Need to learn about Div's and income ETF's

Investment Analysis Clubs Dividend Growth Investing
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Hello all,
I have been tracking some dividend companies for YEARS in a test portfolio, but now that I am here, at this age, I am realizing I don’t have enough information.

I am very confused by things like:

  • NASDAQ: JEPQ - claims a Div Yield of 9.346%, but then the top five stocks are NVIDIA, Apple Inc, Microsoft Corp, Amazon, Meta Platforms. It gets worse from there with a bunch of companies that do not even pay a dividend… (What the heck am I missing?)
  • The top seven funds listed on Nerd Wallet seem to have the worst ratings from Morningstar (KBWY, XSHD, DIV, SPYD, SDOG, RDIV, DHS)

I am getting to the point I expected, where I need to rebalance out of 100% risky/growth/sauldom stocks and getting into more of an income investing style with only some of my money still in high growth stuff.

Where do I look for reliable information on div stocks, div etfs, etc? I know the MF stuff of making sure payouts are sustainable and dividend aristocrats n stuff…but I need more details and less broad strokes at this point.

How have you made the transition and what worked and what didn’t?

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It uses call options to generate income.

Where do I look for reliable information on div stocks, div etfs, etc?

I use to have a paid subscription to Morningstar. I really liked it at the time. YMMV.

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I had been following the path you’re eyeing, @dlbuffy until fairly recently. I had a portion of my portfolio dedicated to risky growth; another for growth from well-established growth companies; and a portion dedicated to companies I expected could generate a post-inflation rate of return of 3% or more, between dividends and capital gains.
I recently decided to give up that approach when I heard an interview with Scott Fraser, an accomplished Canadian investor. He pointed out that when the market crashes (which is my biggest concern as an investor), everything gets sold off – the stable dividend payers alongside the riskier stocks. When I think back to all the market crashes I’ve experienced, going back to Oct 1987, I had to agree with him.
Consequently I am dividing my portfolio between “risky growth” and “less risky growth”. And I have cash to live off of for 4+ years in the event of a delayed market recovery.
My conclusion: there’s no “premium” on safety.

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Hi @dlbuffy,

I go to the source, the company website. Here is the BIV page on Vanguard:

https://investor.vanguard.com/investment-products/etfs/profile/biv#price
It has all the info I need.

For stock, I do the same thing. Here are the sites for O and KMB:

https://www.realtyincome.com/investors/investors

Unfortunately, investor site vary widely from company to company.

I subscribe to the newsfeed email for each company. That way I get notified of earnings, dividends, significant news about the businesses.

For candidates, as you mentioned, the various Dividend Aristocrat/Champions, etc lists are good places to look.

For the Dividend Core in our portfolio, I mostly place emphasis on longevity of paying dividends and regular increases. For this group, I target 150% of our needed cash. (Expenses - Income = Needed Cash)

Right now, it is producing 195% of our needed cash.

Our dividend/interest payers collectively, pay 237% of our needed cash. They consist of:
Dividend Core 39.79% of portfolio:

ABBV, AEP, BBY, CTRA, HD, KMB, NLY, O, OKE, PAYX, PEP, SWK, WFC

Other Dividend 15.91% of portfolio:

ABT, CAT, CRM, DHR, GEHC, LLY, PAYC

ETFs 3.95% of portfolio:

BIV, HYGV

Additionally, I have a set of options ETF’s, like JEPQ, that produce a large amount of cash. They are currently 5.97% of our portfolio and produce nearly 600% of our needed cash.

However, I do not relay on these right now. I do not know how they will behave during various market conditions, so I will watch them for a while. I use the cash to invest in other opportunities.

Something to understand about most “general investing sites” is they often get dividend payers wrong. Yield and coverage can be incorrect. Using Free Cash Flow instead of FFO (Funds from Operations) can make REIT’s look very suspicious.

Does that help you?

Gene
All holdings and some statistics on my Fool profile page
Profile - gdett2 - Motley Fool Community (Click Expand)

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As others have suggested, find good resources that can provide one current and/or updated data on the individual stocks you want to follow. gdett’s advice of going to the individual company websites and signing up for notifications is a good one. Then you (as an interested investor) get data from “the horse’s mouth”, or at least, get individual company data from the company itself.

Many years ago, the Motley Fool had a contributor named David Fish, who did some great work on Dividend-paying stocks. David Fish used to post a spreadsheet, updated monthly, on Dividend Champions, Contenders & Challengers. While David Fish is no longer with us, his work is being continued by other individuals. One such person is named Justin Law, who posts on Seeking Alpha on a regular basis.

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@dlbuffy - You mentioned JEPQ. As noted earlier in the thread, JEPQ is an Income-based ETF that follows a Covered Call strategy. Just be aware that due to this strategy, the dividends/distributions may be taxed differently. I own a more recent ETF version, NVDY, which tracks Nvidia via a Covered Call strategy. I am in accumulation phase, so different forms of dividend e.g. income, don’t bother me too much. OTOH, other types of investors e.g. retirees with other income sources, might care about the type of dividends they earn. YMMV

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I’ve been watching JEPQ with the intent to purchase some of it and on a whim, I took at look at options on it.

Apparently, you can sell covered calls, on your covered call ETF. Wild.

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