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With the elections inching closer and uncertainty around the Federal Reserve’s plans for rate cuts, the market appetite for stable and reliable dividend-paying equities is increasing. Dividend stocks have an attractive history of protecting investors from inflation. According to a report from WisdomTree, from 1975 through 2023, dividends have grown by 5.7% on average per year – more than 2% above the rate of inflation.
But generating a regular monthly income from dividend stocks isn’t easy. That’s why hundreds of beginner investors flock to dividend-focused discussion boards on Reddit, where people share their experiences, secrets and strategies for earning a sustainable income from dividends.
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About five months ago, someone asked /Dividends (now a community with over 580,000 members) how much they earn in yearly dividends. There were many interesting responses. One Redditor said he makes about $25,000 in dividends annually and shared his portfolio. The Redditor said that his total investment was approximately $1 million.
“About one-third of my portfolio is dividend-based,” the Redditor said.
Let’s take a look at the portfolio.
JPMorgan Equity Premium Income ETF
JPMorgan Equity Premium Income ETF (NYSE:JEPI) is one of Reddit’s most popular dividend ETFs. The fund makes money by investing in some of the most notable large-cap U.S. stocks and selling call options. JEPI is ideal for those looking for exposure to defensive stocks. JEPI usually underperforms during bull markets and protects investors against huge losses during bear markets since most of its portfolio consists of large, defensive equities like Trane Technologies PLC (NYSE:TT), Southern Co (NYSE:SO) and Progressive Corp (NYSE:PGR), among many others. Over the past year, the ETF has been up about 6%.
Amplify CWP Enhanced Dividend Income ETF
Amplify CWP Enhanced Dividend Income ETF (NYSE:DIVO) generates monthly income by selling covered calls. Some of the top holdings of the ETF include Visa, UnitedHealth, JPMorgan, Caterpillar, Home Depot and Procter & Gamble. The ETF has over $3.4 billion in assets and has gained much popularity on Reddit. A Redditor performed backtesting to determine the fund’s returns since its inception in 2016. The results showed a $10,000 investment in the ETF in 2016 would have increased to $19,970 vs. $19,614 for SPY with dividends reinvested. Redditors believe the ETF is a good investment for hedging against risks during down markets.
British American Tobacco
British American Tobacco PLC (NYSE:BTI) has a dividend yield of over 9% and a strong history of payout increases. Over the past decade, the company’s dividend has increased by about 5.40%. British American Tobacco PLC (NYSE:BTI) is shifting toward new products amid a decline in smokeable product categories. Analysts believe the company’s Velo nicotine pouches and Vuse vapes present promising growth opportunities to offset declines from the traditional smoking business.
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Philip Morris International
Another tobacco stock in the Redditor’s portfolio claiming to earn about $25,000 in yearly dividends, Philip Morris International Inc. (NYSE:PM) has raised its dividends for 16 straight years. The stock yields about 4.9%. Philip Morris International Inc. (NYSE:PM) second-quarter results posted in July showed revenue and volume growth in the combustible tobacco products segment. Philip Morris is also diversifying its product portfolio with smoke-free products to prepare for the future. Its nicotine pouches brand Zyn and vape brand IQOS are growing.
EPR Properties
Missouri-based entertainment REIT EPR Properties (NYSE:EPR) pays monthly dividends and yields about 7.2%. Raymond James recently upgraded the stock to Strong Buy from Outperform. RBC Capital upgraded the stock earlier this month to Outperform from Sector Perform. Analysts at the firm said EPR Properties (NYSE:EPR) has successfully navigated challenges like the pandemic and Hollywood writers’ strike and is poised to benefit from higher rents and a strong tenant base in the coming months.
BlackRock Science and Technology Trust
BlackRock Science and Technology Trust (NYSE:BST) generates monthly income by investing in science and technology companies and selling covered call options on a portion of its portfolio’s common stocks. It has an over 9% yield. Some of the fund’s top holdings include Nvidia, Broadcom, Meta Platforms, ASML, Microsoft and Apple.
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This article Dividend Investor Earning $25,000 Annually Shares His Portfolio: Top 6 Stocks and ETFs originally appeared on Benzinga.com
