Results after One Year of Withdrawals using Dividend Model (IRAs, fund, margin)
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Starting June 30, 2013 my wife and I started "withdrawal stage" on one of our IRAs. This is in contrast to accumulation phase where all dividends are reinvested and contributions may still be occurring.
When I decide to follow this path, to ensure a increasing dividend stream, I decided I would only withdraw 75% of my dividend income and reinvest 25%.
As of June 30, 2013 we had an annual dividend income of $11,372. We withdrew $700 a month ($8,400 a year) which was slightly less than 75% at 73.86%.
As of June 30, 2014 after withdrawing $8,400 our annual dividend income had increased to $12,140. We are still deducting the $700 per month, so at this point we are only withdrawing 69.1%.
The $700 figure was not random, it goes into an savings account we call Escrow where we save money to pay tax bills, insurance on home and car, HOA bills. All those once a year bills.
The value of the IRA also went up, which makes sense since we are in a bull market, but that will not always be the case. But the dividend income should go up even in down markets.
Actually, they did a study, and 71% of the Dividend Leaders kept dividends the same or increased them during the great recession. And in just regular down markets I would expect no issues. Market was down in July. My income increased.
However, I'm not turning this thread into a debate with you. We know you don't like Dividend Income investing. Just a little info for anyone else that might be interested.
Starting June 30, 2013 my wife and I started "withdrawal stage" on one of our IRAs. This is in contrast to accumulation phase where all dividends are reinvested and contributions may still be occurring.
When I decide to follow this path, to ensure a increasing dividend stream, I decided I would only withdraw 75% of my dividend income and reinvest 25%.
As of June 30, 2013 we had an annual dividend income of $11,372. We withdrew $700 a month ($8,400 a year) which was slightly less than 75% at 73.86%.
As of June 30, 2014 after withdrawing $8,400 our annual dividend income had increased to $12,140. We are still deducting the $700 per month, so at this point we are only withdrawing 69.1%.
The $700 figure was not random, it goes into an savings account we call Escrow where we save money to pay tax bills, insurance on home and car, HOA bills. All those once a year bills.
The value of the IRA also went up, which makes sense since we are in a bull market, but that will not always be the case. But the dividend income should go up even in down markets.
one of my IRA I have around 60K. I am getting close 900 per year on the dividend. I have long way to go to get close to 12K per year. :-)
$900 per year on $60,000 is only about 1.5%. The IRA I am referring to is 100% in Dividend paying stocks, and I would't invest in one paying less than 3% a year. But dividend income is my primary objective.
" During the fourth quarter of 2008 alone, 288 companies cut payouts. Not to be outdone, according to Standard & Poor's, another 804 dividend payments were cut by public companies in 2009 -- costing investors another $58 billion."
$900 per year on $60,000 is only about 1.5%. The IRA I am referring to is 100% in Dividend paying stocks, and I would't invest in one paying less than 3% a year. But dividend income is my primary objective.
Can you give few examples of stock you have? I have only one my full 60K is on GS. I bought this at $80.00 share.
All your dough in one stock is bold. GS pays 1.3% now. GS is a growth stock, and depending on when you bought it you are very happy or very frustrated. If you managed to buy at $80 you are very good or very lucky or both.
Before the recession it was over $218. A year later it was below $50. It climbed over $180 then in Nov 2011 it was $85 again. Now it's at 172. That's kind of crazy ride.
The first 2 stocks I recommend for people dipping their toes into Dividend Investing are Realty Corp (O) and AT&T (T).
Realty Corp is a REIT. They were one of the pioneers in paying monthly dividends. They have a 4.9% yield right now. They have increased their dividend 19 straight years. The fact they pay monthly allows people to see the dividend reinvestment at work right away and often. Here's a nice article about them. http://seekingalpha.com/article/2346...-realty-income Always ensure you look at Funds from Operation not Profits when judging a REIT. REITS generate lots of depreciation writeoffs which makes profits look slim when they are actually making lots of money.
The other I start out recommending is AT&T. AT&T is yielding 5.2% now. They pay quarterly. They have increased dividends 30 straight years.
These stocks are not going to have huge gains. They are going to chug along producing nice dependable boring results. But you'd have an overall 5% yield with these 2 stocks. And if you reinvest them in 10 years you've gotten half your money back.
But it's a different mindset from growth investing.
Actually, they did a study, and 71% of the Dividend Leaders kept dividends the same or increased them during the great recession. And in just regular down markets I would expect no issues. Market was down in July. My income increased.
However, I'm not turning this thread into a debate with you. We know you don't like Dividend Income investing. Just a little info for anyone else that might be interested.
My investing appetite is similar to yours. I like dividends and prefer them over huge capital gains that may or may not happen. All the while, those reinvested dividends are growing the initial investment, and in most cases, experiencing capital appreciation as well. I'm not interested in the Bernie Madoff type yields, just good solid companies with a history of paying and raising their dividends, like the majority did during the last recession. I'm not looking to get rich quick; get rich slow is fine by me.
In addition to T, I also like Duke Energy. Utilities are pretty good about chugging out steady dividend payments, and DUK is no exception. The yield at today's quote is 4.36%, and the stock has been steadily growing in value for years.
I have not invested in any Utils yet...but they are always on my radar. I have no dry power for now. Also bought my first $1,000 worth of a preferred stock recently. Under par, not callable for 5 years, and cumulative.
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