Backed up the truck on the divi portfolio

[Frugal D]

Hi all,

Haven't posted in a while as I've been trying to FIRE with fits and starts for the past 3 years.

I constructed the following portfolio a couple of years ago as a hypothetical diversified divi portfolio for FIRE. I've never believed in the 4% rule as it always felt too risky. Rather, I wanted to accumulate a principle balance that would cover my annual expenses with the dividend alone and have a little left to spare to reinvest. I have watched the portfolio average yield range from about 3-4% and as of market close today it yields 4.04%. I've been trading and investing for years with moderate success, but have grown tired of the volatility and effort involved. Add to that that I am beyond burned out at my job. Today, I moved all of my brokerage into the divi portfolio which covers my annual expenses and I think this could be the beginning of FIRE.

The risk of course is that these companies cut their dividends as we potentially enter into a recession, but it's a risk I'm willing to take given current job burnout and the side project I've been working on. I am still working full time, but sense a round of layoffs isn't too far off.

Please feel free to use this divi portfolio and augment as necessary! 

Wish me luck!

Company   Ticker   Price   Dividend   Yield %
Apple Inc.   AAPL   $143.39   $0.92   0.64%
Industrial Logistics Properties   ILPT   $5.03   $0.04   0.80%
Tootsie Roll Industries   TR   $37.89   $0.35   0.92%
Nordson Corporation   NDSN   $211.51   $2.04   0.96%
Microsoft Corporation   MSFT   $236.15   $2.72   1.15%
H. B. Fuller Company   FUL   $62.73   $0.76   1.21%
Stepan Company   SCL   $95.41   $1.31   1.37%
Commerce Bancshares   CBSH   $67.86   $1.06   1.56%
MSA Safety Incorporated   MSA   $115.39   $1.84   1.59%
Dover Corporation   DOV   $119.10   $2.00   1.68%
Walmart   WMT   $134.09   $2.24   1.67%
American States Water Co.   AWR   $78.29   $1.46   1.86%
California Water Service Group   CWT   $51.69   $1.00   1.93%
ABM Industries Incorporated   ABM   $40.96   $0.78   1.90%
Lancaster Colony Corporation   LANC   $169.31   $3.20   1.89%
Parker-Hannifin Corporation   PH   $259.91   $5.32   2.05%
McDonalds Corporation   MCD   $249.77   $5.52   2.21%
Genuine Parts Company   GPC   $157.87   $3.58   2.27%
Hormel Foods Corporation   HRL   $44.89   $1.04   2.32%
SJW Group   SJW   $61.02   $1.44   2.36%
Lowe's Companies   LOW   $178.30   $4.20   2.36%
Emerson Electric Co   EMR   $80.15   $2.06   2.57%
Colgate-Palmolive   CL   $70.25   $1.88   2.68%
Pepsi   PEP   $171.46   $4.60   2.68%
Aflac Incorporated   AFL   $59.15   $1.60   2.70%
Cincinnati Financial Corp   CINF   $97.75   $2.76   2.82%
Public Storage   PSA   $293.09   $8.00   2.73%
The Home Depot   HD   $269.46   $7.60   2.82%
Johnson & Johnson   JNJ   $165.11   $4.52   2.74%
Procter & Gamble   PG   $126.99   $3.65   2.87%
Farmers & Merchants Bancorp   FMAO   $25.33   $0.84   3.32%
Coke   KO   $55.08   $1.76   3.20%
Kellogg Company   K   $71.76   $2.32   3.23%
Chevron   CVX   $168.96   $5.68   3.36%
Exon Mobile   XOM   $103.93   $3.52   3.39%
JPMorgan Chase   JPM   $116.13   $4.00   3.44%
The Clorox Company   CLX   $133.11   $4.64   3.49%
Pfizer Inc   PFE   $42.91   $1.60   3.73%
Consolidated Edison   ED   $83.42   $3.16   3.79%
Black Hills Corporation   BKH   $61.08   $2.38   3.90%
Welltower Inc   WELL   $58.98   $2.44   4.14%
Omnicom   OMC   $67.97   $2.80   4.12%
Kimco Realty Corp   KIM   $19.22   $0.80   4.16%
Stanley Black & Decker   SWK   $72.15   $3.16   4.38%
Southern Company   SO   $63.50   $2.72   4.28%
UGI   UGI   $32.53   $1.44   4.43%
Toronto-Dominion Bank   TD   $61.63   $2.73   4.43%
Duke Energy   DUK   $87.23   $3.94   4.52%
Federal Realty Investment Trust   FRT   $90.55   $4.28   4.73%
Ennis   EBF   $21.09   $1.00   4.74%
Store Capital   STOR   $31.54   $1.54   4.88%
Realty Income   O   $57.47   $2.97   5.17%
Blackstone Group   BX   $84.04   $4.56   5.43%
3M   MMM   $113.11   $5.96   5.27%
National Retail Properties   NNN   $39.37   $2.12   5.38%
Leggett & Platt, Incorporated   LEG   $30.95   $1.76   5.69%
Philip Morris International Inc.   PM   $85.03   $5.00   5.88%
W.P. Carey   WPC   $70.54   $4.24   6.01%
Universal Health Realty Income   UHT   $44.39   $2.84   6.40%
Simon Property Group, Inc.   SPG   $98.31   $6.80   6.92%
Verizon Wireless   VZ   $37.00   $2.61   7.05%
AT&T   T   $16.74   $1.11   6.63%
Altria Group   MO   $43.56   $3.60   8.26%
SL Green Realty   SLG   $37.71   $3.73   9.89%
Saratoga Investment Coro.   SAR   $20.36   $2.13   10.46%
Apollo Investment Corp.   MFIC   $10.62   $1.28   12.05%
Goldman Sachs BDC   GSBD   $14.72   $1.80   12.23%
Crescent Capital BDC, Inc.   CCAP   $12.90   $1.64   12.71%

[jinga nation]

What's your IPS (https://www.bogleheads.org/wiki/Investment_policy_statement) look like?

How does your portfolio compare to dividend-paying mutual funds such as the ones on this list https://www.investopedia.com/articles/investing/102615/best-8-funds-regular-dividend-income.asp ?

Why not pick the Dividend Aristocrats (https://www.fidelity.com/insights/investing-ideas/2021-dividend-aristocrats-list) and live off their dividends? or buy the NOBL ETF (https://www.proshares.com/our-etfs/strategic/nobl) ?

Are you going to daily/weekly/monthly/quarterly/annually manage that portfolio? You state:

have grown tired of the volatility and effort involved

By having individual stocks and tracking/trading, you aren't alleviating your situation. Consider lazy portfolios.

Have you read A Random Walk Down Wall Street or Rational Investing in Irrational Times or any of the books here https://www.bogleheads.org/forum/suggested-reading ?

[ATtiny85]

Please feel free to use this divi portfolio and augment as necessary! 

I do, and augment with about 4000 other stocks.

Never understood someone wanting to live off dividends. But hey, your heirs will appreciate it if you pull it off, so good luck.

[mistymoney]

First thought: that seems like a lot of stocks to try to keep track of!

Good luck and let us know how this goes for you!

[Viking Thor]

This isn't really a divided portfolio as it has some stocks with below average dividends.

Its a giant hodge podge of stocks with most of them dividend heavy.

Seems very high high maintenance but it could work out. Its less diverse than SP 500 but still pretty diverse.

For most people there are much simpler ways to get similar expected return.

[Must_ache]

I would just pick something like SCHD.  At it's worst it was still down 18% from its peak in the last year.  Currently a 3.73% dividend yield and a 0.06% expense ratio.
Vanguard has VYM, At it's worst it was still down 15% from its peak in the last year.  Currently a 3.39% dividend yield and a 0.06% expense ratio.

Better yet for a bit more diversification put half in each.  SCHD had 41% of its fund in the 10 stocks while only 23% for VYM.  I wouldn't waste my time trying to manage a portfolio of my own choosing.

[GilesMM]

How are dividends less risky than 4% SWR?

[beee]

How are dividends less risky than 4% SWR?

They're less risky emotionally. From the math point of view, $1 in dividends is the same as $1 in price appreciation except for poorer tax treatment.
Dividends look like free money, that's why some people like them.

[ChpBstrd]

How are dividends less risky than 4% SWR?

Yea this was my first thought. Consensus is that a recession is coming. Dividends get cut by a large percentage in every recession. Thus while this might be a great time to FIRE on the 4% rule with index funds, it seems like a horrible time to chase dividends.

@Frugal D if you are beyond burned out and looking to take at least the next couple of years off, why not jump on some of the investment-grade corporate bonds yielding 6-8%? Then you have much less risk of your income stream being cut, your income stream is much bigger, and the bonds will appreciate when/if rates are cut again.

[GilesMM]

They're less risky emotionally. From the math point of view, $1 in dividends is the same as $1 in price appreciation except for poorer tax treatment.
Dividends look like free money, that's why some people like them.

The tax treatment in your example should be the same.  I don't know what emotional risk is, but a narrow pool of stocks from decaying industries paying me taxable income on a schedule they define is MORE risky to me.

[beee]

They're less risky emotionally. From the math point of view, $1 in dividends is the same as $1 in price appreciation except for poorer tax treatment.
Dividends look like free money, that's why some people like them.

The tax treatment in your example should be the same.  I don't know what emotional risk is, but a narrow pool of stocks from decaying industries paying me taxable income on a schedule they define is MORE risky to me.

Dividends are taxed each year, and usually worse than long-term capital gains.
I don't like dividends myself, I'm just trying to figure out why some people like them.

[EvenSteven]

They're less risky emotionally. From the math point of view, $1 in dividends is the same as $1 in price appreciation except for poorer tax treatment.
Dividends look like free money, that's why some people like them.

The tax treatment in your example should be the same.  I don't know what emotional risk is, but a narrow pool of stocks from decaying industries paying me taxable income on a schedule they define is MORE risky to me.

I believe the tax treatment they were talking about was the difference between taxes owed on a distributed dividend in a taxable account and an unrealized capital gain in a taxable account.