A 58-year-old early retiree who has built a portfolio worth $4.8 million shared his insights and top stock picks. The investor retired in 2021 and makes $170,000 a year in dividends. His portfolio has grown by $1.2 million since retirement, despite substantial spending over the past 3.5 years.
The investor advised others not to focus too much on yield and to avoid spending from their dividend income prematurely. “It’s just math. And the time/patience needed to accumulate, which in my case was about 35 years.
Paying for random expenses with small amounts of dividend while you are accumulating is a great way to choke your future wealth,” he explained. Some of the key holdings in the investor’s portfolio include:
SPDR Portfolio High Yield Bond ETF: This ETF provides exposure to USD-denominated high-yield debt. It tracks the ICE BofA US High Yield Index and generates monthly income from the interest income collected on its high-yield bond holdings.
Dividend portfolio strategy insights
Janus Henderson B-BBB CLO ETF: This ETF gives investors exposure to securities with low default risk, low correlations to traditional fixed-income asset classes, and yield potential. It focuses on collateralized loan obligations and yields over 7%.
Janus Henderson AAA CLO ETF: The Janus Henderson AAA CLO ETF invests in high-quality collateralized loan obligations, providing exposure to asset classes with low risk and volatility. It yields over 6%. JPMorgan Equity Premium Income ETF: This ETF makes money by investing in notable large-cap U.S. stocks and selling call options, providing a reliable stream of income.
JPMorgan Nasdaq Equity Premium Income ETF: A high-yield covered call ETF, this fund distributes monthly dividend income, investing in Nasdaq companies and generating extra income by selling call options. It has a dividend yield of about 9%. NEOS S&P 500 High Income ETF: This high-yield covered call ETF invests in top S&P 500 companies and generates extra income by selling call options on stocks, paying out monthly dividend income.
The Virtus InfraCap US Preferred Stock ETF: This ETF invests in preferred stocks of U.S. companies, boasting a dividend yield of more than 9%. The early retiree emphasizes the importance of investing prudently and staying patient over the long term to build a robust income-generating portfolio.
