Unlocking the Power of Dividend Investing
As major AI stocks take a breather, investors are seeking new opportunities in 2025. According to Matt Powers, managing partner at Powers Advisory Group, dividend stocks are poised for a comeback. Powers believes that dividend growth stocks tend to perform well in the early stages of rate-cut cycles, and cash on the sidelines could be a catalyst for dividend-paying companies.
A Shift to Dividend Equity
Powers notes that assets and money market funds have continued to grow throughout the year, and investors have been taking advantage of elevated rates with low risk. He predicts a possible shift to the dividend equity side as a relatively conservative way to gain exposure.
Real-Life Success Stories
On Reddit’s r/Dividends discussion board, one investor shared his remarkable story of retiring at 57 with his wife, thanks to dividend investing strategies. With a $2.5 million retirement fund, his annual dividend income is approximately $170,000, mostly generated from bond funds. He advises younger investors to “pay yourself first” and not to “chase the market or try to time it.”
Top 5 High-Yield Bond Funds
The investor shared the five core bond funds in his portfolio, which have delivered impressive returns:
- PGIM High Yield Fund: Primarily invests in high-yield bonds rated Ba or lower by Moody’s or BB or lower by Standard & Poor’s.
- Virtus Seix Floating Rate High Income Fund: Invests in floating-rate leveraged loans, seeking to earn more interest than the LIBOR benchmark.
- PIMCO Income Fund: Generates income by investing in a diversified portfolio of fixed-income instruments.
- Cohen & Steers Preferred Securities and Income Fund: Invests in preferred and debt securities issued by U.S. and non-U.S. companies.
- Thrivent High Yield Fund: Invests in corporate bonds that are either unrated or rated as junk bonds.
Alternative Investment Opportunities
For those seeking to diversify their portfolios, Arrived offers a unique opportunity to invest in shares of rental properties for as little as $100, providing potential monthly rental income and long-term appreciation. With over $1 million in dividends paid out last quarter, Arrived is an attractive alternative for investors seeking to build a diversified real estate portfolio.
Expert Guidance
Wondering if your investments can get you to a $5,000,000 nest egg? 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.
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