Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Investing in dividend stocks is an effective strategy for securing a reliable income stream during retirement. A study from Ned Davis Research showed that dividend stocks returned about 8.8% annually in aggregate between 1972 and 2012, compared with just a 1.6% return for non-dividend stocks.
But which stocks are reliable enough to live entirely off dividends? Let’s turn to a case study for ideas.
In December last year, someone ran a poll on r/Dividends – a discussion board for income investors on Reddit with 626,000 members – asking whether any retirees were living entirely off dividends. The post received over 200 responses featuring many interesting stories of retirees living off dividend income.
Don’t Miss:
An investor said he lived “quite comfortably” on dividends and social security. He earned over $160,000 in dividends annually and had a portfolio yield of about 4.5%.
“We have an ever-increasing income stream and a portfolio that still grows because of appreciation and we reinvest about 10% of our dividends,” he said.
When asked what he did for a living, the investor said he and his wife earned “above-average” incomes.
“We also put three kids through college with no loans. I always took to heart the advice I was given many years ago: It doesn’t matter how you make your money; it’s what you do with it that counts.”
During the discussion, the investor revealed his top 20 holdings. Let’s examine some of these stocks.
Trending: ‘Scrolling To UBI’ — Deloitte’s #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.26/share with a $1000 minimum.
Pembina Pipeline Corporation
Pembina Pipeline Corporation (PBA) is a Canadian company that operates transportation and storage infrastructure. Its dividend yield is about 4.9%, according to Benzinga Pro. The investor, who earned $160,000 per year in dividends, said PBA was among his biggest positions. The stock has gained about 18% this year.
