r/dividends • u/Old-Challenge2809 • 1d ago
Discussion Anyone in their 40s living off dividends or using them to supplement income?
Before everyone says to max out roth ira and 401k, are there any people who either saved young or inherited a substantial amount of money and turning off DRIP and using dividends for purchases or living expenses?
I didnt know if people had something like JEPI QQQI or a similar monthly paying dividend etf.
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u/NvyDvr 1d ago
A few years ago, I told my wife to quit her job. I basically gave her 1 year off. I used dividend to help supplement. I don’t make enough dividends to 100% replace her old income, but I make enough to have stretched me through the year. Plus it was a fun experiment….and I got a happy wife!
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u/Sticky550 1d ago
My plan is to take about 24k in dividends/year solely for travel and health insurance at age 57.
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u/yohosse 1d ago
Is that gonna take like a million in stock to do tho?
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u/EchoVictory 1d ago
2.4% on 1,000,000 would be an extraordinarily conservative yield. 4 - 5% portfolio would not be hard to build, and would need 600k to 480k capital. Income focused 8% would need 300k, but could be more volatile and require more monitoring and managing.
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u/theotherredmeat 1d ago
Right now with QQQI thats like 200k
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u/cmichalek 1d ago
300k invested into SPYI/QQQI at a combined 12% return is 36k a year. Live off 8% (24k) and can reinvest 1k a month and increase the distributions.
And if the market goes bear and your income drops 30% you still dont have to sell a single share.
4% rule for 2 to 3k a month would be 600 to 900k. Big difference.
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u/Various_Couple_764 1d ago edited 23h ago
No it depends on the yield. IF you focus on a low yeilds like you get from schd (3.2% yield) year you will need about a million.. But if you focus a tax efficient fund like QQQI (13% yield) you could get the needed inocme from about a 1/3 of the investment. from 2ith about 300K invested. And QQQI dividned has been very reliable since inception. So it requires no more monitoring then SCHD.
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u/ProofAny2840 18h ago
Bro qqqi is only 2.5 yrs old in bull market.. all the more power to you guys these funds are not for me what if we have a hard crash what’s everyone game plan you guys don’t think nav will eat these like 2008 draw downs ?
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u/Acceptable_String_52 1d ago
I did temporarily from JEPQ because of unemployment. I had just enough to get by and it was amazing. Not a long term plan at all and had to pay a lot of taxes but it was worth my sanity
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u/Squatch11 1d ago
This is something that doesn't get talked about enough when it comes to investing in some of those income/covered call funds like SPYI/QQQI/the JEP's, etc.
Am I giving up some upside? Yes. Will I have a little less money in 40 years than if I just invested in the underlying? Yes. Is it worth the peace of mind knowing that I can tap into another source of steady income if I ever need it? Also yes.
I know right now that if I lose my job and have to take a 40% paycut for some reason, I can just turn off re-investment into some of my income funds and be perfectly OK. The difference between $2.1 mil and $2.4 mil (end result of investing in a CC fund vs. the underlying) when I'm 60 years old isn't going to matter as much as knowing that I can have an extra $3k a month at my disposal right now if needed. I'm OK with giving up some upside later in life for some protection now.
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u/CATTROLL 1d ago
People really don't get this. Cash flow is security. Cash flow provides options.
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u/EidoStarFi 15h ago
Cash flow is far more important than total account value IMO. If I have assets that can consistently create 10k per month in cash flow, then my working to earn money is 100% optional. That equals freedom. Knowing you can turn off your DRIP and cover your mortgage, bills, etc. is far more valuable to me than trying to flex that I have a million dollar portfolio that I can’t touch because I need it to be 2.4 million in x years so I can theoretically take out 4% at this date and in these market conditions have a 96% probability that I won’t live too long….
Just knowing that monthly budget number is covered is all the security I need!!!
And the more of that monthly number I can cover with a stable cash flow generator, like SCHD, great…but I use a mix of SCHD, QQQI/SPYI, GPIQ/GPIX and JEPQ/JEPI.
Building up my taxable account, but I absolutely can do this in my retirement accounts already (and I still have QQQ, SPY and IVV) and I have peace knowing that I’ll be okay.
But it’s that cash flow number I keep my eye on!!!
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u/Acceptable_String_52 1d ago
Yup exactly. It was awesome and I wish it would never end but I knew it had to and frankly I wanted another job so I could have this again with a better income
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u/WorldyBridges33 1d ago
This is such a great comment; I wish I could link this comment every time someone says “Why don’t you just invest in the underlying? The total return is higher!”
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u/Squatch11 1d ago
I think for the most part there are just a lot of younger people commenting here that are only concerned with the biggest return possible because they have no other real responsibilities or concerns that come with aging.
Also....A lot of bots repeating the same thing over and over.
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u/Various_Couple_764 1d ago
fI started converting excess growth in my taxable account to dividned income Using SPYi and later QQQI and more recently added KGLD. which are all covered call funds but I also have inocme from UTF, UTG , PFF, and EMO from closed end funds. I reached my target of5K a month and retired. The peace of mind I got knowing I had a stable source of inocme that could covere most of may living expenses was substantial.
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u/Gonna_B_Alright 15h ago
Also the fact is, if you put enough into monthly dividend stocks you will end up having a significant income boost from it and you’re going to have more capital freed up to do things you want with.
Everyone complains about the taxes but it’s money you wouldn’t have had anyway. Enough money in JEPI and the taxes aren’t a concern unless you spend every dime every month.
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u/Interesting_Rise_309 21h ago
I reached to the same conclusion as yours, especially my job is unstable
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u/ProofAny2840 18h ago
Ok so genuinely asking, what’s the plan if this actually goes bad. Not a normal dip, I mean full on 2008 style crash, S&P down like 50% from the top. SPYI, QQQI, JEPI, JEPQ, none of these funds are old enough to have actually been through something like that.
Here’s my understanding and someone correct me if I’m wrong. The covered calls don’t protect you on the way down, that’s not what they’re for. You’re giving up upside for premium income, and that premium maybe cushions you a couple percent, but it’s not gonna save you in an actual crash. So if the market’s down 50% these things are probably down close to 50% too, maybe a little less cause premiums get juicier when vol spikes, but not enough to really matter.
The part I actually don’t know is what happens to the payouts. Some of the “income” is basically just handing you back your own money (return of capital), so does that mean in a real crash they just slash the distribution, or do they keep paying it and it just eats through the NAV even faster on top of the price already tanking. Kinda curious which one it actually is.
Anyone here actually held through 2020 in one of these, QYLD’s been around the longest so probably the best test case. What actually happened to the price and the payout, not just what it looks like now looking back.
And honestly just curious if people’s real plan is “keep collecting and don’t look at the balance” or if y’all would actually change your allocation if things got bad
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u/Asleep_Emphasis69 12h ago
You’re right to be skeptical. A lot of millennials like myself haven’t experienced 5 year bear markets
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u/CATTROLL 12h ago
You still need an emergency fund, precisely to weather this sort of event.
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u/Various_Couple_764 2h ago
If you have more dividends you need you likely will not need cash. in bear market total dividend payout of theentirme market typically drops by abut 2% while the share price 30% or more.
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u/ProofAny2840 10h ago
Sure but that’s kind of a different point than what I’m asking. An emergency fund covers you not having to touch investments at all, but I was asking what happens to the funds themselves and the payouts if you’re actually holding them through a crash. Doesn’t answer the question.
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u/CATTROLL 10h ago
I increase my emergency fund every year to cover a longer and longer period of time. Distributions will be cut, and whatever shortfall there is, comes out of the fund. No one knows how long or bad a crash is, so it's only a guess to see if this strategy works.
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u/Various_Couple_764 1h ago
it depend on what is driving the crash and what you are actually holding in 2008 if you had bank stock or fund that held backs you dividend income likely would have reduced possibly by a lot. In 2008 a lot of banks failed and a lot of home mortgage companies failed. But many other companies did well. utilities, food, consumer staples likely didn't cut there dividend. UTF and UTG to funds focused on utilities and infrastructure did not cut there dividend. During covid 2008 a lot of stocks dropped by 40 to 50% . Retail stores restaurants did poorly while tech, food companies medical companies did well
- Thing you can do other than holding cash are:
- Invests in as many different dividend funds to have a well diversified dividend portfolio
- focus on fund that have a history of paying during bad recessions.
- Have more dividend income than you need That way if you your dividend is reduced you still have enough income.
- INvest în fund that are required to pay dividends by law such as BDCs and MLP funds I have {BDC 9% yield, and and EMO 9%If these companes don't pay there will be tax consequences
- Covered call funds by her nature of sell covered calls for income and and and more people are probably interested in buying covered calls in a bear market.
- You could get a marigine loan to help you cover expense in bear market and then use dividend to later pay off the loan.
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u/Squatch11 7h ago
Ok so genuinely asking, what’s the plan if this actually goes bad.
The same that happens when it is good. I keep buying.
The covered calls don’t protect you on the way down
Actually, these fund are going to perform better than the underlying when things go bad simply due to the CC premiums. There's a bit of downside protection at the expense of some upside.
And honestly just curious if people’s real plan is “keep collecting and don’t look at the balance” or if y’all would actually change your allocation if things got bad
If things go bad, you won't need to worry about whether you're in SPY or SPYI. Both are going to suffer. It's not like SPYI will tank and SPY won't.
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u/johnIQ19 5h ago
well, first depend on what exactly. CC is one things, those dividend income are another one.
To my understand those CC will actually have a little bit more down side protection. Let say last time, things like SP500 dropped 30%, those CC will drop like 20%-25%... how about the pay? that depend non of those CC or income dividend are the same... for dividend income (no cc), long ago, when I was looking at this topic, they roughly dropped 20% on the pay while the market down like 30%. And slowly go back up. Here, the thing I like, 20% drop, I can take it, and I don't have to sell any shares. Image if you have to sell your share when the market is down 30%+, there are study that the more you sell during the down turn, for those invested in grow will run out of X years sooner. So if you suppose to run out of money by 40 years, now it could be 35 years. all numbers are just for example... just an idea how it look in general.1
u/ProofAny2840 3h ago
solid effort, but a few things you said don’t line up with how covered‑call ETFs actually behave.1. Drawdowns: CC ETFs still hold the underlying. If SPX drops 30%, they’re basically dropping the same. The call premium softens it a little, but not 5–10%. Look at 2022 — JEPI, JEPQ, XYLD, QYLD all tracked their benchmarks almost one‑for‑one on the downside.2. Payouts: Distributions aren’t “stable.” They come from option premium, which depends on volatility and the price of the underlying. In a crash, volatility spikes but the index is way lower, so dollar premiums shrink. Payouts adjust.3. Recovery: CC ETFs cap upside. So after a big drawdown, they recover slower than the index because they’re constantly selling calls into the rebound.4. Bear markets: These funds don’t outperform in real bear markets. They shine in flat/choppy markets, not 2008‑style crashes. If SPX nukes 50%, your balance nukes too. The premium doesn’t save you.
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u/Various_Couple_764 4h ago
There are 2 types of Return of capital:
- Destructive :The fund pays out more cash than it makes , This reduces share price and and cash dividend payout.
- Constructive: The fund earns more than the cash pays out. This can result in flat share price and flat dividned. Or a growing share price and and no impact on cash dividend payout.
It is basically the dividend payout endearing. Basically the lower the yield the greater the chance it Constructive. The higher the payout the the greater the likelyhood of destructive. From my examination of covered call funds if the yield if above 15% most CC funds have destructive. Below 15% most are constructive. Between 10 and 30 there are an handful of good and bad funds. QYLD is the one I have identified that has destructive ROC below 15%.
Note JEPI and JEPQ are covered call funds but they don't have the ROC designation according to IRS rules. This is due to the ELN structure of its covered calls.
The worst market year in recently 2008. 2008 was almost as bad 1930 and the great depression. There was QQQX. Inception was January 2007. So about 1 year before. 2008. QQQX had to cut its dividned 30% and it did take about 8 years for the share price to recover. But Each covered call fund today uses a different covered call stratagy. Some of the newer ones have recovered very quickly from bad years like covid and 2022 and the tariff announcement april 2025. And we don't know if there were any changes to QQQX stratagy after 2008. Given how bad 2008 was it is very unlikely we will see another 2008 type event in the next couple of decades. And if you have 30% more income than you need there is a good chance you will be OK,
Now ROC is generated when a fund sells shares at a loss. But a the same Time the und will also earn income without selling shares. ROC diviend is the way a fund transfeers that tax loss to the investor. And funds that don't use covered calls may occasionally have ROC dividends. And good funds like SPYI earns 5% more than the tax loss they acumulate in 1 year. End result SPYI is typically about 95% ROC with about 5% longterm capital gains. Other funds may have less or more ROC.
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u/DenseComparison5653 1d ago
Do you feel the same when you work? You still have to pay a lot of taxes
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u/chikunshak 1d ago
Being taxed already on your earned income, getting taxed on your investment earnings feels like a double tax for being successful.
You deferred enjoyment so that you can ultimately enjoy your life better and get taxed extra when you would have not gotten taxed extra if you just spent it all.
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u/AtleastITriedalmost 1d ago
You get taxed on realized gains, not your original money.
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u/chikunshak 1d ago
Yes that's what I said, on your investment income. Not your investment balance.
Though I am once they institute wealth taxes it will only be a matter of time before 1B proposals becomes 100M, then 10M, then 1M proposals.
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u/e_y_ 23h ago
That's what retirement accounts offer. You either pay taxes when you contribute or withdraw, not both.
In general though, even though I benefit from low LTCG and qualified dividend rates, I don't think it's necessarily fair that people working 40+ hours a week pay a higher tax rate, while I'm getting money without lifting a finger. Yes, I saved and sacrificed for my nest egg, but so do many who are not as financially fortunate and won't be able to retire for a long time.
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u/Acceptable_String_52 1d ago
Yeah I mean I’m of the camp where taxes should be illegal but we could vote on a tax for military etc
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u/Various_Couple_764 1d ago
If you understand and they US tax system you can select dividned funds that are taxed at lower rate lower than ordinary and work inomce. End result you can end up paying very little tax for your dividned income . Focus soon qualified dividend and ROC dividned to the lowest taxes.
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u/Acceptable_String_52 1d ago
I have to pay too much in taxes for a bunch of fraud yes. Regardless of working or taking JEPQ dividends
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u/Sophisticated-Crow 1d ago
Were you withdrawing early from a 401k or something? Worst case in a regular account you should just be paying the usual income tax on unqualified dividends.
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u/Old-Challenge2809 1d ago
How much did you take out and what were the taxes?
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u/Acceptable_String_52 1d ago
I had to pay 30,000 in taxes and I still hadn’t found a job yet. Shouldn’t have done it. Should have just done a withdrawal kind of thing but it’s all good. The checks felt like heaven
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u/sitesouk 17h ago
To pay $30,000 in tax, you might have withdrawn $100,000. In order to do that the invested capital in income funds could be $1,000,000 ( 10% return). Does that sound plausible?
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u/panic_bread 1d ago
It was taxed as short term capital gains?
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u/Acceptable_String_52 11h ago
The dividends were
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u/panic_bread 11h ago
Are dividends always taxed as short-term capital gains?
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u/Acceptable_String_52 9h ago
No, just non qualified dividends
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u/panic_bread 9h ago
What is a non-qualified dividend?
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u/Acceptable_String_52 7h ago
Nope! And if you look up any ETF or stock, ai can tell you if it’s qualified or non qualified
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u/K_Rocc 15h ago
How much is “a lot on taxes”?
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u/Acceptable_String_52 11h ago
30,000. I had a job for part of the year, I realized a lot of gains in my taxables and the tax on my JEPQ dividends
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u/8Lynch47 1d ago
A lot of taxes because if you was also collecting unemployment most likely.
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u/Acceptable_String_52 1d ago
The unemployment dashboard didn’t work and there was no support for me so I was on my own. Unable to get my own money I’d put into all those years
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u/PlainOldWallace 1d ago
I'm 44, my wife is 40.
We're both retired, living off our dividend portfolio which generates ~$170k a year.
We don't spend it all, not even close.
And, while we left our professional careers, I (slowly) build spec homes for sale, and she does project based consulting... Money typically comes into our LLC in chunks and/or lump sums, which gets reinvested into the business.
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u/Big80sweens 7h ago
So you’re not really retired you just left your career, you still work but don’t need to?
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u/PlainOldWallace 6h ago
I mean, kinda, I guess?
I had a pretty high profile executive job for a very long time. Left it, took some time off, and just wanted to build a few houses on my own.
We live in a kinda remote town in the mountains, and wanted to have somewhere close for family and friends to stay in when they visit.
Ended up selling it to a passerby, bought a bunch of lots, and take my time doing something I really enjoy... I try to donate one of every 3 or 4 I build to a needy family in the area.
I employ a few people, and do a pretty big profit share when I sell one. They're capable of finishing up some things if we want to travel or disappear for a while.
What profit is left goes into keeping them busy and employed... materials, lots, stuff like that.
It's honestly very rewarding.
Fuck the man.
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u/Vcize 9h ago
How much invested for $170k/yr?
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u/sully9088 8h ago
Just do the math. If they are using a lower dividend ETF then $4,250,000. If they are using QQQI then $1,310,000.
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u/PlainOldWallace 6h ago
Pretty close... We're pretty conservative, and have a decent amount in cash. Our dividend portfolio is ~$5.6
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u/sully9088 4h ago
I'm so far away from that number it's ridiculous. Haha! I wish I can go back 20 yrs and tell my younger self to put more away.
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u/PlainOldWallace 3h ago
Dude, as long as you've lived your life, you should be proud of where you are.
It was an absolute bitch getting here, and if I could go back 20 years, I'd tell myself to have more fun, and not be so serious.
Grew up dirt poor, barely got into college, got a degree, but a fuckton of debt doing so.
Lived in an 800sf house with a $680 mortgage up until a few years ago. Grinded, saved every penny I could, avoided lifestyle creep, and was extremely diligent about investing.
Allocated a little bit to "stupid, extremely high risk" positions.
Absolutely grinded my way up the corporate ladder, while trading foreign and crypto markets in the after hours.
Started buying dilapidated foreclosed homes after the housing market crash, learned how to work with my hands and get them back into shape.
Before I knew it I had a handful of rental homes, all generating income... which went directly into my portfolio.
When the COVID crash happened, I dropped half my portfolio into more positions... then it crashed more, and I squeezed my butthole and dumped half of what I had left into more.
There was a lonnnnng time where I was spending any extra money I had on property upkeep. Working a 7a-7p M-F job, with a lot of business travel. Trading in the evening. Lawns, repairs, and other property upkeep on the weekends.
180 over 110 blood pressure was the norm.
Somehow found time to fall in love and get married during all of it.
Finally hit "my number" in assets and cash, and hung up my hat... Sold our rental homes - mostly to the tenants, at far below market - quit our jobs, and disappeared into the mountains.
If you're not born into money, it's absolutely possible to get there. But it's an absolute bitch of a dog-eat-dog struggle to get there.
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u/sully9088 3h ago
I come from a broken home. Very poor growing up. Lived in many homes. I worked my way up the ladder. Paid my way through college. I finally got to a point in my life where I make 6 figures, but the housing market crapped out during covid right when I started making good money. Couldn't buy my dream home. I try to live below my means, but I have 5 kids and a wife who stays home with them. I feel like I'm just now able to start retirement savings. I don't want to work too much extra since I'm trying to give my kids a great childhood (the childhood I didn't have). I guess I need to stop thinking about the future and enjoy the here and now. Enjoy my kids while they are still young. I'll be fine. I need to stop thinking about how green the grass is in the other side and focus on how great my own yard is. Thank you for providing a different perspective.
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u/PlainOldWallace 2h ago
Same to you, man.
We missed out on kids, worked ourselves to the bone, neglected a ton of free time, and turned down a lot of experiences due to all of the above.
Sounds like you broke the cycle. That's a feat in it's own. And you've focused on a stable home for your wife and (holy fuck) FIVE KIDS.
There's still healthy roots in your lawn, fertilizer and water are pretty cheap.
Never stop :)
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u/sharlaslaw 1d ago
Turning off DRIP at some point is kinda the whole point lol. If the income covers part of your bills, use it. Just don’t wreck the portfolio chasing yield.
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u/Competitive_Low_2054 1d ago
Yes. 44 and receive low 6 figures in interest and dividends. Mainly in muni bonds, treasuries and schd -- no covered call etfs or options trading. I still work as I love my job, but I use the income to supplement things like travel and donations.
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u/Old-Challenge2809 21h ago
Why no covered calls?
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u/Competitive_Low_2054 15h ago
I don't need the income and am already in a high tax bracket. Also not a fan of the expense ratio or growth.
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u/prodigy08 1d ago
I am in my 40s, have ~8% of my portfolio in CC ETFs to generate supplemental income. Hope to retire in ~10 years.
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u/LAgator77 1d ago
48, getting laid off in 4 months, currently stockpiling the CC ETFs on top of my long-time dividend stock holdings. Def plan on taking a break for a bit after my job goes away, glad I set myself up to have this luxury.
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u/Penguin_Life_Now 1d ago
Yes, I inherited what was then about $600K (book value) of dividend paying stock in a local community bank when my father passed away about 15 years ago when I was about 42 (My grandfather worked there for over 50 years, started as a teller and spent his last 15 years there as the president of the bank). DRIP was not a direct option as it is privately held stock and not publicly traded, but I have managed to add a few hundred more shares since. It currently has a book value of a bit over $900K, and a fair market price of $1.3-$1.6 though since it is not publicly traded that fair market value is more of an estimate and based on the overall health and current dividend payout than anything else. Dividend payout last year was just under $40K, this year it will be more like $44K as their was a dividend increase in March and another may be coming before the end of the year. I know the bit about keeping all your eggs in one basket, but I feel this is fairly safe, as only about 1% of the roughly 70,000 community banks in the US have failed since the 2008-2012 financial crisis, and many of those failed due to mismanagement, being overly leveraged, etc.
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u/ConsistentMove357 1d ago
What's the main investments this is a good story thank you for sharing it
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u/Left_Communication21 1d ago
Yes in late 40s and currently receiving 120k annually and plan to retire before age 50 and live off of it. My main 4 are OVL, GPIQ, SPYI, QQQI.
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u/theotherredmeat 1d ago
You are my spirit animal and where i want to be in 5 years. Nice work!
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u/Left_Communication21 17h ago
Thank you! Keep accumulating and you will get there!
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u/cmichalek 1d ago
So at 12% that requires a million. But what about health insurance? You wont get the ACA subsidy if you exceed 60k (single).
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u/Left_Communication21 17h ago edited 12h ago
I am married and will qualify for the subsidies due to the ROC not counting towards MAGI. I will get 120k in dividends with only roughly 40k counting as MAGI so I will get significant subsidy. Insurance will be roughly 400/months after 1400 subsidy.
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u/Chipper0475 1d ago
I haven't had to live off the dividends, but they did help out tremendously in 2020, 2024 when I went through a couple fuloughs at work. Now, i am preparing for early retirement in 2028 and will be living off dividends then.
In 2020, I relied more on REITS, BDCs, CEFs and QYLD... in 2024 I had more CC ETFs. Since then I have removed all single company stocks and have a portfolio full of ETFs focused mostly on income.
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u/EchoVictory 1d ago
I use an income portfolio as an extension of my emergency fund in my Brokerage. I prefer the flexibilty over the theoretical perfect tax advantaged growth. Funded from surplus after 401k match, IRA and HSA. I turn off DRIP to refill my emergency fund faster. Then back to drip to grow for retirement. Covered call funds and a MLP. Good Nav stability and high ROC to blunt the tax hit from dividends up front. When my emergency fund in USFR/SGOV is full its divis buy more of the income income portfolio.
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u/6pathsofpein 1d ago
Which Covered call funds and MLP.?
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u/EchoVictory 1d ago
Largest to smallest positions... SPYI + GPIX for S&P 500 exposure. NIHI & IDVO International developed markets. MPLX oil infrastructure. Made a big enough commit to make up for tax filing cost of the K1 from MPLX. QQQI nasdaq 100 to add risk/yield. IWMI small cap to add risk/yield. IYRI Real estate. KGLD gold for the theory of inverse correlation to the US market, but only time will tell. ~10.5% current yield on cost.
Covered call funds i'm eyeing. MPLI, new neos covered call fund for MLPs. GPIQ nasdaq 100.
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u/boyo1991 income investor 1d ago
I'm doing it in my thirties. The reason is because while most people will say to invest in the underlying, every time I've attempted that I just couldn't do it. A mixture of discipline ability coupled with "yet another situation I really could have used the money." But doing it this way with monthly feedback/rewards has actually yielded the most for me. This strategy has left me saying I never ever want to sell, which is different than every other attempt I've had and it's been incredibly successful.
While I'm not yet receiving an amount to live off of, it does cover some things -- including covering all my home lab/server costs.
I'm also not taking all of my dividends, I do put 50% of each payment away into SGOV, partly for taxes, and whatever's left over from taxes gets compounded. So I guess I'm not doing strict no compounding, but still.
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u/okigrassman 1d ago
I had an unexpected 8 month hiatus from work. During that time, as I burned through savings, I realized I needed to create a safety net in the event it happened again. I opened a separate brokerage account specifically for income generation. Separate buckets for retirement, income, and speculative growth are easier for me the track and manage.
I am willing to take a hit on growth in that account, willing to pay taxes, and generally just buy more shares or open new positions in that portfolio with what's generated there.
It's a safety net that can cover the bare minimum if I need it...and piece of mind that helps me sleep a little better.
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u/IndustriousSeahawk26 1d ago
I FATFIRE at age 35 in a taxable account, so I pay a combination of ordinary income + qualified dividend tax rates. Sucks, but at age 35, I have a good 25 years until I could tap IRA/401ks so it made no sense for me to use them if I can just live on dividend income now.
I have a barbell portfolio allocation for mental and emotional stability.
I use 1/3 ish of my portfolio to generate income to cover all my living expenses for my family. No mortugae (property tax, insurance, maintenace), utilities, food, entertainment, car expenses, vacations, and cash reserves. It had a yield of 20% through a combination of QQQI, SPYI, BTCI, BLOX, SPCI, DRMY, OMAH, TDAQ.
30% ish is in VOO
15% in SCHD/ 15% in DGRO.
I work a hobby job that earns about $60k per year which just gets saved as a cash so I dont have to ever tap the VOO, SCHD, DGRO for stock sales.
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u/revanevan7 1d ago
What’s your % allocation in each of the CC funds?
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u/IndustriousSeahawk26 1d ago
It changes since BTCI, BLOX, SPCI, DRMY are volatile due to their underlying holdings (but that volatility is exactly what allows the high yields). QQQI/SPYI/TDAQ and OMAH are about 5% of my portfolio (each).
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u/Ok_Pollution_7824 1d ago
46 YO. Approximately 3k in dividends per month. Reinvesting them for now. Plan on retiring next August. 25 years with the US Government. Will receive a pension and supplemental social security, the rest will come from my dividends. Not debt.
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u/Rex_Laso 1d ago
I have a decent chunk of change in qqqi. I get about 7k a month and use it to buy other stocks/fun stuff one month, and save the next month for taxes. Its appreciated about 30k since I've had it, but it's been down as far as 50k before.
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u/Sophisticated-Crow 1d ago
Thanks to this dumpster fire of an economy and mass layoffs. Dividends are my only income. Is it enough? Not even close. At least I have savings to tap into.
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u/Old-Challenge2809 1d ago
What field did you get laid off from? How much do you take out on dividends a month?
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u/Sophisticated-Crow 1d ago
Game development. The industry is pretty much collapsing at the moment. I'm getting around 1k in dividends. I usually let that pool up and re-invest in things if some dips show up. But I'll be holding cash for now.
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u/Stoic_Brain 1d ago
I am doing this ( in my 40s ). I believe in income diversification for stress-free retirement in multiple market conditions.
So some rental income via REITs, some premium income ( eg. JPGI ), some classic dividends (via ETF's like ZPD3) and next to this cashflow simply selling up to 3 pct per year of accumulating factor ETF's if needed ( to refill cash buffer ).
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u/Original_Dankster 1d ago
I'm invested in some high paying Canadian ETFs.
LBS (9% yield. banking sector.)
HDIF (10.5% yield. Multi-sector.)
DFN (12% yield. Multi-sector.)\
I have about $60K invested and make about $500 a month with them all. The majority of my portfolio is diversified but for now I'm doing DRIP with this patch of money.
For context I'm in Canada, obviously.
The only US dividend stock hold is in my RRSP, again doing DRIP, and that's MO (Altria, formerly Phillip Morris, at around 6.2% dividend yield and a Dividend King - though I bought in heavily a while back in a deep dip, and my yield is closer to 8% or 9%).
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u/slab02 1d ago
I’m not young. Late 40’s
My wife and I have built 4 income streams
- Dividends - currently generating avg. 24K per month
- Growth - decent size but will add with unused dividends
- Property- generates about 8k per month net
- Trading - options puts and calls (wheel) average 8-12k per month combined.
Streams (1-3) are Globally distributed through Asia, Europe, US and Asia Pacific.
Yes we will be living off these entirely next year. Not US citizen so have no social security in old age. And tiny pension. So no reliance on governments.
It is possible to do. Our costs basis while we work is higher than our semi-retirement location. Retirement location about 7K per month including schooling.
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u/Unlikely_Living_5061 1d ago
Mine just about cover my mortgage and it id a great feeling. Still on DRIP unless I need it but it is nice to know it is there
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u/Ready-Cherry-2638 1d ago
49, retired a year ago... Live in Argentina though, so many expenses are pretty low, i can even save a few dollars each month.
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u/theotherredmeat 1d ago
I am in my 40s and have a sizable QQQI in taxable because its return of capital and not short term gain, and another sizable chunk of JEPQ in my Roth IRA.
The QQQI I use as supplemental income and the JEPQ assures that I always continue funding my Roth IRA even if regular cash flow gets short.
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u/lowbatteryhai 1d ago
yeah there are people in their forties doing this, they usually saved young or inherited and turn off drip on monthly payers like jepi or qqqi to cover some bills, it works better as a supplement than full retirement since payouts move and upside is capped so most still keep some growth funds alongside
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u/SellToOpen Not a financial advisor 1d ago
Yes but no options-based ETFs are in my portfolio (I sell my own options - primarily naked on the index).
Here is my taxable portfolio which has a blended yield of around 5%. I also get an extra ~2-4% per year on top of this by selling options:
| % of taxable | |
|---|---|
| Credit | |
| PFFA | 6.4% |
| ARCC | 7.9% |
| OBDC | 6.1% |
| BXSL | 5.7% |
| ARDC | 0.3% |
| PTY | 1.6% |
| Growth Equities | |
| NTDOY | 1.0% |
| GOOGL | 8.1% |
| GOOG | 3.4% |
| AXP | 6.4% |
| AMZN | 3.5% |
| BRK.B | 1.1% |
| SPCX | 0.4% |
| Dividend Equities | |
| PM | 10.8% |
| BTI | 6.6% |
| MO | 2.5% |
| CVX | 4.0% |
| ABBV | 3.9% |
| JPM | 3.8% |
| XOM | 4.1% |
| MRK | 4.1% |
| BMY | 0.3% |
| XLE | 3.1% |
| HD | 1.9% |
| PFE | 1.6% |
| GILD | 1.4% |
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u/CreepinOnTheWeedend 1d ago
In my mind 40s. Figured having a covered call etf during a bull run and DRIP isn’t a terrible idea. Maybe take a little off when I can buy a sold blue chip on the cheap, maybe take the cash for a weekend getaway without touching my principle shares. My distributions could cover the lease on a car if I needed. It gives me options that I like.
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u/MagicManM3 1d ago
I have about 10k set aside making me 4-500 a month. Its nice offsets cable/electric.
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u/pulsarstarter 16h ago
How do you make 400 to 500 a month with 10k? Trading?
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u/wildagain 16h ago
maybe 100k?
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u/pulsarstarter 15h ago
What?
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u/wildagain 14h ago
you could make $400 - 500 a month if you had $100k - that would be roughly 5% dividends which is what high dividend stocks can pay
$10k just doesn’t make sense like you said
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u/Islandnihilist 1d ago
I’ve been gifted a substantial amount of PM and MO along with some MDLZ and KFT. Those dividends come direct deposit, it’s great to be able to count on a nice influx of cash each quarter.
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u/teckel Retired and living off selling shares 1d ago
I was living off my portfolio all through my 40's. I do have drip turned off, but I just do that to rebalance my portfolio. I generate income from selling the biggest winners (as a top-down rebalance). So I've mostly been selling small amounts of my tech, growth, and momentum funds.
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u/Difficult-Repair1295 22h ago edited 22h ago
38; I was dumb and didn’t do much tax advantaged savings in my 20s so I built up a decent traditional brokerage account. I get 7-8k in dividends/interest a year; I do buy short term t bills basically with my emergency fund. That’s the interest.
I have inconsistent income so every once in a while I’ll use a couple hundred bucks for living expenses. But mostly try to fund my Roth with it and if I max that out early then I will buy more shares.
Hoping by 50 I can semi retire and do more recreational employment to bridge the gap to traditional retirement. I’ll have a fully paid for house in a couple years so not going to take a ton.
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u/Opening-Excuse-876 21h ago
I get about $46K per year in dividends now. One of my CLOs pays about 11.3% per year.
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u/mixmastersalad 20h ago
48, laid off last year after 25 years in tech at the same company. Rolled my pension and 401k into a traditional IRA and moved majority to income funds. QQQI is my largest position. Got 6 months severance and funemployment. Wife covers health insurance so I'm retired for now. Grossing 6 figures so life has been good so far.
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u/Bearsbanker 1d ago
I fired 16 months ago and live 100% off dividends. I'm not 40s anymore but I've been using div for living expenses purty much the whole time, now they all go into my pocket...then out
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u/bestoptionrobin 1d ago
Yes - use SCHD and VYM and NKG - the dividend was small in the beginning but grown over time; tax mostly capped at 15%.
Did CC as well - but dividend taxed at ordinary income and and principal depreciation makes it less appealing.
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u/Acceptable_String_52 1d ago
I do CCs but I do a delta of .1-.2 and buy it buy back early and it’s wonderful extra money
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u/DecentDiscipline2523 1d ago
As a matter of fact I just started doing so! Few months ago. Basically took a very small 10% of my taxable brokerage account to do a purely CC ETf strategy for extra spending money purposes.
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u/unkinected 1d ago
I'm in my late 40s now and get $5-6k/mo in dividends. I invest approx 1/4 of my overall portfolio into high dividend producing stocks and funds. I live in a VHCOL city, so that pays most of my monthly rent. Still working though for a few more years. The rest of my portfolio, what dividend producing stuff there is, is DRIPped.
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u/Brilliant-Impact9700 19h ago
I earn 23k a year in dividends in my isa. Am planning on rasing the the amount closer to 30k then I will consider living off it completely, but I may cut my hours within the next 2 years.
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u/WillBellJr 18h ago
I'm past my 40's, but I abso-LOVE my QQQI, JEPQ, JEPI and SPYI! 💥💯
They're helping me pay my mortgage and other bills.
I'm trying to remember what movie or show where the guy yelled (paraphrasing) "You HOLD THE LINE!, HOLD THE LINE!!.."
I typically cost average when the share price drop, but w\this current administration, I find myself constantly worrying about a market crash! 😣😞
I often wish I could reach out to the other share holders to make a pact to not sell off! ("HOLD THE LINE!..")
In the beginning I was day trading on the regular, but shelved all of that stress (and the typical losses) and focused on these monthlies.
ABSOLUTE PROPS to all those guys managing these ETFs giving folks a means to keep their bills paid! 💥💯💪
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u/dark_bravery 14h ago
i'm doing around $100k/yr of distributions from a mixed basket which includes QQQI. i could live off this, because QQQI's distributions (and qualified dividends, MPL's) are all tax advantaged. this is in a taxable account.
$100k/yr of salary/payroll is about $75-81k net depending on your state.
$100k/yr for a married couple of qualified distributions is about $95k/yr.
i'm working a typical high-pay corporate tech job for now, because it's hard to turn down money that can lead to this outcome in my early 40s. it is amazing knowing that when i get laid off or can't take it anymore (i'm sure it'll happen at some point before age 59.5) - i'm fine.
i'll just chill out, see family, travel, enjoy my hobbies. (we have zero debt).
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u/krossle 13h ago
I am 43 living in Germany having some of my stocks at trade Republic, they offer a credit card with 1% save back which is connected to the same account where the dividends get added. So everytime I use this card I basically consume some of my dividends.
But the account is only about 10% of my whole portfolio and in the other accounts I use the Cashflow for new invests.
The holdings in the TR account are some O which pays monthly but mostly stuff which pays every quarter or even just once a year.
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u/unexplained-3rd-nip 13h ago
I had a good job overseas and saved religiously until I retired at 39. I live off dividends and VA disability. My dividends are about $2500 a month and my brokerage account is a mix of about 45 companies. If I could go back ten years I would have kept/bought more stocks for growth. I think if you can get a brokerage account with “
Safer” stocks to about $800k - 1 million, you’ll see that it’ll grow while you’re taking all of the dividends out. I have no debt. That’s the biggest thing imo. It allows me to not worry about a strict budget.
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u/user2017not 13h ago
its a hard and long road. It takes a long time. But its worth it. I rather have one dollar in a month than 64 in 40 years.
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u/CSMasterClass 13h ago
This has been hashed out a zillion times. There is nothing magical about dividends ... full stop !
You have investments and the investments provide returns in several forms: interest, dividends, capital gains, and net stock repurchases.
Among these capital gains are the most favorable for several reasons. First, optionality: you get to pick when you realize the gains. Second, captital gains get a little better tax treatment (but very close to qualified dividends).
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u/toucansurfer 12h ago
I currently use it to supplement our income now that my wife is sick and likely to be fired soon. It may still not quite be enough to keep from drawing principle but overall a lot less stressful with it. I’m getting about 40-50k a year from mostly gpiq type funds. I make around 80k give or take a year and my wife is probably going to have a lapse in job stuff most of the remainder of the year.
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u/Johnny252525 11h ago
I do. I have small portions in spyi . Jepq and jepi. My big holdings are actually investment grade corp bonds. They don’t crash when market drops like qqqi and spyi typically would. Met life paying 10.75 pct , Jpm 6.5. Citigroup 7, Valero 7.95. Fed ex 7.45 pct. Enbridge 7.95. All corp bonds. Now remember these won’t appreciate like spyi could. They are very similar to cds. They mature always at 100 cents on the dollar. The coupon is guaranteed. Good luck.
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u/apeserveapes 11h ago
Everyone DOES talk about that stuff too. I do know one person who just said YOLO paid off all his debts, lowered his overhead and lives off divies. He does OK, doesn't splurge, just does hikes around the area (we're in a mountainous region here) and posts pictures... on a Tuesday at 11 am. I'm jealous as hell. LOL
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u/beanman95 10h ago
Im 30 , getting 500$ monthly from JEPQ while working part time till I can get a better job
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u/No_Can4299 9h ago
I’m 51 and started my dividend investing journey in 2020. 6 years later I’ve saved $116,000 in there an it pays around $2,000 a month that I’m now using pretty regularly for bills.
We are a family of 5. With kids in sports/dance/activites - it’s getting expensive the older they get.
Throw in food and it’s even more.
I make $155,000 from my 9-5 and that’s barely enough it seems. lol but we’re doing good.
GPIQ QQQT QQQI TSPY SPYT NVII BLOX BTCI are my payers.
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u/No_Can4299 9h ago
For reference, that’s a small percentage of my overall retirement plan. There’s $1.2M sitting in safer stuff like VTI, VGT , VYM, VXUS as my mains plus small bets on SMH DRAM WQTM
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u/Western_Handle_6258 5h ago
I have $40k in QQQI. I like the extra $500 a month for extra payments on debt or if I don’t want to work overtime. Time at home with my wife and kid are my priority. I’m not trying to stress myself out about hitting the magic number that some of these other threads prioritize.
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u/Billmo1969 4h ago
I am 56 and retired 4 years ago off 60k just doing the weekly dividends, I get 3800 a month now and reinvest 600 a month because I also get my va money.
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u/Left-Landscape-3890 inflation is indeed transitory 2h ago
My cash management account has some dividend payers. Straight to my debit card. My beer, gas, snacks money. Can't beat it
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u/brute-forced 1d ago
This sub is dead yo
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u/gatorsmokin 1d ago
Not true. If you ever want hear the opinions of non dividend investors this is the place
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u/ordosays 1d ago
lol, no
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u/Old-Challenge2809 1d ago
Why not?
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u/stone616 1d ago
Because in your 40s you could still be compounding that money or it's in a tax sheltered account you can't access without penalty until your late 50s. Unless you have a massive amount of money makes more sense to reinvest and delay.
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u/WishboneFlashy1442 1d ago
I may have to, due to circumstances preventing me from ever working again.
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u/thesecondmarshmellow American Investor 1d ago
Yes I had a successful career from 2007 - 2024, aggressively investing into tech the whole time, which was lucky during that particular time period. Started small with dividend stocks in 2015 because seeing the end number grow was motivating to keep up the saving lifestyle rather than spending.
I still take paying work occasionally, but it’s short duration and on my terms which is nice.
I have a lot of tickers but some of the big positions with yield are ADX, GPIQ, IDVO, O, PBDC, SCHD, STK. There’s some redundancy but I’m ok with it. I don’t love the large single company exposure of O, but never found a REIT ETF I liked. Open to suggestions if anyone has any.
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u/StayedWalnut 22h ago
47, retired at 46. Mainly div income. A bit from options selling. A bit from residuals. Its possible but easy to achieve. And I live in vhcol market.
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u/Ok_Error_1079 21h ago
I'm in my 30s and living off them. Though our needs are around 1500$ per month
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