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Dividend investing is gaining popularity among young investors worldwide. An analysis from Heartland Advisors shows that dividend stocks outperformed non-dividend payers from 1928 through 2017, with the volatility of income stocks much lower than that of companies that don’t pay dividends.
But which dividend stocks can help you make consistent money with low volatility? Let’s turn to a case study for ideas and inspiration.
Last month, an investor shared his detailed income report and story on r/Dividends â a discussion board for income investors on Reddit. According to his post, he collected about $9,888 in December on an initial investment of $1.2 million. The investment amount also included about $350,000 in cash across two high-yield savings accounts. He said his dividend income was higher in December because most of the companies in his portfolio pay quarterly. He expects to make, on average, $6,000 to $7,000 per month in dividends and interest this year.
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“This has been a journey of trial and error, which I began in the summer of 2023 when I first started considering the possibility of leaving my 9-5 (which I have since done),” he added.
The investor, under 35, said he would not recommend young investors put their money in dividend funds because there are “other stocks” that offer higher returns and due to tax reasons.
He said he’s been working and investing since his early 20s. He saved up because of high-paying jobs in the finance and tech industries. He also said “a few lucky investments” and aggressive saving and investing resulted in his successful portfolio today.
Based on the names he shared in his post, let’s take a look at some of the top dividend stocks in this investorâs portfolio.
Vanguard High Dividend Yield Index Fund ETF
Vanguard High Dividend Yield Index Fund ETF (VYM) provides exposure to some of the most established and safe dividend stocks, including ExxonMobil, Coca-Cola, Walmart and Home Depot. The ETF tracks the FTSE High Dividend Yield Index.
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The Vanguard International High Dividend Yield Index Fund ETF
The Vanguard International High Dividend Yield Index Fund ETF (VYMI) was another key holding in the investorâs portfolio which collected about $9,800 per month in dividend income. VYMI tracks the FTSE All-World ex U.S. High Dividend Yield Index. It’s a suitable ETF for those seeking exposure to non-US dividend stocks. Nestle, Novartis and Roche are the three biggest holdings of the fund.
Franklin International Low Volatility High Dividend Index
The Franklin International Low Volatility High Dividend Index ETF (LVHI) exposes investors to dividend stocks with relatively high yield and low volatility trading in developed markets outside the U.S. The fund pays quarterly and has a dividend yield of about 4%.
Schwab U.S. Dividend Equity ETF
The Redditor who collected $9,800 monthly dividends had Schwab U.S. Dividend Equity ETF (SCHD) in his portfolio. The fund tracks the Dow Jones U.S. Dividend 100 Index. It exposes you to some of the top dividend stocks trading in the U.S., including Home Depot, Coca-Cola, Verizon, Lockheed Martin, Pepsi and AbbVie, among many others. Since SCHD’s holdings are mostly conservative dividend payers, it’s suitable for investors close to retirement looking for consistent dividend income.
Invesco S&P 500 High Div Low Volatility ETF
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) invests in high-yield dividend stocks with low volatility. It tracks the S&P 500 Low Volatility High Dividend Index. The fundâs top holdings include Kinder Morgan, AT&T, Simon Property, ONEOK and VICI Properties.
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Schwab S&P 500 Index Fund
Schwab S&P 500 Index Fund (SWPPX) is suitable for investors looking for exposure to the broader stock market and regular dividends. The fund tracks the S&P 500 index and has a dividend yield of 1.1%, according to Benzinga Pro. Apple, Nvidia, Microsoft and Amazon are among the fundâs top holdings.
Invesco High Yield Equity Dividend Achievers ETF
The Invesco High Yield Equity Dividend Achievers ETF (PEY) invests in stocks with a strong record of dividend growth. It tracks the Nasdaq U.S. Dividend Achievers 50 Index. It has a dividend yield of over 4%.
Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF (VOO) was among the investorâs biggest positions. VOO is one of the best ways to gain exposure to the broader U.S. market and earn steady dividend income. The fund gained about 26% in the last 12 months.
SPDR Portfolio S&P 500 High Dividend ETF
The SPDR Portfolio S&P 500 High Dividend ETF (SPYD) tracks the total return performance of the S&P 500 High Dividend Index. The fundâs top holdings include Kellanova, Public Storage, Hasbro and Simon Property.
Global X 1-3 Month T-bill ETF
The Global X 1-3 Month T-bill ETF (CLIP) provides investors with exposure to short-term U.S. Treasury bills. It’s a suitable fund for investors trying to avoid volatility.
Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAssetâs free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
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This article From 9-to-5 Grind to $9,800 per Month in Dividends: Investor Under 35 Shares His 10 Stock Picks originally appeared on Benzinga.com
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