After one year of living in San Diego, I am back on the road again. I came to San Diego to continue my Marine Corps career, dreaming of doing 30 years.
But after three years away from my family (2 in Japan, 1 in SD), it was time to hang up my green uniform—24 years later.
Luckily I have been studying the ways of passive income for the last four years. So, I will have my military pension and loads of other income streams to help me through life.
Retirement Plus: Use Dividends to Supplement Your Retirement
Passive income is the only way to live the way you dream. If you want to travel, visit family, and have free time, you’ll need to learn to make money while you sleep. Read about my seven-day trip (in 2022) from Pensacola to San Diego here:
- Passive Income Road Trip #1: Financial Mindset
- Passive Income Road Trip #2: Retirement Planning
- Passive Income Road Trip #3: Dividends
- Passive Income Road Trip #4: Cryptocurrencies
- Passive Income Road Trip #5: Real Estate
- Passive Income Road Trip #6: Royalties
- Passive Income Road Trip #7: Automated Business
The first stop on the train of life. The first stop on my seven-day trip is Yuma, Arizona. I love the desert more than any other type of terrain.
Driving around reminds me of the six years my wife and family lived here. I knew nothing of passive income when we lived here from 2008-2014.
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Now I am a seasoned dividend investor. Dividends are the best place to start your journey toward building a passive income portfolio.
Why dividends? Dividends are the most passive type of passive income. You invest once, and the dividends keep arriving on your doorstep.
However, you must understand what type of dividend investing makes you comfortable. You can put yourself into a bad situation if you invest under someone else’s program.
The first question you must ask yourself is, why are you investing? Do you want to retire in America or abroad?
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How much do you want to travel? What other types of retirement or passive income will you receive?
The three types of dividend investing. I categorize dividends into index funds, dividend growth, and income investing.
Index funds are a great place to start because they are very low-risk. In short, you can’t really go wrong investing in the S&P 500 (SPY), Dow Jones Industrial Average (DIA), and the Nasdaq 100 (QQQ).
Index funds pay paltry dividends, however. You’ll receive 1-2% in dividends every year. If you invest $100,000 into DIA at a 2% yield, you’ll receive roughly $166 monthly—hardly enough to survive.
TSP vs. Dividends
The value in dividend growth investing. If you invested that $100,000 into five dividend growth stocks, say McDonald’s (MCD), Johnson & Johnson (JNJ), Procter & Gamble (PG), Starbucks (SBUX), and AbbVie (ABBV), you would get different results.
Your average dividend yield would be roughly 3%; however, principal and dividends would grow yearly.
You could easily see four to five times more dividend income over 30 years, probably more. Dividend growth investors invest in creating a solid (and safe) income stream for tomorrow.
You truly only need one or two companies to do extraordinarily well to set you up for life. For example, buying Microsoft (MFST) or Apple (APPL) in the 2000s would allow you to retire today.
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Income for today. Income investing is your best bet if you need to generate money today. I love income investing because I want my returns now.
I see the world through math, so I love converting money into more money. For example, I can turn $2,000 into $16 monthly with a closed-end fund that yields 10%.
It may not seem like much, but it is life-changing once you start receiving $1,000 per month in dividends.
I aim to reach $10,000 per month in dividends by the end of 2028. That gives me 4.5 years to set this into motion.
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Is my dream achievable? I think so, as long as I simultaneously put other things into motion. The hard part about dividends is that they require money first.
How to start with dividends? It may be tough to trust the stock market—most people don’t. It is a fear you must overcome.
There is almost no way to beat inflation, save for retirement, and fund your kid’s college, without starting a business, owning rental properties, or investing in stocks.
The key is understanding your timelines, risk tolerance, and investment philosophy. I am a buy & hold investor, making it easy to put money into the markets.
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Your dividend journey will not start with a bang but a whimper. You’ll receive a dollar or two a month (if you are lucky).
Remember, a 4% yield means 4% over the entire year. Therefore, you’ll have to divide that number by four to calculate your quarterly dividend.
For example, let’s say your $100 stock pays 4%. You’ll receive $1 every quarter. That’s why most people do not begin down the path of dividends—it’s very slow.
Great rich slowly. If there is one thing I learned over the last four years, it’s to get rich slowly. Taking shortcuts will always end in disaster.
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In 2020 and 2021, many people turned to YouTube day traders to make trades on the stock market.
However, the market was almost always going up during this timeframe, making it hard to make a wrong call.
Once the market turned sour in 2022, people started to freak out and sell everything. We call this panic selling or “having weak hands.”
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Conclusion. I have been buying dividend stocks from 2019 until today. I never stopped investing and didn’t sell shares out of fear.
I did the work to learn how to invest. I read books like “The Intelligent Investor” and “How to Retire on Dividends.”
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I also read about the stock market for 1-2 hours daily. Our dividend portfolio is over $200,000 today due to our diligent research and game plan.
Is dividend investing right for you? I don’t know, do you want to work for the rest of your life? If not, you’ll need a plan and a way to make money 24 hours a day.
Dividend investing changed my life and allowed me to retire six years earlier than I thought. Every day I feel as though it’s raining money because it is. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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