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My wife is retired and I will be retiring at the end of the year. With pensions and SS we will have all of our expenses covered. We have 300k in IRA accounts. (50% Roth,50% Traditional) . I don’t like the idea of buying an annuity so I am considering investing in Dividend stocks for additional income and reinvesting the income until the time would possibly come in the future that we might choose to use the income.
Would you do this if you were in my situation?
If so, do you have any recommendations?
What are your HD thoughts?
My strategy has been to hold Dividend-paying stocks as a hedge so that if the market drops I don’t have to make withdrawls when it’s down;I can just take my dividends. Roughly half of my savings are in individual dividend-paying stocks, and they pay me (annually) almost as much as my SocSec. So far it’s working.
My reason for investing in and recommending dividend funds (and stocks) is NOT in order to harvest dividends for current income. As several have pointed out (https://humbledollar.com/2024/08/yielding-no-advantage/), for most of us it is easy enough to intentionally choose what and when to sell when we need more cash.
Rather I value that these funds and the stocks contained therein are generally more conservative investments, holding less debt, bringing in more free cash flow, and so forth. As such, they are someplace in between holding debt (including bonds) directly and leveraging higher earnings multiples and debt obligations (held by others) for higher returns.
I believe such a middle ground better suits many investors, and in particular may outperform balancing a mix of riskier equities and less rewarding bonds.
Imagine that we wanted to stabilize a teeter totter (seesaw). While we can balance two weights at the ends, the most stable teeter totter is achieved by concentrating the weight as close to the middle as possible. The ride may be a lot less exciting, but a whole lot more calming.
If in a nontaxable account sure, else driving up unnecessary taxable income
That’s my reason for holding a dividend growth fund as well. But, I would stop short of saying it’s a middle ground between stocks and bonds. It’s most definitely stocks, maybe with a bit more quality/less volatility than a total market index fund, but not by much.
I was wondering if anyone had data on annual dividends over decades for international stocks. (such data for US stocks seems far easier to come by) In other words, how have divid