I'm approaching semi-retirement and would like to get some assurance of a regular income while I focus on developing more part-time income. But I need to make sure I'm getting a steady and safe stream of baseline income from my investments to take care of fixed expenses.
What do you think of the strategy of selecting say, 10 of the top dividend stocks that are safe (good companies) and have a good track record on keeping or raising their dividends. For example, Verizon, Enterprise Products Partners, KMI, and others that pay upward of 6% or higher on dividends. I wouldn't distribute the 300k evenly across the 10 (or so) dividend stocks, but I would diversify to a great extent to protect myself from a company going under. That way, I'm getting high dividend returns even if the market takes a downturn (and hoping companies don't lower their dividends if that happens).
I know it's not a 100% safe strategy, but what do you think? Bonds at 4-5% is a bit too low if I can make 6-7% or higher on dividend stocks and get some protection against a potential market downturn.
I'd appreciate anyone's thoughts, thanks!
UPDATE: Thank you for all of your thoughts! I think what I may end up doing is an ETF like VOO or VTI, and as it makes money, secure my profits so that when the market takes a downturn I've built up some profit to keep the steady stream of income coming in. So, every time VOO makes me say 5k, I pull that out and put it in a money market account. “Skim off the top” to keep from market downturns forcing me to potentially dig into the principal. Anyone like that idea? Stock market returns are just too high to not put the 300k there. So long as I build up a security blanket against downturns, putting the 300k in the S&P seems the best choice and taking profits regularly. And if ever I don't need the money and my side job is enough, I'll just leave the 300k in there. VOO has some risk, but is safe long term, just have to weather the valleys as they come.
D.
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