How A Doctor Replaced $200K+ Salary with Dividend Income
| I’ve learned the hard lesson that less is more, when it comes to investing and trading. Here’s an investment portfolio designed for EARLY retirement!
Truth be told … I’m a dentist. Yup, I accomplished a milestone in my investing attempts, in just 6 months, by finally reaching a passive income that rivals my income as a dentist. It wasn’t always like this. Before June, I did not know much about dividend investing. I would look at dividends and see something like a $0.05 payout quarterly and be totally turned off by that insignificant passive income. But, after having discovered high yield dividend investing, it is a great feeling not HAVING to work, but I do STILL WORK, so that I can allow my earnings to continue to compound while I use my current salary for living expenses and insurance.
Before you can understand how I accomplished this, it’s important to understand TWO themes in investing for retirement. Growth Investing and Income Investing.
Growth Income is your typical buy a stock, ETF, or mutual fund and hope that its share price rises in value enough over time to sell it at a higher price than when you bought it. This strategy can be highly successful IF you pick the right stocks or ETFs.
The problem I see with only investing for growth is that when you retire, you have to sell off the shares — you’re selling off your working capital, or the invested capital that was actually earning you money. As some of us have come to discover, that when you retire, you have to reference mortality and life expectancy charts to determine how much of your retirement portfolio you can afford to sell for cash so that you don’t run out before you die! Grim, right?
In general, the stock market always goes up, so theoretically, you could just buy ETFs that reflect the broad market, like the $SPY or $QQQ, or the like, and your portfolio will also go up over time. I agree with this somewhat, but feel that that strategy is too slow. So, fear not, I’ll get into some ways to accelerate portfolio growth and compounding.
Income Investing is buying a stock or ETF that pays dividends, and planning to live on the cash dividends— with or without selling the actual shares for capital gains. I like this approach because, in retirement, when there is no longer a steady salary coming your way, you can receive your dividend as cash, instead of stock repurchase, use it for living expenses, but still own the shares and give it another go the next month … indefinitely!
Below, you’ll see my dividend calendar as of 11/23/2024. It shows at the top in green, that for November, I have already received $12,794, and in gray, I have yet to receive $1,081. You’ll also see that I have structured my dividend payouts so that I get paid at least something WEEKLY. This was accomplished with choosing Monthly payers that pay on different dates of the month, and choosing some ETFs that pay dividends Weekly.
So, before we get into the details and strategy, know that I believe in a MIX of both Growth and Income when assembling my retirement portfolio. I still work, so my salary pays the bills, taxes, and insurance. And any earnings on my investments, currently $15K per month, is compounded into both high growth stocks and ETFs that pay high yield dividends.
What follows is the composition of my retirement portfolio and my philosophy and strategy for Financial Independence Retire Early (F.I.R.E.)!
Author’s Disclosure and Disclaimer: The author may or may not hold positions mentioned in our blogs. This is not trade or financial advice and I am not a financial advisor, money manager, or tax advisor. This blog represents the opinion of the author and is for entertainment purposes. Also, this blog is in no way a recommendation to buy or sell any security, and past performance is no guarantee of future performance.
Investment Philosophy and Strategy
If you have a system or investment portfolio that is growing, then please just stick with that. Don’t try to change with the next new and shiny thing.
But, if you were like me 6 months ago, lacking direction, and unsatisfied with your investment gains, then consider some of these tickers to add SUBSTANTIAL GROWTH to your portfolio.
If you haven’t already, I suggest you read this book, Retirement Money Secrets by Steve Selengut.
This book completely turned me around on how to invest for retirement and it is an easy read, because it is written in story form in short, uncomplicated chapters.
The basis of the book is that you can buy ETFs called CEFs or Closed-Ended Funds that pay dividends, and that, if desired, you can sell the fund to lock in any capital gains. If you’re interested, check out CEFConnect.com — free to use, and it’s a screener. I like screening for high yield and monthly payers.
I think a well-balanced portfolio will have a mixture of:
- Dividend Income payers
- Growth Stocks or ETFs
- Exposure to broad market appreciation
- Cash equivalents for cash preservation and inflation hedge
- Cash for Trading Ideas or Emergency Cash Cushion
The proportion depends on your risk tolerance, and feasibly, is more aggressive in your younger years, and converts to more stability like bonds and cash equivalents in retirement.
In the next section, I’ll highlight just a few, but not necessarily all, of the tickers in my portfolio that have been contributing to the most success.
Dividend Income Payers
As I mentioned, I have my Dividend account set up to pay me every Friday of the year. My position sizes are such that I get paid at least $800 per week currently, but sometimes up to $8,000, depending on the payout. Here are the tickers I have, why I chose them, and when they pay out.
$TSLY — YieldMax TSLA Option Income ETF
This is an ETF from YieldMax. It is a relatively new issuer. It generates income for the ETF by selling options on the reference asset, in this case, $TSLA, but does not hold the actual stock.
The primary goal of these option income strategy ETFs is income generation and dividend payouts — NOT share price growth.
So, since the price of the ETF shares drops every time a monthly distribution is paid out, the share price growth will NEVER rival the underlying asset, because the ETFs primary goal is income, NOT growth. But, since the covered call option strategy is a bullish strategy, it is important to choose reference assets that will likely go up over time.
For Tesla, they have the robo-taxis coming out, robots, advancing technology with their auto industry, and AI. Their space division is a separate company called SpaceX. Also, Elon Musk’s alignment with president-elect Trump is very bullish for Tesla’s future.
YieldMax has decided to re-arrange the payout structure of all of their ETFs, so that you could feasibly have one pay every week, which is what I chose to do. So, $TSLY will pay its distribution income on the 1st Friday of the month.
I currently own 1535 shares of $TSLY for a last payout of $0.599/share, or for me, $919. If I were annualize that by multiplying by 12 months, that comes to $11,000 in dividend income from this single ETF.
$NVDY — YieldMax NVDA Option Income ETF
This option strategy ETF also sells covered calls on the reference asset $NVDA. NVidia’s company and share value exploded this year with the demand for AI. This ETF is one of the few income ETFs that has
total 1-Year return of over 100% — that’s like doubling your money!
So, between the exposure to NVidia’s share price growth this year, and the ETF’s 73% annualized dividend yield, I feel like this is a great combination for both slow share price growth and high dividend payouts. NVidia’s future is bullish due to demand for their technology that exceeds their current supply.
$NVDY pays its cash distribution on the 2nd Friday of the month. I currently own 1315 shares, and at their last distribution of $1.023/share, that gave me $1,345 and, annualized comes to $16,142 for a year. Combined with $TSLY, that now adds up to $27,142 from just these 2 ETFs.
$NFLY — YieldMax NFLX Option Income ETF
This YieldMax ETF pays its distribution on the 3rd Friday of the month, so already you can see that I’ve got income coming for the 1st 3 weeks of the month. Its reference asset is $NFLX. You don’t. hear too much about Netflix these days, but it is just slowing growing in the background compared to all the hot news about AI or Bitcoin.
It has an annualized dividend yield of 46% — anything over 4% is considered “high”. The reason 4% is significant is that in retirement, you are required to take at least 4% of your overall investment portfolio as retirement fixed income. So, theoretically, if your yield income exceeds 4%, then you have money leftover from the distribution to use more of, or to reinvest.
I only own 140 shares, for a recent dividend payout of $109, but I plan to increase this holding to at least 1,000 shares over time. The question is, where do I get the money, to the tune of about $20K to buy 1,000 more shares?
Well, I swing trade shares and options in a different account. I can take profits from that account and increase my dividend exposure, without having to use a cent of my own salary! We well talk a bit about some of those growth tickers too.
$MSTY — YieldMax MSTR Option Income ETF
You can see in the chart above the growth explosion of MicroStrategy after Trump’s win and dedication to Bitcoin. The large red candle was the company selling debt notes to generate income to buy more Bitcoin. For Bitcoin believers, this was a buying opportunity, not an ominous crash.
Between buying Bitcoin, like on Coinbase or Crypto.com, or buying MicroStrategy, it might be smarter to buy actual Bitcoin. This is because of the business nature linked to $MSTR, kind of like that big red candle. Though the company’s value is linked to the amount of Bitcoin on their balance sheet, Bitcoin’s value appreciation was tied a lot to Trump’s dedication to using Bitcoin on the government level to establish a treasury that could theoretically offset our country’s national debt. And, if the US government and states start buying Bitcoin to hold as a treasury asset, so will other countries. The US will basically “green light” Bitcoin’s plausibility to other countries.
Bitcoin can also be used for transactions, whereas $MSTR stock exposure, you’d have to sell shares. But, for me, I have a little bit of both. I have and plan to buy more actual Bitcoin on a centralized app like Coinbase or Crypto.com — easier for my taxes. While it is possible to buy $BTC on a decentralized app like MetaMask, I have found it harder to account for it when it’s tax time. So, to stay compliant, I prefer now to use the centralized apps. I think now that the US government is advocating $BTC, that it is a lot less likely for those collapses of financial institutions from the volatility of crypto.
Anyway, I have 1995 shares of $MSTY, it pays out the 4th Friday of the month, and on their last distribution of $4.421, I received $8,800 in passive income this past Friday. I currently have DRIP reinvestment turned on, so a large part of my income compounding accelerated growth is currently coming from $MSTY.
$YMAG — YieldMax Mag7 Option Income ETF
This ETF sells options for income on the Mag7, which includes Tesla, Google, Meta, Amazon, NVidia, and Microsoft. It recently went from being a monthly payer to a weekly payer.
I think doing that switch, meaning it has to pay out a little something every week, means that the ETF share price growth has slowed, maybe even trading sideways.
Also, it creates a lot of volatility where, since they are making such frequent payouts, and share growth is lateral, that any dip in the broader market will cause this ETF to react wildly negative as well.
Regardless, I like this ETF for consistent weekly income, along with a suite of Option Income ETFs from Roundhill Investments, that I’ll touch on next.
$QDTE/$XDTE/$RDTE
These Option Strategy ETFs from Roundhill Investments are weekly payers. They have an annualized distribution rate of 25%, 15%, and 31% respectively. The $QDTE sells NDX options, The $XDTE sells SPX options, and the $RDTE sells RUT options.
If you didn’t already know, generating income from selling Index options like NDX, SPX, or RUT has a tax advantage from IRS Section Code 1256 60/40 Tax rule. This rule says that the first 60% of your profit is taxed at your long-term tax rate, depending on your filing status. And the last 40% of your profit is taxed at your ordinary income tax rate.
I really love these weekly payers, so I have substantial positions in these. Between ALL of those 3 ETFs, I own 2,190 shares, and I get paid between $500 and 900 per week, from these 3 ETFs.
That’s it for Income. I own other tickers like $PLTY, and am also eye-ing $PYPY — both reference assets appear to have long-term bullish trajectories.
Growth Stocks
Let’s look at a few mega-growth stocks one could ‘pepper’ into their portfolios. I went to ETF.com and screened for stocks that had a 1-year price performance >100% and whose share price was under $50.
$RDW/$LUNR/$RKLB/$ASTS
I decided to group these together because they are all space-related stocks.
$RDW does supplies for space equipment. Its 1-year price performance is 412% and is rated a “BUY” from 4 analysts that track this ticker. Share price is only $11.63.
It does not pay dividends, but SpaceX’s success has put these other space tickers on the radar.
$LUNR does space exploration, infrastructure, and services. It has a 1-year price growth of 407%, and is rated a “STRONG BUY” by 5 analysts. The share price is $15.12. No dividends either.
Next, $RKLB does space rockets for space and defense industries. 1 year price growth is 451%, no dividends, and share price is $23.26. It is rated a “BUY” by 14 analysts.
And lastly, $ASTS builds broadband cellular network in space. They have a 1-year price return of 450%, share price is $24.10, and is rated a “STRONG BUY” by 4 analysts. Interestingly, 2025 price forecasts are between $31 and $53.
I own shares of all 4 of these space tickers.
$DAPP/$CRPT/$BRRR/$BLOK
Again, I’m grouping these as crypto names, ~100%+ 1-Year price returns, and share price ~$50 or less. Obviously $MSTR is going ballistic, but with a share price of $421, it is hard to enjoy the multiplicative effect of owning more shares. Instead, I am getting exposure via crypto-related stocks, as well as using leveraged options to profit from MicroStrategy’s price growth.
$DAPP does digital economy without geo-restraints. 1-year price return is 200%, no dividends, share price $18.47, and rated a “STRONG BUY” based on technical indicators.
$CRPT has a share price of $19.90, a 1-year price growth of 213%, no dividends, and a “BUY” rating based on technical indicators.
$BRRR is the least expensive spot-Bitcoin ETF at $28.08 and has an identical price performance as the more expensive spot-Bitcoin ETFs. Its 1-year price return is 99%, no dividends, and rated a “STRONG BUY” based on technical indicators.
$BLOK is an ETF that invests in companies that use blockchain technology. It has a share price of $50.39, a 1-year price return of 123%, and is rated a “STRONG BUY” based on technical indicators.
OTHER: $RYCEY/$SOFI/$SG/$PLTR/$IONQ/$HOOD
I clumped together these unrelated various stocks but they are high growth, with good sectors. I will finish with just a quick run down on these for your consideration. Remember that I am screening for >100% annual returns and <$50 share price:
$RYCEY — Rolls Royce does electronic technology for aerospace and defense. Priced at $6.92, 1-Year price return of 131%, and rated a “BUY” by 10 analysts.
$SOFI — financial and loan products, priced at $10.13, 1-year return of 129%, and a “NEUTRAL” rating from 16 analysts.
$SG — Sweet Green operates a chain of salad restaurants, priced at $43.40, a 1-year return of 352%, and a “BUY” rating from 10 analysts.
$PLTR — Palantir does software platforms for the US government and other government contracts. Priced at $36.77, a 1-year price return of 217%, and a “NEUTRAL” rating from 13 analysts.
$IONQ — IonQ does quantum computers, priced at $18.58, a 1-year price performance of 153%, and a “BUY” rating from 5 analysts.
$HOOD — Robinhood does financial services platform as well as crypto trading with incentives to match retirement contributions, priced at $30.76, a 1-year return of 356%, and a “BUY” rating from 17 analysts.
I own shares of all of these.
There you have it. An Income portfolio that pays cash weekly, to either use, compound, or reinvest in MEGA-Growth stocks. As much as I am harping on the Income strategy, the Growth component is important too so that your overall portfolio can have a steady upward trajectory and, hopefully, ‘beating’ the broader markets.
If you’d like to learn more about what tools I use to find trades and manage my portfolio, come visit me at BlockStoxx.com!
Happy Trading Folks!
Ryan @ BlockStoxx.com
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