John, a 58-year-old early retiree, is making $170,000 a year in dividends and interest from his $4.8 million portfolio. He retired in 2021 and has no regrets about his decision. “Retirement isn’t paradise, but I have zero regrets and I’m up $1.2MM since retiring, despite spending plenty during the past 3.5 years,” he said in a comment on the r/Dividends Reddit discussion board.
John advises investors not to focus too much on yield and avoid spending from their dividend income while accumulating wealth. “It’s just math. And the time/patience needed to accumulate, which in my case was about 35 years.
Just a tip: paying for random expenses with small amounts of dividend while you are accumulating is a great way to choke your future wealth,” he said. Here are some of the key holdings in John’s portfolio:
1. SPDR Portfolio High Yield Bond ETF: Provides exposure to USD-denominated high-yield debt and generates monthly income from interest income.
2. Janus Henderson B-BBB CLO ETF: Gives investors exposure to securities with low default risk, low correlations to traditional fixed-income asset classes, and yield potential. It focuses on collateralized loan obligations and yields over 7%.
3. Janus Henderson AAA CLO ETF: Invests in high-quality collateralized loan obligations and provides investors with exposure to asset classes with low risk and volatility.
Dividend-funded retirement strategy
It yields over 6%. 4. JPMorgan Equity Premium Income ETF: Makes money by investing in some of the most notable large-cap U.S. stocks and selling call options.
5. JPMorgan Nasdaq Equity Premium Income ETF: A high-yield covered call ETF that distributes monthly dividend income. It invests in Nasdaq companies and generates extra income by selling call options.
It has a dividend yield of about 9%. 6. NEOS S&P 500 High Income ETF: A high-yield covered call ETF that pays monthly dividend income.
It invests in some of the top S&P 500 companies and generates extra income by selling call options on stocks. 7. The Virtus InfraCap US Preferred Stock ETF: Invests in preferred stocks of US companies.
The fund has a dividend yield of more than 9%. John’s approach emphasizes the importance of patience, consistency, and prudent financial management to achieve a comfortable retirement funded by dividends.
