My Income Investing Strategy in Retirement

While I still believe Dividend Growth Investing (DGI) an ideal strategy to accumulate wealth and generate income for retirement it does require a long time to achieve the high income yields needed. Naturally everyone’s financial circumstances are different and will vary greatly depending on your personal situation and needs.

Unfortunately I didn’t learn about DGI early enough in life to put it into practice long enough to fully achieve the capital and high yields needed for my retirement. So for the past two years I have using a high yield income strategy that has worked well for me. It is a cross between the ‘Income Factory’ strategy popularized by Steven Bavaria and the ‘Armchair Income’ YouTube channel.

Here’s the basics of what I’m doing with my retirement portfolio based on these two strategies / income investors:

• Target investments in the 8% – 12% yield range (the ideal range but some of my investments fall above and below this range)
• Favor investments with a 5-10 year or longer history of:
  • No dividend cuts
  • Flat or rising distributions (dividend growth)
  • Total returns higher than the average yield (has some capital appreciation)
• Favor monthly paying investments
• To lower risk:
  • Avoid single stock investments, use ETF’s, CEF’s, and other diversified investment vehicles
  • Limit investments to a maximum 5% portfolio weight (lower weight 2%-3% for higher risk)
  • Invest across a broad range of equity and fixed income asset classes, such as:
    • Covered Call
    • Business Development Companies (BDCs)
    • Crypto Income
    • General Equity
    • Real Estate
    • Utilities/Infrastructure
    • High Yield Bonds
    • Collateralized Loan Obligations (CLOs)
    • Preferred Stock
    • Senior Loans
• Withdraw 40%-60% of the income generated that month for retirement needs. Reinvest the balance to grow the principle, increase income and cover inflation.

Many of the high yield income investments that I hold in my tax-advantaged retirement portfolio are listed on the the High Yield page. I’ll publish my full portfolio shortly followed by any adjustments I make.

Happy New Year!

Filed in: Dividend Geek Portfolio