05-23-2015, 01:23 AM
5% yield is manageable with a portfolio largely based on REITs, utilities, telecoms and financials. 5% would be $4167 per month before taxes. Anything above 5% is definitely getting very risky, even a 5% yielding portfolio will be heavily weighted on the types of stocks I mentioned above and will be lacking in terms of diversification. Also, as this is a dividend GROWTH forum, you will quickly notice that those types of stocks I mentioned above usually have quite low dividend growth numbers.
So that is one option. A second one is pretty much what Eric suggested, a solid portfolio with 3-4% dividend income, then sell what is needed to get up to 6% income per year. This second one seems a bit more balanced and gives a bit more flexibility to spending as you are selling assets and can choose to do so when necessary, but it does take a little bit of management as opposed to just sitting back and cashing in on just the dividends. Also selling assets each and every year puts a bit of pressure on the dividend growth rate if you want to keep up with inflation.
So that is one option. A second one is pretty much what Eric suggested, a solid portfolio with 3-4% dividend income, then sell what is needed to get up to 6% income per year. This second one seems a bit more balanced and gives a bit more flexibility to spending as you are selling assets and can choose to do so when necessary, but it does take a little bit of management as opposed to just sitting back and cashing in on just the dividends. Also selling assets each and every year puts a bit of pressure on the dividend growth rate if you want to keep up with inflation.