Every investor eventually grapples with the daunting question: how much is enough to retire? According to the BLS, 65-74-year-olds in the United States earned an average annual income of $59,872, while the love and wisdom of those aged 75 and older fetched $43,217. A sage finance guru, Chuck Czajka, once remarked:
For every $50,000 of income you need, you need a million bucks,
$50,000 nestles comfortably within this income range and, when factoring in the buoying effect of Social Security checks, might make for a prudent marker. As such, $1 million starts to look like a reassuring retirement egg, particularly for those content dwelling in modestly priced American environs.
The conventional $1,000,000 prescription, allocated between a standard S&P 500 fund and a bond fund, tethered to a 5% rule – an option popular with many – harbors its own hazards.
Primarily, the 5% rule is inherently riskier than its 4% counterpart, even though it remains tenable. Furthermore, any retirement financing predicated on periodic stock and bond disposals confronts a perilous sequence of returns risk, especially when the nest egg isn’t particularly plump to begin with. If an individual requires $50,000 annually from a $5-million-strong retirement purse, a 50% market crash is merely a 2% nip. But if one expects the same from a $1 million bundle, a 10% bite becomes a distinct possibility. Leveraging dividends instead of asset selloffs can stymie this sequence of returns risk, given their comparative stability. By savoring a portfolio of dividend funds, investors can savor their passive income pursuits, insulated even from market tumults.
As such, the current narrative sets out to delimit a robust 7-fund portfolio that affords the luxury of living off dividends perpetually, all within the embrace of a $1 million financial haven.
Sample $1 Million Dividend Portfolio
Without further ado, behold the portfolio:
| Fund | Allocation | % | Yield | Income |
| SCHD | $ 500,000.00 | 50.0% | 3.53% | $ 17,650.00 |
| PFFA | $ 100,000.00 | 10.0% | 9.56% | $ 9,560.00 |
| AMLP | $ 75,000.00 | 7.5% | 8.24% | $ 6,180.00 |
| RQI | $ 100,000.00 | 10.0% | 8.18% | $ 8,180.00 |
| UTF | $ 75,000.00 | 7.5% | 8.74% | $ 6,555.00 |
| JEPI | $ 100,000.00 | 10.0% | 8.40% | $ 8,400.00 |
| BIZD | $ 50,000.00 | 5.0% | 10.84% | $ 5,420.00 |
| Total | $ 1,000,000.00 | 100.0% | 6.19% | $ 61,945.00 |
#1: Schwab U.S. Dividend Equity ETF (SCHD)
Half the corpus finds its abode here. It’s a low-cost behemoth, with a stupendous track record in generating double-digit dividends. It also traverses the dividend stock universe with savvy diversification. This ETF’s yield may fall short of our $50,000-yardstick, but its growth propensities should bolster our passive income yield over time, shadowing inflationary lurches and offsetting potential dividend stumbles in the likes of BIZD and JEPI.
#2: Virtus InfraCap U.S. Preferred Stock ETF (PFFA)
The high yield and portfolio diversity it confers courtesy of its preferred stock holdings win our favor. There’s a smattering of leverage to spike its yield, but it placidly supports fairly steady monthly payouts.
#3: Alerian MLP ETF (AMLP)
AMLP diversifies our portfolio. It notches up our overall yield and widens our horizons to embrace the energy midstream infrastructure. The financial vigor and burgeoning dividends of many midstream outfits make this a smart portfolio adjunct.
#4: Cohen & Steers Quality Income Realty Fund (RQI)
RQI primes our portfolio with a dash of real estate stocks and an astute dose of leverage. It’s laudable for sustaining its monthly payout during the COVID-19 tempest, testament to its robust management and construction, and laying to rest any doubts about its sustainability through future travails.
