From Dirt to Dividends 5: Use Composting & Dividends ETFs To Supplement Your Homestead

Life is good on our wealthy homestead, so welcome back. Here, we live off the land while becoming rich on dividends. It’s not a bad deal to convert nature into cash flow.

This piece is part five of the From Dirt to Dividends series (Part 1, Part 2, Part 3, Part 4). Previously, we have talked about gardening, farming, preferred shares, and closed-end funds.

Today I want to talk about composting, specifically selling excess compost to your friends and neighbors. Once we make profits, we can fund our dividend portfolio with high-yield and growth dividend ETFs. Let’s begin.

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What is compost? Composting is any organic matter undergoing or that has undergone decomposition or decay. The general intent is to turn your food scraps, eggshells, grass clippings, etc., into an organic material you can use to grow crops and flowers. 

I read the book “Composting for Beginners” to learn more about composting. I’ll admit I did build a nice composting situation a couple of years ago. However, Hurricane Sally destroyed my setup back in 2020.

How can we make money from composting? The excellent part about composting is that it takes your natural leftovers and creates precious organic soil. If we are on the homestead, you will have all types of waste.

We will have the food we eat, plus leftovers from plants, animals, and humans. We have to be careful about certain things, like feces from meat-eaters, but we can reasonably determine our input limits. 

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If we want to make more money, we can leverage bigger composting containers or bins. However, the bigger the pile, the more “science” we will need to utilize.

There are hot and cold composting techniques. Hot techniques use specific organic materials to heat the composting core, speeding up the process naturally.

Cold techniques are more passive. You need less science but more time. I used the cold process, but it can take months to produce a product you can sell.

If you are serious about composting, you can also add worms to your mix. They can speed up the process considerably. I will discuss starting a worm business in the following article in the series. 

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Why use dividend ETFs? Dividend ETFs are unique in that you can use them in income and dividend growth portfolios. I wrote about them in “The Pros and Cons of Dividend ETFs.”

In a nutshell, dividend ETFs invest in the same blue-chip companies we use in our dividend growth portfolios. If you are nervous about picking individual dividend stocks, you should start with a dividend ETF. 

As the companies grow their dividends, your dividend ETF will grow its dividends and its stock price. Yes, you get growth and income from dividend ETFs—which contrasts with closed-end funds that mainly focus on income. 

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My favorite dividend ETFs are Schwab Dividend ETF (SCHD) and WisdomTree High Dividend ETF (DHS). These ETFs give me roughly 4% growth and 4% dividends. DHS has more dividends, and SCHD has more growth.

The problem with Dividend ETFs. The main problem with dividend ETFs is that they work best with compounding; thus, you want to keep reinvesting. You should use them more like a nest egg than a paycheck. 

Therefore, we may not want to put too much cash flow into our dividend ETFs because we want to use the money in 7-10 years, if not later. This will be a growth portfolio; however, it will be a high-income paycheck once it matures. 

Think of closed-end funds as using a microwave for cooking your food and dividend ETFs as using an oven. You’ll get the same results, but the oven always tastes better.

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Getting started with composting and dividend ETFs. I would begin composting indoors with a small container. You can add worms at this point if you’d like. You want to learn the ins and outs before you go full-bore.

As you keep learning, you’ll produce excess compost—that’s what you’ll sell. Don’t make promises you can’t control. Just produce what you naturally use and sell the excess as it becomes available. Starting a full-on composting business is an entirely different scenario.

Once we get some profits, we will want to fund our dividend ETFs. You can find SCHD on STASH (affiliate link) and M1 Finance. Of those two platforms, you can only find DHS on M1 Finance. 

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Don’t forget; there are many more dividend ETFs out there. These are just my personal favorites. I would use the STASH when starting because you can funnel $5-$10 into SCHD at any time.

As your income becomes more consistent, you may want to purchase $5-$10 a week into SCHD on STASH. Once you have large lump sums of money, creating an M1 finance pie using an index fund, two dividend ETFs, and a closed-end fund (like PDI) would be tremendous. You would get good growth, with an excellent dividend yield as well.

Conclusion. Your physical life is about building long-term relationships, and your financial life is about obtaining assets. Your composting abilities will be an asset that you can convert into a long-term income-generating dividend portfolio. 

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Most people would use the income from their compost to buy goods and services directly. You need to take the extra step to invest the money first. Once your dividends arrive, then you can spend freely. 

You are slowly buying your freedom from the day-to-day grind. If you want to stop selling compost, you can because your dividends provide for you. Yes, you can truly live on dividends. 

My wife and I will achieve over $1,000/month in dividends this month. We did not do it from composting because we are both still working. 

However, we plan to retire to the homestead and use these techniques to continue building our net worth, one batch of compost at a time. Good luck!

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