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While the fear of missing out on the AI bandwagon keeps investors excited about tech stocks, long-term investors are looking for that sweet spot between stable dividend income and capital gains via stock price appreciation. Last month, during an interview with Bloomberg, Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, recommended investors pile into dividend stocks.
"I think you want to be in safe dividends. And I know this is the most boring call of all time, but sometimes boring is good. And you know, when you think about where we are today, we’re in an environment," the analyst said.
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About seven months ago, a dividend investor shared an update on his investing journey on r/Dividends – a discussion board on Reddit with about 600,000 members. According to the portfolio screenshots shared by the investor, he was making $138,000 a year or $11,500 per month, in dividend income. He confirmed these numbers when someone specifically asked him about his income in the comments section.
This investor's portfolio was worth about $2.6 million, giving it a dividend yield of over 6.1%. The dividend portfolio had just seven holdings and 94% of the portfolio was invested in ETFs.
When asked about his investing journey and what he did for a living, the investor said:
"30 years of both my wife and I working engineer jobs and living very frugally, combined with 30 years of investing."
The investor was then asked to elaborate on what he meant by "very frugally." His response gives insight into the patience and long-term commitment needed to achieve a substantial and reliable dividend income like his:
"It’s actually depressing to talk about. We buy clearance food only eat out with a Groupon. My wife is an excellent cook and I am pretty ok myself so we mostly cook at home. We don’t go out and do anything “fun” that most people do. We rarely buy anything for entertainment. Our cars are old but I maintain all of them."