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Research has shown that dividend stocks become attractive in a rate-cut environment as investors flock to these equities for defensive and offensive portfolios. Data from Ned Davis Research says dividend stocks have historically outperformed the market after the Federal Reserve’s first rate cut.
But reaching a sizable dividend income per month is a long game and you don’t need to wait for rate cuts to play it. It’s possible to ignore the day-to-day financial news cycle and focus on long-term investing to reach your financial goals.
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About five days ago, a dividend investor shared his success on r/Dividends on Reddit, saying he reached about $3,900 in dividend income. The investor said that except for one dividend ETF, he does not “chase yield” and instead focuses on dividend-growing stocks.
The screenshots of his portfolio details shared by the investor showed his total portfolio yields about 2.16%. Based on this, the community members guessed the current total portfolio worth about $2.2 million and the investor said this estimate was roughly correct. However, he said that his initial investment was about $1.67 million.
Asked how he was able to save $1.6 million for his initial investment, the investor said:
“Started saving as best as I could since my mid-20s, but I prioritized owning real estate. I believe the first thing any young person should do is start to save to buy a home. Then build from there. I only started investing with my cash savings in the last five years. My entry point into the market was in March 2020, so it was very fortunate for me.”
The Redditor, who said he’s 55, was asked multiple times when he started investing. Here was his response:
“Believe it or not, very recently, when the pandemic started, I was 50. Before that I just had my 401(k) which was and still is very modest for my age and maybe 20k in a Betterment account. During the pandemic down time I learned more about investing and started investing my cash savings.”
The investor was generous enough to share his stock holdings. Here are some of the most important stocks and funds in his portfolio.
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Schwab U.S. Dividend Equity ETF
The Redditor earning $3,900 per month said Schwab U.S. Dividend Equity ETF (NYSE:SCHD) was among the largest positions in his portfolio. The ETF tracks the Dow Jones U.S. Dividend 100 Index and exposes you to some of the top dividend stocks trading in the U.S., including Home Depot, Coca-Cola, Verizon, Lockheed Martin, Pepsi and AbbVie, among many others. Since SCHD’s holdings are mostly conservative dividend payers, it’s suitable for investors close to retirement looking for consistent dividend income.
Vanguard Dividend Appreciation Index Fund ETF
Vanguard Dividend Appreciation Index Fund (VIG) is ideal for anyone looking to gain exposure to companies that consistently grow their dividends. The fund tracks the S&P U.S. Dividend Growers Index. The fund’s portfolio consists of about 337 stocks, most of which are large-cap companies. Apple, Microsoft, Broadcom, UnitedHealth, ExxonMobil and Procter & Gamble are among the ETF’s top holdings.
JPMorgan Nasdaq Equity Premium Income ETF
The Redditor, who earns about $3,900 in monthly dividend income, said he does not “chase yield” except when it comes to JEPQ, which is among the largest positions in his portfolio and yields about 9.2%. JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is a covered call ETF that distributes monthly dividend income. The ETF invests in Nasdaq companies and generates extra income by selling call options.
Realty Income
Realty Income Corp (NYSE:O) pays a monthly dividend and has a dividend yield of over 5%. The stock is up about 7% so far this year, with further upside expected amid a falling rate-cut environment that would help major retailers in the U.S., the REIT’s biggest tenants.
Johnson & Johnson
Johnson & Johnson (NYSE:JNJ) is one of the Redditor’s biggest holdings, earning about $3,900 per month in dividends. The health care products company has raised its dividend for over six decades. However, Johnson & Johnson is embroiled in lawsuits and analysts are awaiting further clarity on these legal headwinds.
3M
Industrial conglomerate 3M Co (NYSE:MMM) is a strong dividend-paying stock in the Redditor portfolio, generating about $3,900 in income per month. The company has raised its dividends for 64 consecutive years. 3M Co (NYSE:MMM) is up 64% this year.
Duke Energy
Duke Energy Corp (NYSE:DUK) has a dividend yield of about 3.6% and has paid regular dividends for 98 years. Earlier this month, Jefferies discussed its top-rate utility stock picks amid energy transition and data center demand. Duke was one of the stocks the firm is bullish on.
Coca-Cola
Coca-Cola Co (NYSE:KO) is among the Redditor’s biggest holdings, earning about $3,900 monthly in dividends. With 62 years of consecutive dividend increases and a strong business, KO has become a no-brainer dividend stock pick for investors looking for long-term stable income. Billionaire Warren Buffett is the company’s biggest stakeholder, with a whopping $25 billion stake.
Cisco Systems
Cisco Systems Inc (NASDAQ:CSCO) yields over 3% and has increased its payouts yearly since 2011. Cisco’s CFO Scott Herren recently said in a conference that the company expects about $1 billion in AI product orders in fiscal 2025, with a 30% growth in hyperscalers recorded by the company during the second half 2024 alone.
Looking For Higher-Yield Opportunities In A Shifting Market?
The changing interest rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider.
For instance, the Ascent Income Fund from EquityMultiple targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Benzinga Readers: Earn a 1% return boost on your first EquityMultiple investment when you sign up here (accredited investors only).
Don’t miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga’s favorite high-yield offerings.
Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
This article 55-Year-Old Who Reached $3,900 Per Month Income In Just 5 Years Shares Portfolio: Top 9 Stocks And ETFs originally appeared on Benzinga.com
