[Alegra]

I’m exploring the concept of achieving financial independence through dividend investing and am curious about those who have successfully transitioned to living purely off their dividend income. The nuances of such a lifestyle, especially in terms of financial strategies and discipline, can be deeply insightful for someone contemplating a similar path.

For individuals who’ve achieved this or financial experts familiar with dividend-based income: Are there any of you who sustain yourselves entirely on dividends? If so, what are the three foundational rules or principles you consider non-negotiable in your approach to this lifestyle? I’m keen on understanding the pillars that ensure stability and growth in a dividend-centric financial strategy.

[Jeff]

I took two years off and lived off a blend of dividends and rental income. I’m back to work now, but it’s my own business and my choice to go back.

I’m not sure what rules you mean. I just hold a high Div etf and have about 300k in there generating 900-1000 a month.

[Paul]

I invest my time and skills at a job, my employer pays me dividends each week, enough to live off too.

[Christopher]

Dividends are Great But Cashflow is Better. Your Money is Worth More in Real Estate!

[Troy]

Someone in Canada must.

We have a candian tax dividend credit. Tax free ! dividend return if it’s a Canadian company.

[Capitalist]

You’d need a lot of money. I don’t have that kind of money to invest. Rentals will generate faster results but aren’t as passive.

[Dane]

Dividends are simply one piece of the puzzle when balancing income and appreciation. You can cost yourself money by focusing on them too much.

Please look up “dividends are not free money” in any internet search before diving in headfirst.

[Nikhil]

1) Taxes: There’s a tax benefit to holding longer positions in dividend stocks or etfs and getting “qualified dividends” taxed at long-term capital gains rates (avg 15% in US) vs ordinary income tax rates (20-30%+). That’s up to 50% off taxes, which is meaningful when amplified with large dividends. These are for the US market.

2) Diversify: don’t put all your eggs into one dividend stock, diversify into either mutiple stocks or etfs (preferable). I also use 2 different brokers (schwab, fidelity) for different etfs in case one is down or has issues with the connected bank on a transfer, etc (very rare but always a good hedge).

3) vary profiles: when investing in multiple dividend instruments, vary them by yield and growth. SCHD has a lower yield (3%) but grows consistently over time so both the capital base and dividend payout will increase over time adding a nice inflation boost. You might pair that with JEPI (9%) or PTY (10%), which generate high yields however see more volatility in price. I split my portfolio this way, and reinvest back into the volatile high-yield plays on dips with excess dividend income to grow the base.

[Author]

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