59-Year-Old Retiree Earning $65,000 in Dividends Reveals Portfolio: Top 3 ETF Picks

Benzinga and Yahoo Finance LLC may earn commission or revenue for some articles through the links below.

Markets got off to a slow start in September amid volatility and uncertainty over rate cuts and the future trajectory of the US economy. Some point to cracks in the labor market as signs of a possible recession. In this context, investors seek diversified sources of income to protect themselves against risks. Activity on Reddit’s dividend discussion boards is picking up as more retail investors turn to funneling their capital into dividend stocks and ETFs.

Trending now:

• A billion dollar investment strategy with minimums as low as $10 — you can become part of the next big real estate boom today.
  This is a paid advertisement. Please carefully consider the Fundrise Flagship Fund’s investment objectives, risks, fees and expenses before investing. This and other information can be found in fund prospectus. Read them carefully before investing.

• This multi-billion dollar fund invested in the next big real estate boom, here’s how you can sign up for $10.
  This is a paid advertisement. Please carefully consider the Fundrise Flagship Fund’s investment objectives, risks, fees and expenses before investing. This and other information can be found in fund prospectus. Please read them carefully before investing.

Many new investors wonder if it is even possible to make a significant amount of money from dividend stocks. A few years ago, someone on Reddit asked the r/retirement subreddit if it was possible to retire and live off dividends. There were many interesting answers to this question. We specifically focused on the response of a Redditor who claimed to be earning around $65,000 per year in dividends from an initial investment of $575,000 to $600,000.

This Redditor’s portfolio consists of just three ETFs. He said that just 10 years before reaching this dividend income figure, he was “broke”.

“At the end of 2013, I was broke. I went into 50,000 from a previous employer who gave me the option to keep my 323.00 per month pension which was to start in 10 years or accept a lump sum of 50k. I opted for One lump sum and invested it all in Apple Eight years later and I’m retired,” said the Redditor.

Let’s take a look at the funds in his portfolio.

Global X Nasdaq 100 Covered Call ETF

Global X Nasdaq 100 Covered Call ETF (NASDAQ:QYLD) generates income by selling covered call options on the Nasdaq-100 index. The fund was launched in 2013 and has paid monthly income to investors since then. The fund has returns of approximately 12%. Some of the ETF’s top holdings are Apple, Nvidia, Microsoft, Amazon, and Broadcom.

The story continues

The Redditor who shared his portfolio said that QYLD is one of the high-yielding dividend investments in his portfolio that helps him pay his mortgage every month. However, many on Reddit believe that QYLD is one of the riskier investments because the ETF underperforms, especially when the broader market is choppy. However, the ETF suits those who want to generate high monthly income with heavy investment. QYLD is up about 1.92% this year.

Global X Russell 2000 Covered Call ETF

Global X Russell 2000 Covered Call ETF (NYSE:RYLD) generates income by selling call options on the small-cap and heavy-cap Russell 2000 index. The ETF yields approximately 12.3%. As a covered call ETF, RYLD is also not without risk and often experiences losses during bear markets. However, Redditors believe that interest rate cuts expected in September and possible investor interest in small-cap stocks in the coming months could boost the ETF. Over the past month, the ETF is up about 5%.

Read more:

Icahn Enterprises LP

Billionaire Carl Icahn’s conglomerate, Icahn Enterprises LP Common Stock (NASDAQ:IEP), has been a tempting investment for income investors for years thanks to its past dividend yield of more than 25%. However, the company’s fundamentals and recent controversies have investors worried about the safety of its dividend. In August, Icahn settled with the SEC over allegations that the billionaire failed to disclose that he was pledging most of the company’s securities for billions in personal margin loans. The settlement comes about a year after Hindenburg Research alleged that Icahn ran “Ponzi-like economic structures” at the holding company.

However, the Redditor, who claimed to earn about $65,000 in dividends per year, said in his post (reminder: this was two years ago) that he invested in IEP for the following reasons:

“IEP is a bit of a different animal. It is a managed limited partnership, and although the quarterly payments are called dividends, they are distributions. Because it is an MLP, there is a K1 form at tax time, which really requires a tax expert. to top it off, so it’s an expense IEP pays $2 per share, which was about a 15% yield, Carl Icahn owns IEP and owns a few different companies, which owns Pep Boys AAMCO Transmission, among others.”

But a lot of water has gone under the bridge since this post. Last year, IEP cut its dividend by 50% and now pays about $1 per share.

Tax Implications of Dividend Income Portfolio of $65,000

The Redditor who made about $65,000 in dividends from the ETFs above was also asked about the tax implications of his investments. Here’s what he said:

“I’m over 59.5 so only federal taxes, no state income where I live. When I claim a distribution, I have 18% withheld for taxes. That’s more than enough to cover me for dividends, but I’ll probably owe something for SS. I don’t have the total of 65,000 set aside as needed and I’m still saving more than I ever have in my life.

Lock in high rates now with a short-term commitment

Leaving your money where you won’t earn anything is like wasting money. There are ways you can take advantage of the current high-interest environment by investing in private real estate.

EquityMultiple’s Basecamp Alpine Notes is the perfect solution for novice investors. It offers a target APY of 9% with a term of just three months, making it a powerful short-term cash management tool with incredible flexibility. EquityMultiple issued 61 series of Alpine notes and met all of its payment and funding obligations with no missed or late interest payments. With a minimum investment of $5,000, Basecamp Alpine Notes makes it easier than ever to start building a high-yield portfolio.

Don’t miss this opportunity to take advantage of high yield investments while rates are high. Check out Benzinga’s favorite high yield deals.

This article 59-Year-Old Retiree Earning $65,000 in Dividends Reveals Portfolio: Top 3 ETF Picks originally appeared on Benzinga.com