Attorney With $2 Million In Dividend Stocks Pulls $16,000/Month – Says ‘Young Investors Are Blowing Their Future By Cashing Out Too Soon’
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Investing is a journey that requires patience and a long-term perspective, but for some younger investors, the possibility of quick gains is too tempting to resist.
This can significantly impact long-term wealth accumulation since compounding is one of the most powerful reasons to let money grow, especially when talking about dividend investing.
Enter the story of an attorney who has mastered the art of dividend investing. With a $2 million portfolio generating $16,000 monthly in passive income, he shares his journey in Reddit’s r/Dividends community.
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The poster has built his $2 million portfolio by applying a dividend and covered calls strategy. He split his investments into $300,000 tranches, which are now yielding around 10% annually.
“For me, being in all-dividends now is a dress rehearsal for full retirement. It’s to work out the kinks, watch the cash flow, watch the values fluctuate, and make sure this all works as it “should” on paper. And thus far, it’s working great,” he wrote.
The poster’s journey wasn’t built on dividends alone from the start, as he initially grew his wealth through S&P 500 and NASDAQ index funds, taking advantage of their leveraging potential.
Still, as he nears retirement, he has started to focus on income-generating assets to ensure financial stability. The investor has his holdings in a self-directed Roth IRA.
The attorney’s portfolio consists of a combo of dividend-paying stocks and ETFs, so let’s analyze them below.
JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is a covered call ETF that generates income by selling call options on NASDAQ-listed stocks. JEPQ has a dividend yield of around 9.53% annually.
Ares Capital Corporation
A business development company, Ares Capital Corporation (NASDAQ:ARCC) focuses on financing middle-market companies. With a dividend yield of over 8%, ARCC has a diversified investment portfolio and offers exposure to private debt markets.
Altria Group Inc.
Altria Group Inc (NYSE:MO) is a major producer of tobacco products, mainly known for the Marlboro brand. The company pays 8% to 9% in annual dividends, and because it’s a classic dividend aristocrat, it appeals to income-seeking investors the most.
A mortgage real estate investment trust, Ellington Financial Inc. (NYSE:EFC) specializes in buying and managing mortgage-related assets, such as residential and commercial mortgage-backed securities. EFC generates approximately 13% in dividend yield annually.
Guggenheim Strategic Opportunities Fund
Guggenheim Strategic Opportunities Fund (NYSE:GOF) has a 13.88% dividend yield per year. GOF is a closed-end fund that invests in a diversified portfolio of debt and fixed-income securities.
Enterprise Products Partners LP
With an annual dividend yield of around 6% to 7%, Enterprise Products Partners LP (NYSE:EPD) is a leading North American midstream energy services provider that focuses on the storage and transportation of oil, natural gas and petrochemicals.
Barings Corporate Investors
Generating 7.69% in dividend yield annually, Barings Corporate Investors (NYSE:MCI) is a closed-end fund that invests mainly in privately placed debt and equity securities of U.S. companies.
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