04 Jan Question: What About Income-Generating Portfolios?
Question: What About Income-Generating Portfolios?
Jan. 4, 2023
It would be nice to beat the market.
And it absolutely can be done.
But what about the people who don’t really care about beating the market?
What about the people who are most concerned with getting income from their investments? They don’t need a million percent return.
They need a check each month.
Well, that person could try real estate. That’s definitely worked for some people. If you like prospecting and tenants and organizing cleaning crews and hiring contractors and dealing with realtors, that might be a way to go.
Or you could do something much easier.
You could just buy stocks and reap the dividends.
One of those options definitely seems easier than the other.
But what dividend stocks should we pick?
That’s a good question. We could buy Dividend Aristocrats that don’t pay out very much but have grown dividend rates for decades, or we could try our hand with risky stocks that pay 20% per month…until they potentially go bye-bye.
Or we could do something in-between.
Here’s what a recent Forbes article offered in regard to dividend portfolios. The author’s goal is to create a portfolio that creates a dividend of 8% per year.
That would mean that an investor could hypothetically receive $80,000 a year indefinitely on a $1 million account. Not bad.
Here are the recommendations from the article:
- AMPL (current dividend 7.32%)
- ARCC (current dividend 10.4%)
- WPC (current dividend 5.45%)
That’s potentially a 7.7% return each year–before fees and assuming these companies never drop their dividends. We could theoretically take out $70k per year and never touch our original nest egg.
With no work.
In the new Stock Program I talked about last year, we’re going to discuss more companies like that, and I have my favorites (email me for details).
But those three are an interesting possible solution and are a great place to start if you’re looking for income generation.
In our next Newsletters, we’ll discuss a few more things to consider for 2023, including futures and options.
Talk to you soon.
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