05-05-2024, 02:16 PM
Firstly, do look real real deep into these high dividend payers. You know that their dividends are extremely high, which is part of the reason you picked them, but can they really sustain those dividends if/when things go sideways? Because if they cut that dividend, for whatever reason, then you're losing a big part of your cash flow AND the stock price will tank like 20% in a day. That is no small loss of capital, even if your $1.5m is split into 10 different high payers and only one goes and fails.
I don't know how the tax stuff for you goes, but I would assume that you'll be paying some sort of a tax for the dividends received. So do take that into account in your calculations.
Also, I would highly recommend to have a relatively large cash buffer from day 1. Whether this means working an extra month or two, or making the switch to high div payers 6 months before retirement so they can already accumulate a decent chunk of cash... there are plenty of ways. But just having that cash there ready to go is a great way to ease your mind as it'll protect you from "life happens". Plus that cash will eliminate any risk of retiring on the eve of a big market crash and being forced to start to butcher your 401k into falling prices during the first months of retirement.
I don't know how the tax stuff for you goes, but I would assume that you'll be paying some sort of a tax for the dividends received. So do take that into account in your calculations.
Also, I would highly recommend to have a relatively large cash buffer from day 1. Whether this means working an extra month or two, or making the switch to high div payers 6 months before retirement so they can already accumulate a decent chunk of cash... there are plenty of ways. But just having that cash there ready to go is a great way to ease your mind as it'll protect you from "life happens". Plus that cash will eliminate any risk of retiring on the eve of a big market crash and being forced to start to butcher your 401k into falling prices during the first months of retirement.