Living off dividends?

[james.hendrickson]

Hi Guys,

So I'm at the tail end of a week long trip in Hawaii. And the cost of living is super high here, so a lot of people I've been talking with are looking for an exit from the paid labor force.

So here is my question to the board: is there a credible path to actually living of dividends or the earnings from your investments?

There is a ton of interest in this question from lurkers, and I'm guessing some of you have this problem solved or partially solved.

[disneysteve]

There is nothing magic about dividends. In fact, if you hang out in the Early Retirement forum or other investment forums, you'll find a lot of people are actually opposed to investing for dividends. Why? Because dividends are essentially forced sales of holdings. They are taxable events that occur whether you want them to or not.

That said, sure, tons of retirees live off of the income generated by their portfolios. YTD as of 11/30/23, our Vanguard account alone has generated over $51,000 of investment income between interest, dividends, and capital gains. There will probably be another $15,000-20,000 from the rest of our portfolio by year end. I know one fund already paid out $5,000 in year-end gains and dividends. So that will be somewhere in the $70-75,000 range, some taxable, some not. That isn't enough for us to live on but it certainly could be for many. And I could make adjustments to our portfolio to be more income-focused and less growth-focused if I wanted to.

My 93-year-old mother lives on her SS check and her investment income.

[LivingAlmostLarge]

Hi Guys,

So I'm at the tail end of a week long trip in Hawaii. And the cost of living is super high here, so a lot of people I've been talking with are looking for an exit from the paid labor force.

So here is my question to the board: is there a credible path to actually living of dividends or the earnings from your investments?

There is a ton of interest in this question from lurkers, and I'm guessing some of you have this problem solved or partially solved.

Most people in hawaii work for the state, county, or federal. They have pensions and that's the bulk of their retirement. Hawaii is a huge union state and people don't normally have much invested because of it.

I think while most on the early retirement forum are correct on not investing for dividends, a lot depends on your personality. I wouldn't and don't like dividend investing for myself but my mom wants guaranteed income and wants to leave her money in cash. Not even CDs or Bonds. So CDs, bonds, or dividend stocks or preferred stocks is better than NOTHING for her.

[bjl584]

There are entire communities dedicated to this very subject. It's not an uncommon thing at all. Many will couple a dividend strategy with real estate since it takes much less capital to generate income from rentals than it does from stocks.