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Dividend fund investing/strategies


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Didn’t see a thread specifically for dividend stocks/etfs etc. For people who are involved and utilize them, how do you use it and what fund(s) did you pick?

Examples being an HOA payment for a condo. Maybe you downsized, sold the house and put in a fund that pays monthly that covers rent. Utilities, Groceries, anything you have a payment plan on etc

I know the big hitters in the space are considered SCHD, JEPI,JEPQ, QQQI. Curious what the board may have? I saw a video with a guy who used Yield Max ETFs to pay for a solar panel installation at his house and got me thinking after he acknowledge the fund probably goes to 0 at some point. Won’t pretend to know what covered call options are, but I do comprehend qualified vs non qualified dividends

 

 

 

 

Edited by StassneyHorn
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Covered call options are selling call options against a stock position you own.  Used to generate income from a stock position from the option premium.  The trade is covered (you own enough of the stock to cover the call) so you aren’t stuck buying the stock at a price that loses money.

IMPO the biggest mistake in dividend investing is yield traps like AT&T over the last decade.  The 7% dividend looks great but the stock slowly erodes in value.

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One ETF I just started putting into recently is DGRO. I wanted to start moving some risk out of S&P/Nas into something that still focused on large caps, but more stable the closer I get to retirement.

Then from my ESPP, I've been selling my LT gains once a year and buying some individual dividend stocks (F, VZ, ET, MPLX, DVN, MPW), with the thought of using those dividends as an income stream in retirement. Mostly mixed results with that, so may start moving those into a dividend ETF or large cap value fund as well. Let somebody else find the values/yields and I'll just tinker around with a few individual stonks.

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I went down the dividend yield path for a few years investing in, and carefully watching, their performance.

I ended up dramatically rolling back my investments in higher dividend stocks because at the end of the day a company must generate earnings and grow those earnings in order for an investor to receive money in the form of dividends or stock price appreciation. 

I found that high dividend stocks might deliver great dividends, but over time their stock prices offset some of those distributed earnings, or the stock price didn’t grow enough to make their performance attractive as compared to other investments in terms of total return.

However, I’m not saying there is no role for high dividend stocks in a portfolio. There is something to be said for locking in the returns from dividends, as opposed to having all your returns in price appreciation.  As a result I do hold a few higher dividend ETF’s, VYM and VYMI.

I stay away from higher yield stuff because there are real questions about the total return potential over the long term. There is some pretty big downside risk with a lot of it. 

Of course with the market valuations so high right now, having some money in higher dividend investments could end up being a somewhat savvy move. 

 

Edited by Dbeasy
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I don't chase dividends.   I do have VTI which has a yield around 1.25%, but currently I reinvest the dividends.   Next year, I will use them as part of my income in retirement.   I get some dividends, but also keep the upside in the market with a total market index.  

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Since I’m still working and contributing, I don’t worry about dividends in the tax advantaged plans. Just want growth. 

On a brokerage account, I’ve been playing around with throwing excess money here and there into dividend stocks. First it was individual and lately more into SCHD and SPYD ETFs. The eventual goal is to earn $1,000/mo in dividends by retirement. Whether I stick to path, who knows.

At first I chased yield but realized that too many of those stocks either lose price or they offer anemic dividend growth. I’ve become more interested in higher quality stocks that grow dividends by 4-5% per year and have solid cash flow. I figure that is the best long term play.

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I have been playing around with some of the higher risk higher yield dividend stocks in my play account on schwab. I have about 10k total invested in JEPQ, SPYI and SVOL. The yields are great but not sure SPYI and SVOL are holding their value. There is some erosion there. Still fun to fuck around and see if there really are some 10% dividend winners 

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