No. of Recommendations: 21
Something to ponder…and I have been for many years. I also ponder all the good points about total return, sell to make your own dividend, and sell at the average price over time. That’s a lot of moving parts.
We have a portfolio of 15 stocks, the largest position is BRK at around 30% and the smallest is GOOGL at about 0.5%. The other 13 pay dividends and currently cover all of our living expenses, and then some.
This cash flows into multiple accounts each month and gives us both independence and peace of mind. No big sell decisions, or many small ones. No stockpile of multi years living expenses. The dividends flow into both taxed and tax advantaged accounts so we have some discretion over income splitting with my wife, and how much to extract each year and flow through income tax.
I retired in 2015 at 56, my wife in early 2016 and we have been living off the dividend cashflow since then. I managed our investments through the tech crash, the great recession, and the pandemic and each time I got a few dividend cuts and some freezes. Generally, I think we took a 10% dividend reduction to the portfolio twice, but in relatively short order dividends are restored and continue upwards, with annual “pay raises” as I like to call them.
I sleep well at night, even through large market corrections, and am much more comfortable about spending money than I ever was through the whole accumulation phase.
It may not be the very best investment strategy to maximize our total income but, it suits our income needs, complexity level and my personality. My wife is happy.
Happy New Year!
PS Tail wind coming for all those bond proxy, yield hogs, this year :-)
