From Nasdaq: 2025-05-31 05:50:00

Americans dream of achieving financial freedom by living off dividends, but it requires a substantial investment. To make $100,000 annually with a 3% dividend yield, you’d need to invest around $3.33 million. Risks include companies cutting dividends or suspending programs, like Disney and Walgreens. Inflation also poses a threat to buying power.

Diversification and investing in dividend-focused ETFs or closed-end funds can help minimize risks. For example, the Schwab U.S. Dividend Equity ETF offers a 4% dividend yield with an average annual return of 12%. Closed-end funds like Cohen & Steers Infrastructure Fund provide a distribution yield of 7.2% but come with higher fees and leverage risks.

It’s crucial to monitor and adjust investments to adapt to changing market conditions and ensure dividend income keeps up with inflation. While many Americans can rely on dividends for life, the sources of those dividends may need to change over time. Before investing in specific funds like Schwab U.S. Dividend Equity ETF, consider expert recommendations and historical performance to maximize returns.



Read more at Nasdaq: Can I Rely on Dividends for Life After Quitting My Job?