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Many people dream of earning a steady income from dividends, whether they are looking to retire early or supplement their existing income and grow wealth. Reaching specific benchmarks indicates that you are headed in the right direction. One Redditor posting on the "Dividends" forum shared how they have managed to amass a portfolio that will earn $1,000 a week in dividends. The takeaways are simple but valuable for any dividend investor.
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Dividend investing isn't like some of the other investing disciplines. It requires a lot of patience and a steady allocation of capital to reach your goals. In this case, the Redditor has been working on the portfolio for 15 years, steadily adding along the way and reinvesting dividends received until the portfolio was close to the magic million-dollar mark. The 49-year-old Redditor has a plan to reach $125,000 in yield from this portfolio and other investments by the end of 2025 in order not to have to touch the principal after retirement.
It Doesn't Have To Be All High Yield
You don't always need high-yielding stocks to significantly impact your portfolio over time. The Redditor posted a portfolio showing a yield of 5.61%. While that is a healthy yield, the Redditor posted that the portfolio is a mix of exchange-traded funds (ETFs) and stocks and that nothing is more than 7% of the total. They highlighted three specific stocks.
The Coca-Cola Company (NYSE:KO) has a forward dividend yield of 2.99% and an annual dividend payout of $1.94. Because of its modest payout, it would take a substantial outlay of over $40,000 to earn even $100 a month in dividend income. In this case, steadiness is a virtue; the company is a dividend aristocrat who has paid out steadily over time. Coca-Cola recently reported earnings and raised guidance. CEO James Quincey noted, “Consumer sentiment in the aggregate is pretty strong, pretty resilient."
Another dividend aristocrat, PepsiCo (NASDAQ:PEP), has a forward dividend yield of 3.26% and an annual dividend payout of $5.42. Like Coca-Cola, Pepsi is very tied to consumer spending habits. However, it has additional exposure to the snacks and prepared foods market through its Quaker Oats and Frito-Lay divisions. After the most recent earnings showed signs of a slowdown in snacking habits, the company plans to reevaluate its pricing and debut new tastes and flavors designed to get people excited about its products again.
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Popular fast-food chain Wendy's (WEN) has a higher forward dividend yield than the two mentioned above, coming in at 5.97%, but with an annual payout of only $1.00. Goldman Sachs analyst Christine Cho recently called Wendy's a ‘show-me' story because it has made minimal inroads on its push into better breakfast sales. The company recently announced that it is selling its Honey Buddy honey chicken biscuit for $1 during morning hours.
The Redditor also relies on various ETFs, including the JPMorgan Equity Premium Income ETF (NYSE:JEPI), which has a 12-month rolling dividend yield of 7.98%. It has 135 holdings, a mix of technology, financial services, and consumer goods companies. The portfolio also has exposure to the JPMorgan Nasdaq Equity Premium Income ETF (NYSE:JEPQ), which aims to provide monthly distributable income and Nasdaq 100 exposure with less volatility. It currently has 99 stocks and is heavily weighted toward Big Tech companies, including Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT).
While we can't know a person's entire portfolio from a single Reddit post, a well-thought-out dividend strategy can significantly help build wealth over time. A mixture of reliable dividend payers and ETFs for a broader exposure range can yield substantial gains for patient investors.
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This article $1,000 A Week In Dividends, Redditor Shares Passive Income Secrets originally appeared on Benzinga.com