One of the investment strategies that I have been really attracted to over the past few years is the idea of setting up a portfolio of dividend stocks to create an income stream.
This is a great idea and it deserves a closer look. Even though I have spoken out against diversification as an investment strategy, diversifying income streams is an amazing idea which I am totally behind 1000%.
The thing about dividend stocks is that they are seen as being dependable. They are usually very established companies that have mostly graduated from their days of volatility and huge growth. They have to offer dividends to investors to keep them invested in the company because that can’t compete with the gains of rising star companies. This makes paying out and growing their dividends one of their most important activities.
What that means is dividend returns are fairly reliable.
Let’s throw a little math into this discussion just to get an idea of what we are talking about..
If you wanted to generate a gross income of $40,000/year from dividend returns based on an average payout of 4%, you would need a portfolio of $1,000,000.
That’s a crap-tonne of money you might be thinking, and you are right. But I support the idea that we are standing on the precipice of some truly transformational, life-changing gains in the coming years if we can position ourselves optimally. I recently posted an article on how knowing and using the 4 year bitcoin cycle could transform $100,000 into $1,250,000. That’s more than the $40,000/year dividend portfolio right there.
It’s also prudent to keep in mind that keeping as much of your gains as possible and growing them, is just as important as getting them in the first place.
So let’s throw an alternative to traditional dividend investing for a revenue stream into the mix: yield income on your crypto. I’m a big fan of Celsius. They are currently offering a 6.2% yield on Bitcoin. So for the same $1,000,000, you could be earning $62,000/year.
Dedicating a growing part of your investments to building a dividend portfolio is a great part of a bigger retirement plan. How many revenue streams are you planning to create?