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With the elections inching closer and uncertainty across the Federal Reserve’s plans for rate cuts, the market appetite for stable and reliable dividend-paying equities is increasing. Dividend stocks have a pretty history of protecting investors from inflation. In accordance with a report from WisdomTree, from 1975 through 2023, dividends have grown by 5.7% on average per 12 months – greater than 2% above the speed of inflation.
But generating an everyday monthly income from dividend stocks is not easy. That is why a whole lot of beginner investors flock to dividend-focused discussion boards on Reddit, where people share their experiences, secrets and techniques for earning a sustainable income from dividends.
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About five months ago, someone asked /Dividends (now a community with over 580,000 members) how much they earn in yearly dividends. There have been many interesting responses. One Redditor said he makes about $25,000 in dividends annually and shared his portfolio. The Redditor said that his total investment was roughly $1 million.
“About one-third of my portfolio is dividend-based,” the Redditor said.
Let’s take a take a look at the portfolio.
JPMorgan Equity Premium Income ETF
JPMorgan Equity Premium Income ETF (NYSE:JEPI) is one among Reddit’s hottest dividend ETFs. The fund makes money by investing in a number of the most notable large-cap U.S. stocks and selling call options. JEPI is right for those searching for exposure to defensive stocks. JEPI normally underperforms during bull markets and protects investors against huge losses during bear markets since most of its portfolio consists of enormous, defensive equities like Trane Technologies PLC (NYSE:TT), Southern Co (NYSE:SO) and Progressive Corp (NYSE:PGR), amongst many others. Over the past 12 months, the ETF has been up about 6%.
Amplify CWP Enhanced Dividend Income ETF
Amplify CWP Enhanced Dividend Income ETF (NYSE:DIVO) generates monthly income by selling covered calls. A few of the top holdings of the ETF include Visa, UnitedHealth, JPMorgan, Caterpillar, Home Depot and Procter & Gamble. The ETF has over $3.4 billion in assets and has gained much popularity on Reddit. A Redditor performed backtesting to find out the fund’s returns since its inception in 2016. The outcomes showed a $10,000 investment within the ETF in 2016 would have increased to $19,970 vs. $19,614 for SPY with dividends reinvested. Redditors consider the ETF is a very good investment for hedging against risks during down markets.
British American Tobacco
British American Tobacco PLC (NYSE:BTI) has a dividend yield of over 9% and a powerful history of payout increases. Over the past decade, the corporate’s dividend has increased by about 5.40%. British American Tobacco PLC (NYSE:BTI) is shifting toward recent products amid a decline in smokeable product categories. Analysts consider the corporate’s Velo nicotine pouches and Vuse vapes present promising growth opportunities to offset declines from the standard smoking business.
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Philip Morris International
One other tobacco stock within the Redditor’s portfolio claiming to earn about $25,000 in yearly dividends, Philip Morris International Inc. (NYSE:PM) has raised its dividends for 16 straight years. The stock yields about 4.9%. Philip Morris International Inc. (NYSE:PM) second-quarter results posted in July showed revenue and volume growth within the flamable tobacco products segment. Philip Morris can be diversifying its product portfolio with smoke-free products to organize for the long run. Its nicotine pouches brand Zyn and vape brand IQOS are growing.
EPR Properties
Missouri-based entertainment REIT EPR Properties (NYSE:EPR) pays monthly dividends and yields about 7.2%. Raymond James recently upgraded the stock to Strong Buy from Outperform. RBC Capital upgraded the stock earlier this month to Outperform from Sector Perform. Analysts on the firm said EPR Properties (NYSE:EPR) has successfully navigated challenges just like the pandemic and Hollywood writers’ strike and is poised to learn from higher rents and a powerful tenant base in the approaching months.
BlackRock Science and Technology Trust
BlackRock Science and Technology Trust (NYSE:BST) generates monthly income by investing in science and technology corporations and selling covered call options on a portion of its portfolio’s common stocks. It has an over 9% yield. A few of the fund’s top holdings include Nvidia, Broadcom, Meta Platforms, ASML, Microsoft and Apple.
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