The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Mr Mark on February 18, 2012, 04:10:40 PM
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A 'stash cash challenge.
Let's say you've finally reached your 'number' and have a 'stash to create a portfolio that needs to grow and throw off enough cash for your expenses. Assume $1 million and that you already own a $150k house that you live in.
How does such an MMM portfolio look? My target would be 5% pre-tax 'dividend' and some 1% p.a. net long term [target 20 - 50 years] capital growth after inflation.
My Initial Guestimate
Rental House(s): $200k. Say $18k/yr net?
General Stock Mutuals: $300k. Say @ 3% dividend, $9k
High Dividend stocks $200: Say 4% dividend, $8k
REIT: $100k. Assume @3%, $3k
Corp Bonds: $200k. Assume 6%, $12k
Total: 5% yield.
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I favor all dividend growth stock initially (JNJ, PG, KO, PEP, AFL, HAS, PM, BP, WMT, TGT, CHD, etc.) until the dividends grow to 20% Yield on cost. Once you're pulling in $200k in annual dividends, I'd imagine I'd get pretty antsy to start investing (buying) in operating businesses, 130 unit apartment complexes, etc. It's my belief that those high dividend stocks, REITs, bonds, etc. would only slow your passive income down over the long haul because they do not grow at double digits like those listed above. In other words, AFL, which has averaged ~20% dividend growth for the previous 10 years (even startingat 3% yield) will quickly surpass a high yielder paying 15% that doesn't grow or more likely will be cut.
Good luck in reaching your goals in a couple of years.
Jason