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Investing is a game of patience, strategy and purpose. Whether building short-term or long-term wealth, the trick is to choose the right tools and stick to a plan.
Dividend investing has become a charming option for those looking for reliable, steady passive income. Many now tend toward this strategy’s ability to generate consistent returns and growth.
One Reddit user shared her journey in the r/dividends community, revealing a strategy that has delivered outstanding results. With a $400K portfolio, the 26-year-old investor hit $1,673 in monthly dividends, but her goal is to reach $3,000 by 2025.
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Her approach involves a combo of high-yield ETFs, constantly reinvesting dividends and living below her means. Her portfolio is currently split across SCHD, JEPI and O, but the investor plans to funnel bonuses into JEPI, compound dividends and keep up with the monthly payments. With an annual $150K income, she’s thinking of doubling the returns in 2025 by investing smartly.
“I know doubling up to $3K/month sounds crazy, but the market’s running hot and I’ve got a good income to invest ($150K). Been working so far with this boring strategy,” she wrote.
Let’s dive into the three investments in her portfolio that bring her over $1.6K monthly passive income and see why these ETFs are so popular among investors.
SCHD (Schwab U.S. Dividend Equity ETF) offers exposure to high-quality dividend-paying companies. With a yield of 3.39%, the ETF is a go-to for investors who seek reliability and steady growth. SCHD tracks an index of solid companies that pay sustainable dividends, which makes it a popular investment choice for long-term returns and growth.
JEPI
JEPI (JPMorgan Equity Premium Income ETF) offers a high monthly income thanks to a mix of derivatives and equity. Its current yield of 7.12% is among the highest in the stock market, which attracts investors who focus on income. JEPI’s focus on generating cash flow without risking a lot makes it a go-to fund for those who want consistent revenue.
O
O (Realty Income) is a real estate investment trust (REIT) chosen by investors mainly because of its monthly dividend payouts. The REIT has a current yield of 5.60% and attracts investors who seek reliable income from real estate without the hassle of owning properties. O is known for its dependability and a track record of increasing dividends over time.
By mixing these three investments, the 26-year-old investor is leveraging diversification, high returns and reinvestment to reach her goal of earning $3K per month in dividends.
The Reddit community had plenty to say about this strategy. While some congratulated the investor, others provided constructive criticism, but overall, the commenters offered valuable tips.
Let’s see some of their most common responses.
Many Redditors admired the 26-year-old investor’s achievements, which highlights how unique her progress is compared to the average investor at that age.
“At 26, I had $2,000 saved up. You, at 26, are making a ton of dividend income and are making your money work for you. […] Your trajectory is above mine by miles and I want you to know this stranger is proud of you for that,” a commenter says.
A dad in the comments said he would be extremely proud if his daughter saved that much money.
“I am a girl dad and would be phenomenally proud if my daughter saved up $400k (even if it is lottery or inheritance) at 26. The wisdom to invest in your future and not blow the money is exceptional. Congratulations and well done. Keep going,” the Reddit user wrote.
A recurring theme in the thread’s comment section was the debate about prioritizing dividends over growth and vice versa.
“At 26, I’d personally rather have the growth, especially with your high level of income. By the time you’re 40, you could have enough capital to never worry about money,” a comment reads.
While some suggested diversifying into growth-focused ETFs, others recommended the poster stick with her approach.
“Congrats! I see lots of people saying to go for growth at your age. Growth drops a lot in bear markets and dividend companies like SCHD have not! It’s stable and you probably won’t have crazy losses in bear markets,” a dividend supporter said.
Finally, some investors in the r/dividends community suggested the 26-year-old optimize her portfolio further, including considering alternative ETFs.
“Have you looked into JEPQ instead of JEPI? My summary of JEPQ is solid divvy with a bit higher chance of capital appreciation than JEPI,” one Redditor wrote.
