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While everyone is undergoing FOMO over the AI bandwagon, many investors seek to balance their portfolios by adding reliable dividend stocks. In January, Josh Duitz, Abrdn’s deputy head of global equities, predicted that dividend stocks would play a key role this year. Talking to CNBC, the analyst said that since 1936, dividend stocks have accounted for about 36% of the total market returns. He believed dividends would outperform even if we had a recession.
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But which dividend stocks to buy for sustainable long-term income? Let's take ideas from a success story.
About three years ago, an investor shared his detailed income report on r/Dividends, a vibrant Reddit community of 600,000 members. The investor, who said he was 42, shared that his total investment portfolio was worth about $500,000, spanning his Roth and taxable accounts.
"This is not counting 401(k) which is around $1M, all in Vanguard index funds," he added.
The investor also shared his plans and goals for his investing journey and asked for feedback from fellow investors:
"Growing/dripping everything for now. I am hoping to be able to start using dividends from all but ROTH in about 10 years as extra supplemental income, depending on market of course. At some point will also start shifting VTSAX into higher yield but I figured if I have about 10 years I might let it sit and grow for a while."
He also said he had about $300,000 in cash as a safety net because he was a "scaredy cat." Many urged the investor to put this money to work too and avoid keeping so much in cash. Some curious Redditors also asked him what he did for a living.
"Used to work in finance. Semiretired now with part-time consulting. Spouse works," he replied.
The investor also explained part of the reason why he had so much cash: