Dividend investing may not always grab the spotlight, especially when tech stocks and AI are dominating market buzz. However, for long-term investors, the stability of income-generating stocks is crucial. According to research from Richard C. Young Investment Advisors, dividends and reinvested dividends contributed to about 60% of the S&P 500’s total return over the past 40 years.
Recently, a dividend investor shared his impressive monthly income report on Reddit’s r/Dividends community, revealing that he earns around $5,300 per month in dividend income. His portfolio, valued at approximately $880,368, took just one year to grow from $4,000 to $5,300 in monthly payouts.
How He Picks Dividend Stocks
The investor outlined the key criteria he follows when selecting dividend stocks:
- Dividend yield over 3%: A higher yield helps generate more income from your investments.
- Dividend growth above 3-4%: This ensures that the dividends keep pace with inflation.
- Five-year stock price trend: It’s essential to assess if the stock is rising, stable, or declining.
- Brand power: Does the company have a strong presence in its market?
- Essential products/services: The investor focuses on companies that provide what “people need,” such as energy stocks like EPD or ENB.
Advice for Beginners
For those new to dividend investing, his advice was simple: “If you’re unsure where to start, begin with VOO and QQQM.” These exchange-traded funds (ETFs) offer a reliable entry point into the market. He suggests watching the market for a while before diving into individual stocks.
Top Dividend Stocks in His Portfolio
Among his top holdings, one of the most notable is Arbor Realty Trust Inc. (NYSE: ABR). A mortgage REIT, Arbor Realty boasts a dividend yield of over 11%. The investor holds 2,020 shares of the company, generating $3,650 annually in dividends from Arbor Realty alone.
Dividend investing remains a powerful strategy for long-term wealth generation, and this investor’s journey to earning over $5,300 monthly shows the potential for consistent income growth through disciplined stock selection.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult with a financial advisor before making any investment decisions.