World Stock Watch

Unlocking the Secrets of a $1.23 Million Dividend Portfolio

As interest rates continue to fall, dividend investing becomes an increasingly attractive option for investors seeking stable returns. A recent report from Sterling Capital reveals that dividend stocks outperform non-dividend stocks after the first rate cut, with dividend growers performing even better than high-yield stocks in this environment.

A Real-Life Example of Dividend Investing Success

Meet a 53-year-old Redditor who’s “getting ready” to retire, thanks to his impressive dividend income portfolio. With a total portfolio value of $1.23 million, he’s generating an astonishing $48,000 in annual dividend income. So, what’s his secret?

From Military to Millionaire

Our investor’s journey began when he was just 26 years old. After losing significant sums three times, he changed his investment strategy to focus on long-term growth. He stopped chasing high-flyers and instead opted for a slow and steady approach. Today, he’s reaping the rewards of his patience and discipline.

Top Holdings Revealed

Let’s take a closer look at the top holdings in our Redditor’s portfolio:

• Schwab U.S. Dividend Equity ETF (SCHD): With a 33% allocation, this ETF tracks the Dow Jones U.S. Dividend 100 Index, providing exposure to top dividend stocks like Home Depot, Coca-Cola, and Verizon.
• Vanguard High Dividend Yield Index Fund ETF (VYM): Up 15% this year, VYM tracks the FTSE High Dividend Yield Index, offering investors high-yield U.S. dividend stocks like Broadcom, JPMorgan, and ExxonMobil.
• Vanguard International High Dividend Yield Index Fund ETF (VYMI): This ETF provides exposure to non-US dividend stocks, with top holdings including Nestle, Novartis, and Roche.
• SPDR Portfolio S&P 500 High Dividend ETF (SPYD): Yielding over 4%, SPYD tracks the S&P 500 High Dividend Index, featuring top holdings like Kellanova, Public Storage, and Hasbro.
• Fidelity High Dividend ETF (FDVV): Tracking the Fidelity High Dividend Index, FDVV’s top holdings include Apple, ExxonMobil, Nvidia, and Broadcom.
• Vanguard Dividend Appreciation Index Fund ETF (VIG): Ideal for those seeking exposure to companies that consistently grow dividends, VIG tracks the S&P U.S. Dividend Growers Index, with top holdings including Apple, Microsoft, and UnitedHealth.
• iShares International Select Dividend ETF (IDV): This ETF gives investors exposure to dividend stocks from developed markets outside the US, tracking the Dow Jones EPAC Select Dividend Index.
• Pfizer Inc. (PFE): With a 15-year dividend growth streak, PFE brought in $1,680 in annual income for our Redditor.
• Reaves Utility Income Fund (UTG): Yielding about 8%, UTG invests in utilities and infrastructure companies to generate monthly dividend income for investors.

Takeaways from a Dividend Investing Pro

Our Redditor’s success story serves as a reminder that slow and steady wins the race. By focusing on long-term growth and consistent dividend income, investors can build a reliable portfolio that generates substantial returns over time. Whether you’re just starting out or nearing retirement, there’s much to be learned from this impressive dividend income portfolio.