The Four Horsemen - a Monthly Dividend Portfolio Earning 10%+ Annually

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Dividend Investing Might be a Good Fit for Your Portfolio

The Get-Rich quick scenario, simply doesn’t work.

Wealth expressed as an equation equals CONTRIBUTIONS x TIME in the investment x Rate of Return or ROI of the investment. No matter how you slice it, the game always takes its fair share. How so?

The easiest example, some people fall into financial windfall and end up broke, on average 4 years later.

Why? Because like some sort of sick Rick and Morty episode, they didn’t satisfy the equation. Keeping wealth requires that you follow the parameters of the equation.

Especially now with inflation pushing north of 3%, investors are scrambling to edge the market. Putting money in the local bank’s saving account at less than 1% is as bad as leaving money in the car, in the house, or under the mattress.

I’m not a big advocate for cryptocurrency nor will I ever give quick Barbershop investment advice. As such, I’m compelled to give you a disclaimer that this is not investment advice, these are merely ideas on how this investment system works. In the end, the decisions rest with you as to how you use your own money.

With that said, dividends might be a comfortable intermediary for newbies or seasoned investors downgrading out of the market. Why? They offer a learning buffer that either motivates you or provides you with sustainable monthly income if done correctly.

Here are the advantages of Dividend Investing:

Dividends Pay You. Most quarterly per share. Others pay out Semi-annually or annually. And a select few, pay out monthly.
Dividend Growth Compounding through the DRIP. The benefits of exponential growth are multiplied by growing dividends. Your shares earn dividends and those dividends buy more shares that earn you more dividends. That’s the gist.
Dividends generally pay out no matter the market. When you earn dividends in a downturn, you will take advantage of buying stocks cheaper. And so on and so forth.
Capital Preservation, since dividend stocks are often part of a matured business cycle. For example, Coca-Cola $KO has been here for a bit and will likely not go out of business without a fight.
Create an Income Stream, presumably for retirement. Since a $1 Million portfolio can likely net a decent $36,000 annually if invested properly.

The Four-Horsemen of Monthly Dividends as of 7.5.2021

The Four Horsemen of Monthly dividends (see M1 Link) ushers in monthly dividend payments as you invested. Growth since 2016 has been a fairly smooth at +10% with exception to March 2020 (COVID). Dividend yield is up +6%.

While this is far from the extreme ups and downs of the market, for some people this is a simple win with a solid payoff. For those looking for the biggest growth, check out the How to Build a 5-Yr over 500% Growth Portfolio.

1. Dividend Yield is where it shines

A portfolio of $1M in retirement would yield around $60,000 dividend annually or otherwise $5,000 per month.

The calculation is simple really; Portfolio Total $1M x Div Yield 6.192% = $61,920 per year.

Imagine living off of $60,000 all while your money is still growing on average north of 8%.

And we haven’t even discussed the tax advantages.

2. Dividend Payouts are taxed differently

Secondly, dividends are taxed at 0%, 15% or 20%, depending on your taxable income and filing status. The tax rate on non-qualified dividends the same as your regular income tax bracket.

In this case, a retired married couple with $60,000 of dividend income + $20,000 of social security, would gross $80,000 annually in retirement minus the standard deduction of $24,800. The end result would equal little or even $0.00 in taxes.

This is incredible. This is one of the reasons that I’m pursuing generational FIRE to live off of dividends and to have all our investments go to our next of kin or a Trust. Thus, successfully closing the racial wealth gap for our family.

What is the dividend tax rate as of 2020?

	0%	15%	20%
Single Tax Payer	$0 to $40,000	$40,001 to $441,550	$441,451+
Head of Household	$0 to $53,600	$53,601 to $469,050	$469,051+
Married Filing Jointly	$0 to $80,000	$80,001 to $496,600	$496,601+

*Non-qualified dividends are taxed as ordinary income according to federal income tax brackets.

3. Understand it will take time

Thirdly, getting started and setting up a portfolio of $1M can take time. How much time?

26 Years if you are investing $1,000 per month at 8%. In order words, married couple could invest $6,000 per year each in a ROTH individual retirement account and voila.

If you want to stretch this investment an additional 26 years at 8%, here are the results below. Generational Wealth secured. Well at least that’s my household plans. We are gearing up to invest in various opportunities whereas the dividends will likely represent 90% of what we live off of annually.

The rest will keep growing like a generational wealth wild FIRE. Wayne Gretzky stated that “You miss 100 percent of the shots you don’t take.”

We don’t intend to miss anymore.

Disclaimer – Do your own research!

Like everything only, learn to do your own research and take this as just random advice. This is my personal portfolio on M1 Finance if you want to see it in real time, click TNFG Starter Kit v5.

If you are more defensive, you can start with this monthly dividend portfolio aka the ZODIAC portfolio

In addition, if you want to start investing, I got the $10 for $10 referral link, right here. If you like this portfolio, feel free to check out: