Dividend Portfolio for Retirement Income: 6% or higher club

[Saluki]

1 hour ago, LC said:

The only use I see for dividends is to limit management's allocation options so they don't do stupid stuff. And sometimes even that doesn't work.

 

 

Why not ignore dividends, just buy good companies you think are growing in value, and sell a few shares every year to create your dividend? I.e. Buffett's advice from years ago?

 

9 hours ago, winjitsu said:

SRG Preferred is around 7-8% and you'll get a little bump once they liquidate and redeem the pref. Very well covered by the Real Estate.

 

CCLDO is a name I've held for the past year, 11% dividend is covered around 4x, net cash on balance sheet, slight decline in core business.

 

 

 

SRG preferred is not really worth the risk. You might get a little bump if they liquidate and there is enough to cash you out at par, but that is still not 100% certain and a lot of risk for 7%.  Check out POWWP and LFMDP. Both issues are callable next year, and you are getting 9% (sometimes 10% if you buy on a good day) with profitable companies that will want to pay par since they are doing well and can get cheaper access to capital. 

 

I have some EPD and ET, mentioned here and I also own a little SFL, which pays a big dividend 11-12% and is structured to buy ships and lease them long term (Like Aercap), instead of playing in the spot market. It's price is down a lot because of some uncertainty over a floating platform that is waiting for a new contract, but if that gets settled, the stock price should go back to it's normal trading range.

 

I have a medium positions in BTI and PM too. BTI I got lucky and started buying at $30. If it didn't have a dividend, I might sell, but by holding it I don't pay the taxes and I get paid a decent amount that I can invest elsewhere. Plus, if you are going risk off, tobacco is not a bad place to be in a downturn. 

[Michael Campbell]

I’ve owned ENB, VTS, and EFC in the past. I think they each fit the bill of what you’re looking for.

[Castanza]

If your goal is 6% why not just lock it in with a 20yr treasury at 5% and then allocate something towards a dividend index fund with better div growth that will likely outperform any individual company long term? SCHD as an example.

[Gregmal]

CTO is probably worth a look 

[winjitsu]

1 hour ago, Saluki said:

 

 

SRG preferred is not really worth the risk. You might get a little bump if they liquidate and there is enough to cash you out at par, but that is still not 100% certain and a lot of risk for 7%.  Check out POWWP and LFMDP. Both issues are callable next year, and you are getting 9% (sometimes 10% if you buy on a good day) with profitable companies that will want to pay par since they are doing well and can get cheaper access to capital. 

 

 

The risk w/ SRG preferred is no change of control clause (DTLA the big example) in a M&A case, but the value of their cash flowing real estate (La Jolla, Aventura which is finally being marketed as of a few weeks ago) and cash on hand more than cover the rather small preferred and payoff of the term loan. When Aventura is sold, I expect them to more or less pay off the term loan and prefs are up next, so the timeline is also 1 year to redemption.

The equity, however, continues to be a complete turd the longer the liquidation drags out.

 

[bizaro86]

3 hours ago, LC said:

The only use I see for dividends is to limit management's allocation options so they don't do stupid stuff. And sometimes even that doesn't work.

 

 

Why not ignore dividends, just buy good companies you think are growing in value, and sell a few shares every year to create your dividend? I.e. Buffett's advice from years ago?

 

Depends on the situation. My wife's income is in a relatively low tax bracket. In Canada, the dividend tax credit is very advantageous for those not in the top income tax bracket, so her effective tax rate on dividends is considerably lower than  it would be for capital gains.

[Junior R]

1 hour ago, bizaro86 said:

 

Depends on the situation. My wife's income is in a relatively low tax bracket. In Canada, the dividend tax credit is very advantageous for those not in the top income tax bracket, so her effective tax rate on dividends is considerably lower than  it would be for capital gains.

also I think the first 40 to 50 k with no income is tax free

[bizaro86]

1 minute ago, Junior R said:

also I think the first 40 to 50 k with no income is tax free

That's true as well, although my wife's other income is higher than that. But as a retirement plan in Canada dividends are better than capital gains for most people.

[Junior R]

the other thing you can look at is writing 1 year out cc on SPY would be 8% to 9% + 1% div = 10%...take 5% as div and keep the other 5% for year 2 incase index falls significantly and keep doing this ...the pool that you carry over will get bigger as long as SPY is above your purchase price 

[dipod]

17 hours ago, Junior R said:

the other thing you can look at is writing 1 year out cc on SPY would be 8% to 9% + 1% div = 10%...take 5% as div and keep the other 5% for year 2 incase index falls significantly and keep doing this ...the pool that you carry over will get bigger as long as SPY is above your purchase price 

This is a great idea. Thank you!

[dipod]

20 hours ago, Gregmal said:

CTO is probably worth a look 

Interesting name here. I'll dig into it some more. Thank you.

[Jaygo]

22 hours ago, bizaro86 said:

 

Depends on the situation. My wife's income is in a relatively low tax bracket. In Canada, the dividend tax credit is very advantageous for those not in the top income tax bracket, so her effective tax rate on dividends is considerably lower than  it would be for capital gains.

 

There is a situation where you can get up to 58k in dividends completely tax free. Small business owners can benefit themselves by figuring out the sweet spot where they can drop their income to the bare minimum. Borrow to invest to the point the interest cancels out the income and then live off the dividends while letting earned income pile up in the company coffers and invest through the company.

 

Say you have a $ 1M personal portfolio paying 35K in dividends, your small biz pays you 40k a year. Borrow to invest 500k in dividend paying co's and your income minus the 12K limit will effectively be zero. You will now get 20-25k per year in dividends on the investment, 35K from your existing portfolio and you will have an negative tax rate when you consider any benefits.

 

If you increase these numbers a bit to sustain your lifestyle you may end up with a 10-15% tax rate but still very low. 

 

This has been my path but my numbers are a little larger so I am paying around 18% total average tax rate through personal and small business. Its not perfect but its legal and when comping my T4 friends who are also in the 250k range I am paying considerably less tax overall and most importantly I am amassing an income stream in my taxable accounts much faster. The key is keep it legal, keep very clean records and you have to be somewhat frugal to build the accounts in the first place. 

 

[brobro777]

Come on guys if you like dividends, you gotta love Marlboros

 

[Marco Van Basten]

1 hour ago, brobro777 said:

Come on guys if you like dividends, you gotta love Marlboros

 

No! 10% volume declines will leave you with nothing in a decade.  I doubt the dividends in 10 years will exceed dividends today.  Meanwhile inflation marches on.  

[73 Reds]

8 hours ago, Marco Van Basten said:

No! 10% volume declines will leave you with nothing in a decade.  I doubt the dividends in 10 years will exceed dividends today.  Meanwhile inflation marches on.  

They've been saying the same thing for decades.  Meanwhile people will need their nicotine fix in one form or another.  Profits and dividends from tobacco companies would be the least of my worries.

[Marco Van Basten]

4 hours ago, 73 Reds said:

They've been saying the same thing for decades.  Meanwhile people will need their nicotine fix in one form or another.  Profits and dividends from tobacco companies would be the least of my worries.

That's not correct.  Altria's volume declines were NOT 10% per year in 1990, 2000, 2010 or 2015.  

[73 Reds]

1 hour ago, Marco Van Basten said:

That's not correct.  Altria's volume declines were NOT 10% per year in 1990, 2000, 2010 or 2015.  

No one is arguing that cigarette sales are rapidly declining.  Cigs are not the reason to own these companies.

[Marco Van Basten]

1 minute ago, 73 Reds said:

No one is arguing that cigarette sales are rapidly declining.  Cigs are not the reason to own these companies.

What is the reason then?  Where do you see EBIT and dividends of MO in 2035 and why?  Thank you.

[73 Reds]

2 minutes ago, Marco Van Basten said:

What is the reason then?  Where do you see EBIT and dividends of MO in 2035 and why?  Thank you.

Both much higher than today.  The issue here (per the thread title) is 6% or higher dividend portfolio for retirees.  MO has been, is and will continue to be just that.  Price appreciation is gravy.

[Marco Van Basten]

25 minutes ago, 73 Reds said:

Both much higher than today.  The issue here (per the thread title) is 6% or higher dividend portfolio for retirees.  MO has been, is and will continue to be just that.  Price appreciation is gravy.

What will drive EBIT growth?  How do you overcome 10% volume drag, 10% price hikes are not sustainable anymore.  Or do you think that MO can continue to post 8%+ annual price increases in cigarettes, and hence keeps EBIT growing at inflation?

[73 Reds]

2 minutes ago, Marco Van Basten said:

What will drive EBIT growth?  How do you overcome 10% volume drag, 10% price hikes are not sustainable anymore.  Or do you think that MO can continue to post 8%+ annual price increases in cigarettes, and hence keeps EBIT growing at inflation?

MO can continue to raise cigarette prices while working on other products like vapes, HTPs, pouches, etc..   Nicotine is addictive.  Demand is not going away.  No need to focus on precise numbers; rather on optionality.   If you believe tobacco companies are going out of business don't own them.  I own them for one reason - they generate a lot of dividends in a small retirement account which are fun to play with.  Yet if I were a retiree in need of dividend income these companies would be at the top of the list.  

[Spekulatius]

On 5/29/2025 at 1:08 PM, 73 Reds said:

MO can continue to raise cigarette prices while working on other products like vapes, HTPs, pouches, etc..   Nicotine is addictive.  Demand is not going away. 

While true, they have not been successful  with any alt product and PM and to a lesser extent BTI could eat their lunch.

 

I think MO is very iffy.

[Malmqky]

3 minutes ago, Spekulatius said:

While true, they have not been successful  with any alt product and PM and to a lesser extent BTI could eat their lunch.

 

I think MO is very iffy.

 

MO also has been doing dumb things for a longgg time now.

[73 Reds]

1 hour ago, Spekulatius said:

While true, they have not been successful  with any alt product and PM and to a lesser extent BTI could eat their lunch.

 

I think MO is very iffy.

Fair enough.  Which is a good reason to own them all.   An easy group to own with some upside if they manage to get it right and little downside.    

[brobro777]

1 hour ago, Malmqky said:

 

MO also has been doing dumb things for a longgg time now.

 

Yea and yet they raised dividends more than 50 plus years in a row and the stock is at $60 now, probably on its way to break all time highs within the next 5 years

 

Think about what a strong business MO has when it can withstand endless lawsuits, endless government regulations, endless dumbass management decisions, and endless marketing campaigns against tobacco, decade after decade

 

You gotta try to understand the mentality of guys who go to gas stations at 2AM to buy a pack of Marlboro Reds - I recommend smoking 2 packs a day for a while

 

haha