How To Live Off Of Dividends Forever The Right Way

How To Live Off Of Dividends Forever The Right WayYou want to know how to live off of dividends and never work another day in your life?  Good news, I am going to show you exactly what it takes to make this a reality.  The bad news is that it will take some money in your investment account before you can start to sip margaritas on the beach of your choice.  Don’t fret though, I have the information you need to make the best of your current investments in order to get you to that magical number.  Living off of passive income does not have to be a dream, it just takes good planning and a little bit of saving in order to make a living off monthly dividends.




I want you to imagine having people go to work every single day and then finish their shifts and return to your house and give you all the money they earned.  It sounds unbelievable, but when you invest your money in the right dividend stocks, that is exactly what you are doing.  The management’s job of said company is not just to show up, but to maximize the amount that they bring to you.  Dividend stocks are the main key to financial freedom and one of the least spoken about investments out there.  I have written about some solid dividend stocks before, such as GSK, BLX, INTC, and TU that can help get you to that magic number of financial independence.  Let’s get down to it and see how to live off of dividends forever the right way even if you are just getting started.

How Much Money Do We Need To Live Off Dividends Forever?

How To Live Off Of DividendsThe first question we need to answer is how much does it take to retire?  I think it is safe to say that saying you need $2,000,000 saved up by retirement is a bit of an overestimate.  Most financial advisors say that you should try to be debt free when you are ready to retire, which I agree with to a point.  It we truly want to maximize our retirement years, we cannot be strapped down with lingering debt during our nonworking years…or as I like to call them, our beach and margarita years.  So what do we need if we don’t have $2,000,000?  It is different for each individual person.  I am not trying to take the easy way out here, but let’s face it, everyone spends money differently.  You may only need $20,000 a year to live comfortably, where someone else might need $100,000.  Whatever your magic number is, we will show you what you need to do to get there and how to live off of dividends the way you have dreamed of.  Before concentrating on buying all these dividend stocks, you need to take a long hard look at the debt you are carrying around right now.  Is it debt that should be paid off before sinking funds into investments?  If you are carrying debt that has an interest rate above say 6%, I would recommend paying that off before investing into stocks.  It is getting to the point that getting returns of greater than 6% in the market is going to be a difficult thing to do consistently.  (Unless you sign up for our newsletter at the bottom of this page, then it won’t be quite as difficult. :) )  Think about it like this, if you have $10,000 in debt at 10% and you have $10,000 in cash to invest at 6 % interest, does it make any sense to invest it?  You end up owing $1,000 in interest and only making $600 from you investment, which leads to a $400 loss overall for the year.  If you pay off the debt, you are increasing your gain for the year by $400.  After taking care of your debt situation, you can focus on building a nice income producing portfolio with no debt to sabotage it.



There is a standard thought process that goes into thinking about retirement income needed to keep up your lifestyle that you had before quitting work.  Folks are suppose to have income of 85% of there preretirement income in order to live as they always had.  For example, if you made $25,000 a year, you would need $21,250 in retirement income.  Another example is that if you had $100,000 a year preretirement income, then you will need $85,000 a year in income.  This doesn’t mean that all your income has to come from dividends, but it would sure be nice if it did.  So what are we looking at per $25,000 in dividend income?  Let’s find out.

What Is The Best Dividend Stock To Buy?

Here is a solid dividend stock that you will want to highly consider in figuring out how to live off of dividends forever.  Amerigas (APU $42.95) is in the propane business.  They are not just in the business, but they are basically THE business.  They are the largest supplier of propane in the United States.  This is as close as you can get to a monopoly and still keep Uncle Sam off your back.  Now that you see why I chose them, let see what Amerigas is paying out in terms of dividends.  At this point in the game, Amerigas pays out $0.92 a share every quarter or $3.68 a year.  The best thing about Amerigas’s dividend payments is that it hasn’t decreased in over a decade.  That means that with their near monopoly status and continuing dividends, you are able to invest and not lose sleep worrying about them making money for you.

UPDATE:  APU has been going through the roof and those that have been following me are enjoying some great dividends AS WELL AS a very nice appreciation in stock price.  It is trading at $49.50 as of August 1st, 2016.  We will take that all day long!



Since we have chosen APU as our go to stock of choice, we can now figure out how much we would need to invest in it in order to maintain our post work lifestyle.  Let’s say that we are shooting for that $25,000 in dividends a year figure.  Because APU pays $3.68 a share in dividends per year, all we have to do is divide $25,000 by $3.68 and then multiply that answer by the share price of $42.95 to see how much we need to put into the business.  We come up with 6,793 shares and a total investment of a surprising low number of $291,795.  Now that we know how much it takes per $25,000 worth of dividend payments, we can make a small inference below into the needs of different levels of spenders.  These are the numbers that you need to have if you want to know how to live off of dividends forever.




$25,000 needs $291,795
$50,000 needs $583,590
$75,000 needs $875,385
$100,000 needs $1,167,180
$200,000 needs $2,334,360

Now that we have a good idea of what it takes, you also know now how to get there.  You can start investing in APU and reinvesting all dividends back in until you get to the point that you can comfortably live off of the quarterly dividends.  The best part is that these dividends will grow with you as time goes on unlike many other retirement plans.  In 2006, Amerigas was paying $2.32 a share and just 10 years later, they are paying out $3.68 a share.  This is an increase of 58%.  I can tell you that Social Security did nothing close to this in terms of dividend appreciation.  If we take the cost of living raises since 2006 for Social Security and apply them to the $2.32 a share dividend that Amerigas paid out back in 2006 and figured out what it should be today, we find that it would be only $2.82 a share.  This is a whopping $0.86 a share less than it would have been.  In other words, this stock is awesome for crushing inflation and actually giving you above inflation raises.  This is how to live off of dividends forever and never look back.






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As always, if you are truly ready to start making some serious cash quickly and you are not afraid of dealing in penny stocks, you will want to take at this program and see how you can turn as little as $1,000 into one of the figures up above.

How To Live Off Of Dividends Forever And Never Look Back

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Comments

  1. Excellent way to build for retirement. Now I will need you to write one about how to get to the quarter million and half million mark. Ughhh….

    • Stock Moe says:

      Working on the next article for that part of the game as we speak. It is much easier then you would think.

      Thanks…Stock Moe

  2. There quite a few dividend stocks out there that you could live off of. I think the problem is getting enough cash to get to the point of earning a decent return. Great thought though.

    • Stock Moe says:

      Hi Stan,

      The hardest part of any journey is that first step. I believe that by starting your initial deposits into this stock, you will start to receive those dividend payments and with continuing your deposits, you will see the account grow rapidly over the years. This will give you the “light at the end of the tunnel” that you will need to stay focused and well invested.

      Thanks…Stock Moe

  3. Do you any other stocks that pay decent dividends that you could recommend? I am looking to do exactly what you wrote about and was hoping to diversify a bit more. Thank you ahead of time.

    • Stock Moe says:

      Hi Mary,

      Absolutely! I have quite a bit of stocks that I have researched and invested in. I will be sharing them through the email newsletter as well as through some posts.

      Thanks…Stock Moe

  4. I don’t think you covered what the title of the article really implies (and what I was interested in)- which is the math behind minimum savings needed, annual dividend rate/$ and monly expenses as well as future inflation and dividend growth assumptions. Instead you ended up recommending certain stocks….

    • Here is another article I wrote that takes a bit of a different view on the dividend life. I do not cover the monthly expenses when I find that everyone’s is always different. My idea is to give a realistic view of what one could expect if they followed the steps outlined. The annual growth rate in salaries as well as money invested is included in this article. As for inflation, that is something that definitely needs to be considered. I am writing an article now about the effects of inflation on one’s portfolio and will try to combine the two articles into one that covers all your concerns. http://www.stockmoe.com/how-to-live-off-dividends-the-filthy-rich-way/

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