerment plan income… which is my plan….
I don’t think you should diversify just for the sake of it. Know the business, understand the business and learn how to read financial statements.
I would argue that younger people should seek dividend growth stocks and have them on reinvestment.
I'm in my 50's and have started the dividend portfolio to test if I can live off them while working for income. it's been working... and I have the choice of buying what's low each month/quarter.
Thank you Great Video Very Helpful for me
Great strategy but you’d better have a LOT saved!
Great topic - thanks Azul! Cheers
This is a good strategy, buying dividend stocks. But there are risks. I bought AT&T years ago for the dividends, but the stock price has tanked so much that I am in the red, even with the higher %. Dividends, like stock price, can drop when a company hits a rough spot also. I guess I care about dividends every year if I am using them as income, while I care about stock price only when I want to retrieve some of my investment. One good thing about dividends is they help me rebalance the portfolio without selling stocks.
That sounds like a great strategy! I wonder how do you get the individual stocks into one of the companies that you mentioned? For instance if you have all your assets with Vanguard and are in mutual funds (technically they have pressured shareholders to convert to a brokerage account in the last year) but they are still calling them funds. They wanted to do away with the original mutual fund class that long timers like me still had. Do they sell the individual stocks and can you use the assets in the 3 different categories to buy them? You wouldn't need to sell assets from your IRA, SEP IRA, or ROTH IRA to buy them I hope! That sounds like a tax nightmare in the making if it was required.
If you have a 401k, you can roll it over to any custodian like Schwab which will in turn make the rollover a TRADITION IRA which can be converted a ROTH IRA. You can buy whatever stock you want with whatever assets you hold. If your majority assets are in an IRA and your at or close to retirement than you can convert those assets (ie open end mutual funds) to individual dividend growth stocks. You can take out only the dividends as distributions and leave the holdings in the account to generate dividend income into perpetuity. I would recommend those seeking current income from dividends to create a basket of dividend growth stocks to keep up and beat inflation and another basket of QUALITY higher yield closed end funds (in the 7-11% yield range) which will juice your current income.
@@polster2 Thanks for taking the time to respond! I originally had some stocks and funds elsewhere and eventually consolidated to Vanguard. They did the IRA conversion directly. I don't think that ROTH's were even available yet. I had the stocks in DRIP plans held directly by the companies (if you can remember them) that I sold and put in taxable accounts as funds when they started using 3rd parties with fee's. I have traditional IRA's, SEP IRA's and a ROTH IRA all with Vanguard. The tax deferred accounts are just over half of all IRA's including the ROTH. What I'm wondering is if Vanguard will sell individual stocks or do I need to have a different company to do that? And I guess that having some in each account type would be a good idea. My taxable account has gotten a bit low now or some of those in that account would be a good idea as well.
@@MILGEO If Vanguard is your custodian on the accounts than you should be able to buy or sell whatever you want including funds or stocks. Vanguard or Schwab, or Fidelity are just custodians (brokerages) of your holdings. You can do whatever you want with your assets unless your using an advisor which will do it for you for a fee. In a taxable account its good utilize qualified dividend paying stocks or muni funds to get the best tax treatment on distributions. You can always hold Bonds, REITS, BDC's in a tax differed account.
@@polster2 Thanks again for taking the time to respond.I already have Bond and REIT index funds in my tax deferred accounts along with Dividend Appreciation, Capital Appreciation and a few other funds. I don't know what BCD's are though. I had some unexpected expenses in the last couple of years that really caused me to sell more of my taxable assets than I would have liked. I also have paid the taxes on ROTH conversions from it. It's hard to replenish those funds at this point but I'm trying!
@@MILGEO BDC's are Business Development Companies and are in the asset class that's not tax beneficial for a taxable brokerage account in that the dividends are considered ordinary income. So BDC's REITS, BOND and Bond Funds (outside of MUNIPICAL BONDS) are taxed at ordinary income and are better utilized in a tax deferred account like an ROTH IRA. If you want to live off the dividend and not take out the principal asset I recommend buying a basket of quality closed end funds (different than open end funds) and quality dividend stocks that have a long history of paying and increasing distributions. You can live of the dividends while never selling the underlying assets. Index funds while are more risk averse do not pump out a high enough yield to make a significant income from the underlying dividend on the index fund.
I just sold my dividends because I didn’t have any money… What do I do now do I reinvest
Work more.
Would love to know what camera (smart phone) you are using and what selfie stick?
Are you using a mic other than what is built in?
I did not have so much luck with dividends. I was enjoying dividends until they were cut by 75%. I will never trust the stock market again.
SCHD weeds out the losers every year in March. About 100 companies in it.
Great video on dividend stocks and how to play them out in retirement. Im in my mod 30s, however, I am diversified into growth and dividend stocks. I am thinking that between social security, my 401k, taxable accounts, and my Roth that I'll be perfectly fine financially.
I’m a federal employee. I realized a long time ago between my pension and the TSP (federal employee 401k), I wouldn’t be able to survive. So, I started investing in good dividend paying companies. Dividends won’t be 100% of my retirement. Dividends, pension, TSP, and social security will all be part of my retirement cash flow.
With so much happening around the world, US debt issues and de dollarization I really wonder what is the future of S&P 500. Scary !!!
🎉🎉Buy companies not Products, break the cycle 😎😎
I’m 66 have an annuity and ss. My financial advisor specializes in dividend and interest that’s why I went to him. As he says eat the eggs not the chicken. Get 5% a month off my invested money
Good stuff, keep it coming! Curious to know: if Dividend paying stocks sit well for your taxable brokerage bucket, what's your focus for the tax me later and tax me never buckets?
A couple can make upt to $80,000 in taxable income which would be SS, pensions and RMD's minus deductions, and make all the qualified dividends and capital gains they want, Federal tax free. More than 1/2 of our income is from qualifies dividends. . It's not your net worth, or what you make; it's what you keep.
Easy to follow!
Have you done a video on "buy, borrow, die" strategy?
I going to supplement with Covered Calls.
I’m living off my dividends right now until I hit my max SS IN 2 years. No side hustle. I’ve been investing since the 1980’s. Don’t sell the chicken that lays the egg. Just eat the eggs , dividends.
SCHD or bust.
Yup
Hi Azul. Great Video. I love the Div investing strategy for retirement. I have my whole Roth IRA in Div stocks with a drip. Then I hedge that with my pre tax 401k invested all in the total stock market index an eventually will use the 4% rule with that account. I'm 48 and should have the option to retire at 55 using some creative withdrawal strategies from my retirement accounts to avoid penalties.
Your videos are very good. You seem quite firm on the fee only advisor . I currently have about 1/3 of my liquid assets with Edward Jones and the rest in my company 401k. I'll be retiring in couple years and I'm questioning whether or not to move the entire thing to Edward Jones. I've heard criticisms that the organization is quite expensive (1.0 % "under management". Would you be willing to make a video on comparing and contrasting the fee only versus a company like Edward Jones?
Thanks for the idea Drew. I am a big believer that financial advisers should be fiduciaries to their clients 100% of the time - just like your physician, accountant and lawyers. I’ll think about doing a fiduciary vs non-fiduciary vid sometime soon. But, i like to keep me videos with a positive vibe … 😎 Azul
PS, until then, you might find this video to be helpful …
th-cam.com/video/JyAhhy3sNjs/w-d-xo.html
What about investing in a dividend aristocrats ETF?
nice!
It is better to start with a growth portfolio in your 20s and early 30s and if it works out, the same portfolio may become your dividend portfolio in your 50s or 60s even if it’s having a yield of 0.5 to 1% but because of its much higher corpus.
Looks like Gig Harbor
Azul do you think bonds will be getting back in the mix? I’m 52. Dividends sound good now. I wonder if ten years from now bonds will be good to mix in. Fir added income.
What are your thoughts on reinvesting dividends?
If you don't need the money (e.g. in the accumulation phase of your portfolio), you should reinvest the dividends, either in the same stock or in a different security. Some brokers even allow you to automatically reinvest dividends. In a taxable account this can be cumbersome, because of the need to take the cost basis of each lot, so I never auto-reinvested, but let the money accumulate for a few weeks of months and then purchase a stock/ETF that looked attractive at the time.
Pretty treeeee
650K at 3% is $19.5K
In year 1 only.
It goes up every year after.
Qualified dividends earned from a retirement account are considered ordinary income. These dividends stocks need to be in your brokerage account to receive the LTCG tax treatment rather than a 401k/Traditional IRA account.
No. No and no.
How do you actually start taking money from your 401k? Do you take it a few times a year or once a year, or like you would draw a paycheck?
Keep in mind that for purposes of "affordable care act', income tax bracket, 401k distributions are taxable income (but not social security). Don't take out more than you have to or you might run into some unintended consequences. Remember that you want as much of it to grow for as long as possible and it can't do that if you paid it to the IRS after taking a distribution. Obviously there will come a time when you have to take it out but until then, leave it as long as you can in an IRA rollover account.
🤘
If you employ value investing principles, you can buy good paying dividends cheap.
What kind of a tree is that at the beginning of the video? I've never seen anything like it.
Why would a company focus on consistent dividends vs growth?
Stable, established companies offering dividends are usually beyond their high growth phase.
As my father-in-law said "a lot of people don't understand how compounding works".
When my mutual funds declare a dividend the share price immediately declines. So... I receive the profits as dividends. If there's no dividend my profit is in the form of capital gains. I just don't see the attraction of dividend payments.
If you own a stock the price can go down around the ex date but eventually the stock price goes back up plus the div is paid so it's a win win! Over time this adds up. I would think mutual funds behave similarly?
@@hastycontemplation Its basic math. I believe in Total Return investing. When a company gives me a one dollar dividend, the company is worth one dollar less and the value of a share should also go down. When you do see the stock continue to rise, it is due to other factors. In fact the stock may well rise even faster if they had not given the dividend.
@@31martycEasy to answer that yourself with an hour and a few TH-cam searches.
Once you replace your current expenses, you don’t have to work again ever.
This is great ...thank you !!!
And as a sequel to this, maybe you can cover Muni Bonds as a possible bucket as well
Any bank will give you the 4%, especially if you have 1Million!
But no opportunity to have any capital growth
Also to add Azul’s point in dividend growth