Dividend Income From $100,000 (Not What You Think)

how much dividend income will one hundred thousand dollars generate one hundred thousand dollars is a great start to a retirement portfolio if you're younger but how much money can you expect to receive from this much capital would it be enough to fund your car payment cover your mortgage payment or maybe even enough to cover your income needed for retirement perhaps it would be enough to provide peace of mind to see that regular income hitting your account regardless of whether or not you're working depending on your investing style you might be surprised at how much you would receive from a 100 000 account take a look at how much dividend income that could generate and learn how you can maximize the profits to reach your goals quicker my name is chris and i help teach people about money personal finance and investing if you're interested in improving your financial future make sure to subscribe to the channel and hit the like button if this video is helpful it goes without saying that the amount of income you will receive depends on where your money is parked you could invest in a general broad market index fund that will track the entire s p 500 you could buy individual dividend stocks to maximize growth in income or you could purchase a mixture of both dividend yields will vary based on the aggressiveness of your portfolio and should ultimately depend on how long until you retire you don't want to be invested it's only income investments way before your projected retirement date simply because overall returns are lower with dividend-paying stocks this is because they're not fast growing companies but rather older blue chip alternatives high income is nice to have but is ultimately irrelevant to younger investors if you invest your entire 100 thousand dollars into a fund that tracks the s p 500 you could expect an average amount of dividend income meaning it won't be geared towards income or growth but a combination since you're buying the market your income and overall returns including capital appreciation will be average currently the s p 500 has a dividend yield of about 1.5 percent that means that you would receive 1500 per year or an average of 125 per month in dividend income payments are typically made on a quarterly basis which would equate to 375 dollars each quarter or every three months while the dividend yield isn't particularly high the overall return is averaged about 10 percent annually receiving this type of dividend income is ideal for the average investor because it provides a near perfect combination of income and growth even if someone were to spend the entirety of their dividend payments they would still see considerable investment growth over time to achieve a higher growth rate but lower dividend income one might choose to invest in an s p 500 growth fund a fund such as this would hold the fastest growing companies that are held within the s p 500 this is great for people who don't plan on retiring for quite some time and don't rely on their dividends the yield will probably only be about point five percent because many of the holdings are technology companies which pay little to no dividends with a one hundred thousand dollar investment that's only five hundred dollars per year forty one dollars per month or 125 dollars per quarter in dividend income although that's quite insignificant the capital appreciation will be higher than average since the companies are fast growing businesses like apple microsoft tesla nvidia and google these companies have very small dividends if any because they prefer to grow the business instead of distributing income to shareholders since the dividend income is only one-third of the s p 500 you'd need three times the capital invested to receive the same amount of income but since the growth is high you could reach that number much more quickly if higher dividend income is something you'd like to achieve and don't mind a lower overall rate of return you may consider buying a fund that's designed to specifically provide higher than average dividend income a good example of this type of fund is spdr's s p 500 high dividend etf it owns companies that have the highest dividend yields that are included in the s p 500 these funds almost always experience slow capital appreciation because the companies held are focused on generating consistent profits and income for shareholders instead of trying to scale keep in mind that even when considering the dividend payments returns will likely be lower than a higher growth alternative that's why this type of investment is usually only recommended for those who need retirement income immediately and don't have time to watch investments grow over time before taking income some investors choose to purchase single dividend stocks that meet their criteria everyone has their own preferences in terms of characteristics of a stock but dividend investors usually seek those with a history of dividend growth they also want future dividend growth in addition to a company with growing earnings and profit to ensure their share price will rise as well a dividend stock that yields 10 percent but loses 20 percent of its share price every year is a bad investment but many novice investors are lured in by an extremely high yield individual stocks are the riskiest option but they also allow for the most upside since share prices move independently it's easy to spot a particular stock that's on sale for various reasons on the other hand some stocks are equally overpriced it's hard to get a deal when purchasing funds because all the stocks are priced together the ability to purchase an individual stock on sale is what's most attractive to investors think of it like buying a fixer-upper that's priced way below market value with massive upside it's easy to grab that rundown home on sale while the immaculate property on the other side of town is priced at a premium one example of a single dividend stock is iron mountain their business is storing protecting and managing information and assets it's one of the highest yielding stocks in the s p 500 due to the fact that it's a reit which is typically the type of stock with the highest yield it pays a 7 dividend which means you'd receive seven thousand dollars per year or about five hundred and eighty dollars per month in dividend income that's a pretty sizable amount and hopefully the share price will continue to rise earnings investors good capital appreciation as well its earnings don't grow that much compared to its peers but the dividend income is why most would own it well it's not recommended you pile all of your portfolio in one single holding iron mountain is a good example of what you could potentially purchase and receive a nice amount of income for doing absolutely no work in addition if you have a portfolio consisting of maybe 10 quality stocks the chances of one of them being on sale at any given time is high so you can always get a great deal the amount of dividend income generated from a portfolio this size isn't exactly a large amount of money that's not to say that some people wouldn't be comfortable with this amount combined with another source of income such as a part-time job or maybe social security income considering the average social security benefit is about fifteen hundred dollars per month another few hundred dollars in spending money is attractive perhaps a couple with a paid off home and low expenses could live happily on social security in addition to some dividend income if a retiree is working a part-time job 20 hours per week at 13 per hour that's about 1 000 per month and dividend income would be nice to add to that otherwise it could be enough to cover transportation expenses a vacation fund or even a small mortgage payment even though these income amounts aren't particularly high the power these dividends reinvested over time can be huge dividend investing has increased interest from younger investors but they need to keep their goals in mind in order to determine the best strategy that will provide them with the most money when they decide to use it should you invest in income investments something that will track the overall market or growth investments that tend to outperform the market a broad market fund like the s p 500 might be the best of both worlds consider the amount of dividend income you might expect to receive from these different types of investments then you'll have an idea of the investment strategy to implement and the amount of money needed to reach those income goals

Channel: Chris Invests

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Keywords: Dividend Income From $100000 (not what you think), dividend income, dividend investing, dividend income from $100000, how much dividend income from $100000, $100000 in dividend income, dividends from $100000, $100000 dividends, income from dividends

Id: RQc-uFmBw_U

Length: 8min 2sec (482 seconds)

Published: Sun Mar 28 2021