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Strategies & Market Trends : Dividend investing for retirement

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To: JimisJim who wrote (30429)	1/17/2019 7:14:40 PM
From: E_K_S	5 Recommendations Recommended By B.O. Plenty Fuzzy JimisJim Kip S maverick61 Read Replies (5) of 34328

Dividend income and the 4% rule The 4 percent rule is a rule of thumb used to determine how much a retiree should withdraw from a retirement account each year. This rule seeks to provide a steady income stream to the retiree while also maintaining an account balance that keeps income flowing through retirement. Experts consider the 4 percent withdrawal rate safe, as the withdrawals will consist primarily of interest and dividends. Bengen concluded that even during untenable markets, no historical case existed in which a 4 percent annual withdrawal exhausted a retirement portfolio in less than 33 years. Theoretically, if you have dividend payers that yield 4% or more, then if you withdrew 4% per year from the portfolio, you would never tap into your principal. There is always the remaining that would compound. My rule of thumb is look for dividend payers that yield 4% or more However, I do look at the total portfolio dividend yield and that is critical that my blended yield is 4% or higher. I find that it is not that hard during different sector cycles to find those 4% dividend payers. This was the case w/ Drug/Pharma stocks which could be had on the cheap in 2009 and 2015. I picked up MRK & PFE during these periods when they yielded around 4%. Now, a 2-3 bagger if you had the nerve to pick up shares in 2009 and still a 40%-50% gainer if you got shares in 2015/2016. I do fold in some lower 3% dividend payers from time to time to add more growth. To be fair, Steve's Total Return table can be significantly more or less depending on (1) when and (2) sector you bought over those years. So the Buyer's stock selection of dividend payers import too in that equation. Good Investing EKS

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