No problem on the shout out. I'm a long time fan of your channel. I think it should be required viewing for dividend investors. Lance is one of the good ones! Not surprised he let you know (:
Hey Sean! Thank you for the generous super chat! That is above and beyond and I appreciate it. I also see you're a channel member. Awesome stuff! I want to focus on my channel membership (long-term) so that I don't have to take as many (or any) sponsorships to get by. Still thinking of ways to enhance and feature it without being too spammy. I left making $14,000 per month at my job and am stuck at about $1,000 now. Would do it again in a heartbeat (: At the end of the day, I'm here to help as many people as possible down the simple path to financial freedom.
Schd for life for me. But I have a 3 fund portfolio with Voo/VGT also. I’ve struggled for a while with the whole growth vs. dividend dilemma. There’s no wrong answer just what’s best for you.
VGT is only giving you the technology sector which may not continue to outperform. Historically (the last 100 years) small cap value has outperformed everything else. Large cap value has also outperformed large cap growth by a wide margin historically. The problem is most people don't look beyond the last 10-15 years of performance which is why they're overweight in large cap growth and tech in general which hasn't been great by comparison throughout history.
Hey Kevin. I couldn't agree more. There really is no 'one size fits all' with investing. It's one of the things that makes this stuff fun. Each person I work with has different goals & style.
Spot on. I agree with you on this one. Need to zoom out and take in as much data as possible. However, I would caution looking at too broad of 'categories' if it isn't what we are deciding between. The specific ETFs or mutual funds are what matter. But with those, to your point, we want as many years as possible.
@@commonsense5555 everyone has to do what you feel is best for you. I don’t see myself staying with VGT for next 20 years but AI isn’t going anywhere in next decade. My 401k grew 36% in last 12 months with good bit of info tech so I’m very pleased with it.
I do both. I invest into growth and dividend stocks, along some ETF like JEPI and SCHD as my core positions in my IRA (I called my "hybrid portfolio"). I usually re-balance every 6 months and place the long term capital gains into my cash core account. Is been working for me so far along with my pensions. I been retired the last 8 months. Great video, Thanks!
Very nice Julio. It is great to find what works for us and to stick with it. I think you have a great thing going. Congratulations on retirement! A lot of people never get there (and that is what I aim to fix with this channel).
Thanks for watching and for the comment. I think you nailed the general direction here for most investors. Growth makes sense in the accumulation phase when we have over a decade to stay the course. And more dividend stocks or ETFs for stability in retirement.
Hey Ryan. I appreciate your consistent support of the channel. Thanks for watching and leaving comments. I love the process of making these videos and I don't see my passion dying anytime soon.
I'm definitely enjoying focusing on dividend income and cash flow. My plan continues to be to buy a share of SPYI and SCHD every Monday no matter what the stock market is doing to continue to DCA like you said. Thanks for the video.
Hey Leonard. Love the consistent strategy. Sticking to your system will produce great results over many decades. It's when we try to outsmart and out-time the system that we get in trouble. You're staying the course and building those shares. Keep it going for many years to come.
I prefer a hybrid approach. Until rates are lowered and the economy stabilizes I am investing in undervalued dividend stocks near the end of the rate cuts I will rotate out of the dividend stocks while they are selling at a premium and rotate into growth stocks that are selling at a discount. When the growth stocks are at fair value again I will keep them but start buying undervalued dividend stocks that have the potential for both capital gains and dividend growth.
I love this balanced approach. It is how I go about it too with my target allocations. I've only been buying SCHD for the past couple years. Once VGT and QQQM continue crashing, I will automatically buy the dip on them to get them back to allocation. I agree with your take, and have automated the process. It makes it impossible to not by the 'comparative' dip within my portfolio.
Hey Sandy. I agree with that overall. Younger people should tilt towards growth if they can stay the course during a 50% drop and keep piling money in to buy more shares. Then tilt to value in the later years.
Thank you for the kind words. I think that is a great mix! It will be important to stick to your allocations as the market changes. If VGT crashes more than SCHD, be sure to buy more VGT to get it back to its 40%. Same concept the other way around. Stay the course and win this game long-term.
Very nice. So, the retired couple in your example filing jointly with taxable income < $94000 will literally pay $0 capital gains(qualified dividend) tax on the SCHD annual dividend, right?
Thanks for watching and for the question. You're right, and it is pretty wild. When you add the standard deduction, couples can have (in 2025) up to $126,000 in taxable income and pay $0 on qualified dividends.
Thanks Nate! I appreciate you consistent support of the channel. You go above and beyond with the membership, and I hope to make that worth it over the years.
As I have mentioned before - and thank you again for always responding- it would be great if you began your comparison in scary 2008 and put in VTI as a “positive “control”. You would need to use VIG as the dividend stock since SCHD does not go back so fast, as you know
Thanks for watching and for leaving a comment. The only thing I'm not crazy about for that scenario is how growth heavy the 'dividend' ETF would be (compared to SCHD). I like to use SCHD + QQQM/VGT because it weirdly 'creates' an 'index' that is balanced (from a growth / value ratio, and PE) to VOO or VTI. SCHD is picking 'different' value companies, and QQQM and or VGT is selecting 'different' growth companies. VTI and VOO are historically 'roughly' 50/50 between growth and value (lately higher in growth, but zoomed out it is around 50%) I completely agree with you that VOO or VTI are great anchors to have (even 100% works well). In the downturns, SCHD will be the best (by far), VTI in the middle, and QQQM or VGT terrible. In the boom markets, same, only opposite. I try to show the growth / value comparisons in most of my videos, and what is 'best' for different people.
Thank you Jeff. Excellent video. Great breakdown between growth and dividend investing. I have a combo myself. Love GenEx so thank you for supporting him. Both you and he are outstanding in the UA-cam world and are great educators. Wish I had mentors like you two (and Rob as well ) when I was young. I truly believe quality people such as yourself will be making the generational change to help and guide the younger to an investing pathway for a brighter retirement in their later years. Keep on doing the great job. Looking forward to more great videos from you (and GenEx). Be well.
Thanks Lance! Your feedback always comes from a generous perspective. I'm not surprised one bit after learning more about you from our few exchanges. You have done and seen A LOT in your life, and it is clear you want to give back to the world and see those around you flourish. I'm a young buck on 'that mission', but I hope to take a similar path of helping people (in a different way than what you did, mine more on the finance side, but also from a connection standpoint). Getting out of the corporate grind has opened my eyes so much more than I thought it would. I didn't realize I was stuck in the rat race. I was busy moving up the ranks and 'winning', being the best at what I did, putting in the hours and making more and more money. I was oblivious to the great things around me in my life.
Thanks Ed. It really is impressive. All real numbers so zero 'projections' there. We don't know what the next 10 years will look like of course, but SCHD is a high value play that will be solid over any stretch of time. It did struggle compared to growth by comparison the past couple years, but it is still slowly moving up on both price and dividends.
He really is. Nothing flashy or flavor of the month with that guy. Quality investing in all markets. Thanks for watching this one and for dropping a comment.
Has any ever tried out the scenario where let's say you have about 20-25 years and you put it all in growth like VGT, QQQ, etc and after 25 years, move it over to dividend stocks like SCHD? Would that work? You would have to sell those and pay a lot of taxes but you would have more from the growth? Or is it better to start off buying SCHD, VGT, O etc? What would give you best return and live off your dividend if you have about 20-25 years in a Roth? I'm a new subscriber to your channel. Thanks!
Thanks for watching and for the great question. Most back tests will show that having growth with QQQ and VGT for long periods of time will have higher returns. But it also depends on the time range that you are doing. A growth tilt is better assuming you are dollar cost averaging money into the market over multiple decades. However, I don't think it should be 100% growth. When you are 10 years from retirement, start slowly selling some long-term capital gains from QQQ and VGT to buy more SCHD. When you are 5 years, convert even more to SCHD. The 'right answer' will depend on the individual investor, but 'generally speaking' this is how it should go for a typical risk profile. I'm 42 and I like an even mix of dividend/value and growth in my portfolio. For me, it is SCHD and VGT+QQQM.
Thanks for the kind words Ivan. I appreciate your support of the channel over the past few months. I extra appreciate you being a channel member! It helps and means a lot. I hope to make the videos for years to come!
It would be interesting to see a spreadsheet called Retiring on SCHG and how that compares to your retiring on SCHD one. Sell shares of SCHG that would be equivalent to what SCHD would pay and see where it ends up. Or use 4% rule once a year. Not sure how to set that up exactly (when to sell - once per year or end of every month). Maybe too much work!
That is a good thought experiment. The retire on SCHG spreadsheet would have been *way* better in the past decade (using the 4% rule combined with the small dividends). A retire on VGT or QQQM would have been even better (by a long shot) than the SCHG. What happens is the 4% rule with VGT, SCHG, VOO, VTI, SCHG, etc (any growth or cornerstone ETF) will 'win' by a lot more in most scenarios compared to SCHD. But, SCHD has 'the highest odds' of making it safely to your death bed. When the market crashes, SCHD stays fairly flat (down a little) and the growth ETFs plummet face first. This drastically changes the '4% value' of the withdrawals. In a bad market, the money runs dry quickly. In a great or even average market, you will have a much greater surplus compared to boring things like SCHD. The secret is, SCHD will 'make it' (assuming dividends were covering bills to start with 3.5%) in 'nearly all' scenarios over 30 year projected stretches. You'll die with less money in most cases, but you don't run out because of the dividend growth (regardless of share price).
Thanks Jeff. In our traditional IRA, we are taking the jepq dividends and buying schd. After a year of this, would we then be able to take the jepq dividends as cash and have the distributions taxed as long term capital gains? And would pulling schd dividends as cash be similarly taxed as qualified dividends? The dividend scenarios I can grasp….the tax stuff is tricky.
Hey Aurea. Great question. The answer to the JEPQ dividends is no in any account. If you hold it for at least a year, the dividends will still be paid as ordinary income. Even if you held it for 10 years. If you sell some shares of it to create the gains, then you would have long-term capital gains which are better for taxes (treated same as qualified dividends). However, none of this will matter in a traditional IRA. These qualified and long-term gains vs ordinary income only matter in a taxable account. All income is treated identically from a traditional IRA. It doesn't matter if it was ordinary dividends, qualified dividends, long-term capital gains, short term capital gains, or interest income. It will all be treated as 'ordinary income' when you withdraw the money to live on. In a taxable account, the SCHD dividends will be qualified, and shares sold that you held for at least a year are long-term capital gains. Unfortunately, the JEPQ dividends are 'ordinary income' everywhere, including in a taxable account. For example, I have JEPQ and SCHD in my taxable account. I need the cash-flow now, and I don't want to pay the penalty before 59.5 years old. If I was over 59.5 years old, I would definitely prefer JEPQ in a tax protected account (Roth or traditional). All (well, over 90%) of the JEPQ dividends I receive are taxed as 'ordinary income'. This adds to my wife and my taxable income as if we made more ordinary income that year. The SCHD dividends from my taxable account do not add to my ordinary income. They are taxed at 15% instead of 22% (like the JEPQ). But again, if SCHD was in a traditional IRA, it would be ordinary income when you take out the dividends. Traditional IRA income does not benefit from the favorable taxes regardless of how the income was generated. It will always be 'as if you made more money' that year and will add to your federal tax table marginal tax rate.
Hi Jeff, does compounding work if you didn’t invest in dividends and did a VOO etf instead? Dividend people say their dividends compound and snowball, but does that mean the VOO compounds aswell or not?
Thanks for watching and great question. Absolutely! VOO *technically* usually compounds better than dividend ETFs when we consider total return (dividends (with the growth) + price appreciation). This is why a lot of people use the 4% rule to 'create cash-flow' in retirement using something like VOO or VTI. Live on the dividends + ~2.5% withdrawals to make the 4% per year. The 4% rule usually ends with a higher net worth on your death bed. This is why many consider it *better* overall. However, the HUGE red flag is that a bad year will REALLY hurt your odds of making it. Especially early on in retirement. Someone could 'start' retirement with a 6.5% yield or so (50% JEPQ / 50% SCHD). Then reinvest about a third of the dividends and live on the rest (4 to 4.5%). A market crash of 50% will actually make cash-flow more powerful. But the short answer is yes, VOO compounds just as well, if not better, in most cases, than dividend growth ETFs.
@ thank you responding so clearly, you are great :) I am learning something here. Wait last question, why does a crash make cash-flow more powerful? Is it because you still have income and your fund hasn’t crashed as much?
There are solutions and adjustments with any portfolio mix, so take this with a little grain of salt here, but the high level reason is... With VOO, you're making withdrawals to pay the bills. If you live on the '4% rule', which is widely accepted and a solid barometer to go by, albeit not perfect, you would do the following (technically there are inflation adjustments and other little things, but I'm going to keep the numbers round and simple): Year 1: $1,000,000 portfolio. Withdraw $40,000 to live, 4% of the value. Year 2: $500,000 (after a huge market crash): Withdraw $20,000 to life, 4% of the value. Realistically, withdraw 8% to actually live, and you've down over half already. Again, extreme crash cash here to make the point. With dividends, say mostly SCHD + JEPQ to create 6%, you will never sell a share. Year 1: $1,000,000 portfolio. $60,000 cash, $20,000 reinvested. Year 2: $650,000 portfolio (probably more with SCHD protection). $62,000 cash (with slight dividend growth, probably would be higher growth in reality), $22,000 reinvested. Again, this math isn't perfect for the real world here, but the general idea is that it is 'nearly' impossible to run out of money with something like SCHD if you can pay the bills with the current cash flow, and reinvest some as well. VOO will 'usually' grow to a high amount in most markets. But the dividend approach will *almost always* work in any market, and will *usually* have a little less net worth on your death bed.
@ sorry but to get to that $1,000,000 portofolio, so if VOO compounds the same or better, isn’t it better to use VOO to grow the fund, or will it grow at the same rate if I start with SCHD + JEPQ?
It is. Well, it depends. That is the primary argument in favor of VOO over dividend portfolios. Again, it *usually* grows better over the years while using the 4% rule. But a crash will destroy the compound effect and make you take out more than 4% to live the same life. It is less predictable than dividend ETFs paying and growing over the decades (which not appreciating in price as much). Look at it this way. Again, not accurate numbers here, but more core concepts: We run 1,000 scenarios of VOO vs dividend mix. In 950 scenarios, VOO makes it to the finish line without running out of money. In 999 scenarios, dividend growth makes it to the finish line without running out of money. In 900 scenarios VOO gives a higher value on your death bed than the dividend mix. In 100 scenarios the dividend mix gives a higher value than VOO on the death bed. In 50 scenarios, the crash wiped out the portfolio before you died with VOO In 1 scenario, the dividend mix wiped out the portfolio before you died. VOO is *better* 90% of the time. But growing dividends will *make it* more often. You have to define your version of *better*.
Hello! I want to know if yearly inflation is calculated in most calculators you find online but also in promising UA-cam videos from creators showing you a formula table with time to retire. Because having 800,000 USD with those monthly investments in 30 years won’t have the same value than having them today
I think some online calculators have a field for inflation. The ones you pay for that are full on retirement software definitely have that variable. But inflation is real. I account for it as 3% by default. As long as your dividend growth rate exceeds 3% you will increase your purchasing power. That is why SCHD is so nice (10 year average dividend increase of 11% per year is crazy). Also, price appreciates with most of these ETFs as well. So that $800,000 will outpace inflation (over long periods of time) by quite a bit (assuming you're not taking out principle to live). I consider this a bonus in most of my tools. I'm a worst case scenario kind of guy lol.
Hey Michael. No doubt. It is why I don't like HUGE data that includes everything for stuff like this. Again, it is great to have because it is accurate for what it is. The problem is that it doesn't directly pertain to the investments we actually invest in. For example, QQQM only has 100 (mostly) growth stocks. SCHD only has 100 quality dividend stocks. VOO, 'the market', is only 500 of the largest US companies (growth and value). VGT is just over 300 tech companies, etc. If I look at 'all dividend payers' vs 'all non-dividend payers', it doesn't tell me much. I mean, it proves dividend paying companies are generally 'good' and 'well established', but still, not overly pertinent for a use case.
Haha, glad you found it! Thanks for watching and for leaving a comment as always. I'm catching up a bit myself here, was out of service area for the past few days.
Hi Jeff, Can you please make a video on JEPQ elaborating it's actual income and growth strategy. JEPQ description claims holding 80% NASDAQ stocks for growth and trading ELNs on 20% only for additional income. But as a matter of fact 80% holding is always lagging growth in proportion to QQQ whenever Index grows. Same thing is happening with JEPI. Both ETFs claim for potential growth from 80% reserved holdings seem misleading and contradictory and their performance almost resemble with QYLD and XYLD.
Hey Syed. I've tried to mention that in videos and often times people (JEPQ fans) get mad at me. JEPQ will very likely fall short of QQQ over any long stretch of time. This is because the call options that produce the premium income come at the expense of slicing into the growth ceiling. JEPQ guarantees premium income by selling the options. But, when the price goes sky high, opportunity cost is lost. Someone on the other side is paying a little money for the right to buy the stock at a set price. When the market goes up, JEPQ doesn't get to realize all of the gains. It 'traded' some for the guaranteed income. When it goes down, JEPQ is better off than QQQM (still drops in price, but also collected the income from the party that never got to 'strike' at the agreed upon price). QQQM is a better long-term investment than JEPQ unless you *need* cash flow now (typically retirees). I need cash flow now, for example, so I have a chunk of JEPQ. The 8-10% dividend helps pay my bills since quitting my job. If I still worked my job that I quit to start this channel, I would only hold QQQM because it will produce better results long-term.
Hi Jeff, Thanks for detailed response and providing in depth understanding about JEPQ functionality. I absolutely agree with your point of view for opting or avoiding JEPQ based on personal financial circumstances. Thanks for always providing valuable information and knowledge through your amazing videos and also by responding comments of your followers and admirers of your work.
Hello Jeff! Do you have something in mind, when it's going about the most efficient formula for the amounts of SCHD and JEPQ? Is there any math behind this topic, to understand the best correlation, like for instance 30% of JEPQ and 70% of SCHD, to have optimal income + growth? Thanks for sharing!
Thanks for watching and for the great question. I don't have any specific math with historical evidence because JEPQ is too new. However, for me personally, I think SCHD is 'better' for long-term, consistent growing cash-flow to beat inflation. JEPQ is better if you need more yield now to pay the bills, but it won't 'grow' the dividend as much. It is based on call options that vary with the markets volatility instead of companies that consistently pay and grow dividends like SCHD. I think the right mix depends on your total portfolio value. The higher it is, the more SCHD I would add (to pay bills now and grow more later).
Hey Mohit. Sure thing, it makes my 24/7/365 recommendation even more powerful for long-term investors. Buy, buy, buy! (: When they rise? Buy! When they drop? Buy! How about sideways? Buy! (:
Thanks for explaining the tax definitions…What would a 50/50% (dividend/4%) retirement distribution look like? Also, with different percentages?? Thanks!
This is a fantastic perspective. I feel like it is always the 4% rule *or* the dividend cash-flow. I'm guilty of this too when comparing the options. Technically, a hybrid can be a great way to approach it. Also, the lower the % of withdrawals the better than chance of making it. Using 3% gets close to 100% success rate (in general). Using 5% or 6% gets pretty messy in many historical scenarios. If we used half and half, it could look something like this: If you need 3% of the portfolio to live: 50% of the portfolio in dividend ETFs and stocks producing 4% dividends. This gives us 2% of our funds to live on. 50% in index funds using the 4% rule. Your dividend will be at least 1%, so that gets you another 0.5% to live on before selling to make the 4% rule work. Then we would only have to sell 1% of the index portfolio to get another 0.5% to live on. Basically, treating both separately and making them contribute evenly. Of course any combo could work with some tweaking. I hope to have the portfolio balance (some day) to produce 3% dividends and not sell anything. But within that, I would love a nice chunk to be VOO, VGT, and QQQM. This just means I need a sizable piece of SCHD and JEPQ. I have planned on the 'hybrid' approach for a long-time. Dividend is my 'fall back' if things don't go as well as planned.
I believe that Hartford funds research into dividends vs growth results is looking at S&P 500 stocks. So the argument that there’s bad growth stocks isn’t relevant because they have to be doing pretty good to be in the S&P 500. Narrowing the results to S&P 500 stocks is comparing apples to apples Even if they are looking at the entire market there’s also bad stocks that pay dividends so the bad stocks cancel each other out imo
It is the same story no matter how we slice it. Dividend paying stocks will have better returns than non-paying dividend stocks. I think that is common sense for the reasons I mentioned in the video (I've also read so many data filled books on factor investing that it hurts, lol). I think we are 'kinda' on the same page, but I'm not 100% sure. I was mainly trying to make the point that 'dividends' aren't technically a 'factor' for investing for alpha. I'm not saying they aren't good, I love them and all 25 stocks I own pay a dividend, but I don't think you understand what I meant by apples to apples in this case. I was strictly referring to big data studies (such as value vs growth) vs 'actual investments' that often times show very different results. People under or over perform *big time* within each category. It's hard to explain in one short video. You are right there are also bad stocks that pay dividends. No doubt about it. But we are talking about 'per company' probabilities here. I think if you pick 1,000 dividend stocks vs 1,000 non-dividend stocks, you will have far more 'duds' in the non-dividend. But if you screen out a lot of key metrics, and get it down to 10 of each, it can look different. I'm still not sure if I'm making sense here, I tried (: Mass data vs selective data.
I do love dividends! Almost all of my investments pay dividends so yes I believe we’re on the same page. At the 10:40 mark you started talking about the Hartford fund research saying that dividends investments outperform non dividend investments. Then you said that unfocused data wasn’t always pertinent. I was just pointing out that the Hartford fund results only used S&P 500 stocks so there shouldn’t be many “bad” stocks skewing the data.
Hi Jeff, Isn't one advantage of living off dividends is consistency of dividend or income growth in retirement over the 4% rule? For example if someone retires with $500k and is invested in growth ETF's is the downside risk because of high beta and big swings in income?
Hey Chris. Absolutely! It is common to hear the argument against dividend investing to look something like this: Growth and index funds will outperform dividend ETFs most of the time. It is capping your ceiling if you have a dividend portfolio instead of the 4% rule strategies. The truth is that they are exactly right! More times than not, high yield dividend investing will not keep up with the heavy growers. However, to your point, dividend growth investing WILL give us close to 100% success rate if it produces the cash-flow needed to get by without dipping into the principal amount. The floor is higher, and I care way more about that (the retired me, that is). I will be heavy dividend (JEPQ in Roth and SCHD in taxable) in retirement. I am focusing on a balance of SCHD, VGT, QQQM, and VOO in the accumulation stage to take advantage of the better total returns. But I would rather die with 3 million than 10 million if it meant having 100% chance to cover me to get there (:
Jeff could you please help me with the following question, when you outperform the market with growth assets (without them it doesn't seem possible to beat the makret), but excluding dopamine, what this outperformance can give to investor, my understading these are two main things: 1) All the assets in portfolio are more secured in general, even in case of market decline; So if you have income stocks, dividend-growth stocks, and growth stocks, then after several years of holidng growth stocks you will have secured buffer, to have positive numbers for overall portfolio even when makret crashes. 2) Potential to have bigger numbers, on the brokerage account sometime in the future. (what I don't like about growth stocks, is that you need to pay taxes when you sell them 😁) Am I missing something? Thank you!
Thanks for watching and for the great question. It is a hard one to answer, and I guess that is why well over 90% of investors fall short of the markets returns over long periods of time with their handpicked strategies. 'The Market' being the S&P 500, or VOO, is a natural combination of the growth stocks, value stocks, dividend stocks, dividend growth, etc. It has a touch of all the things, so it makes it extremely hard to beat. When growth stocks and ETFs go to the moon, the market will crush dividend and value ETFs, because it has a nice chunk of the growth stocks and will scale up with them. This is 'how it works' for people that have gotten in during the past (and historical) bull run lately. The less known fact is that value has outperformed growth over the past 100 years. When those 'runs' happen, the market will crush the performance of growth stocks and ETFs because it holds, and scales up, the dividend and value holdings. It's like a cheat code. Today's handpicking winners are tomorrows losers. The market is always sliding in the middle. How to beat it? Have better growth stocks and better value stocks than the market, and keep them balanced with target allocations in all markets. My mix has never fallen short of the market since I started investing in 2010 (to be fair, I was 100% the market in my first 2 years, so I tied it). It's not because I'm smart, it's because I keep the growth and value side of the portfolio in balance and don't get caught up in the runs. I am falling short this year by a little, but we'll see how the year ends up. The probabilities of beating the market when you try to CRUSH it (with big tilts) approaches 0% over long periods of time. The reversion to the mean is inevitable in all markets, we just don't know the timeline. As far as the taxes are concerned, growth ETFs are the best because 100% of your taxes will be long-term capital gains. At worse, it will be taxed the same as qualified dividends, and you take the gains on your on timeline.
Great video, at the end you mention the 4% rule balance will beat the dividend method at the end of life. Wondering if that taxes taxes into account with qualified dividends being exempt from taxes up to a certain amount. Love the channel. Thanks
Hey Thomas. It does consider the tax implications. This is because the 4% rule to sell long-term holdings to create long-term capital gains. This income is treated the same way as qualified dividends from a tax perspective. To be clear, the 4% rule (index holdings or market ETFs + selling to create income) will beat dividend portfolios in 'most' scenarios, BUT, the dividend portfolio has way high odds of 'making it'. Dividends have a higher floor and lower ceiling. I'll take that in retirement any day, personally. Realistically I'll use a hybrid approach.
I really appreciated you showing how to view total returns on Seeking Alpha.... been frustrated with only seeing price returns. Would love to find an easy way to compare several stocks or ETFs total returns at once, without having to create my own spreadheet every time... ideas?
Thank you for watching the video and leaving the kind words. I think Seeking Alpha allows us to compare 7 ETFs (or stocks) at a time. That isn't too bad, but I'm sure there are better sites online to view more at once. I've created a spreadsheet to do this, and I pull a screener from Seeking Alpha once per week to update the data. It is in Excel (and Google Sheets) for my channel members. Updating these spreadsheets that I maintain for the channel costs some time each week, so I do have it set to $2.99 per month to join. It is completely optional & if the channel keeps growing I may share some of the basic ones (like the ETF comparer) for free. I'm still trying to navigate how to go about some of these things.
Hi Jeff, Could you please advise if 100% SCHD Portfolio would not be meant as putting all eggs in one basket ? I mean in case of any issue with fund or Asset Manager (Charles SCHWAB), whole investment could be at risk because SCHD Fact Sheet clearly reflect this statement with details "Not FDIC Insured • No Bank Guarantee • May Lose Value". In such scenario, what should be the safest strategy to protect our investment especially when we are close to retirement age.
This has been a hot topic over the past year or so. Especially when Schwab had some problems for a bit there. The short answer is that it is very safe. Your eggs are in 100 quality dividend stocks that have a history of growing the dividends and that have clean balance sheets. Could one or two, or 5 cut dividends? Absolutely. But it has never not grown its dividends since inception in an single year. The language you mentioned form the fact sheet is standard for ETFs. All that said, I personally like to keep my money in multiple ETFs. I have SCHD, VOO, VGT, QQQM, JEPQ, and a money market VMFXX. Along with 25 individual stocks. This is for safety in returns and performance, not for worries of one 'going under'.
Thanks Jeff for guidance and support. I meant SCHD as one basket (which surely has 100 quality diversified stocks), but I agree with your clarification for adding other Index ETFs in portfolio to mitigate any fear of investing with just single Asset managing organization. Your prompt response and help is always highly appreciated.
Hey Jacob. I use Seeking Alpha for most of my research. I will also use E*Trade from time to time (because most of my assets are there). Seeking Alpha is superior for research though. I aggregate my portfolios to Seeking Alpha, which puts the relevant articles and research there by default when I see how things are going. I only log into brokers (E*Trade and M1 Finance) when I need to buy something.
Hey Mark. I don't invest in gold ETFs personally, but a lot of very smart people do. I think it helps diversify a portfolio for a variety of market conditions. It isn't a part of my personal long-term strategy.
Jeff, just bought 10k of fidelity FDVV! I'm on the fence of getting rid of it and putting the cash into SCHD/SCHG! What do you think increase my position in FDVV or trade for SCHD/SCHG?
Thanks for watching and for the question. I like SCHD better than FDVV as a long-term dividend payer and grower. SCHD has been a bit beat up the past couple of years by comparison, but I still prefer the consistent dividend payments and growth. It also has nice 'long-term' steady price appreciation as well. FDVV does have a total return of 147% compared to SCHD 143% since FDVV's inception. It is a quality dividend ETF. I don't like the lower yield and more importantly, the lack of dividend growth at 2.89% dividend CAGR in the last 5 years. SCHD is at 12.88% in that time. SCHG is a different animal because it is on the growth ETF side of things. I think it is a high quality growth ETF that is right up there with the best of the best. Short answer is that I would personally prefer SCHD and SCHG over FDVV. But I think all three are solid.
@@JeffTeeples Jeff, Thank you for answering my question I'm sticking to only SCHD/SCHG 50/50 combo!! In my broker I have SCHD/VGT, Roth is SCHD/SCHG and my T. IRA IS SCHD/SCHG/JEPQ/FDVV currently but I'll sell both JEPQ/FDVV for the top dogs SCHD/SCHG! Thanks again Jeff, look forward to your new videos!
I have vwce for growth 1k/month and vici, o, main, obdc for dividend 100€ each/month. I have a tax exemption of 1500€/year on dividends in my country. So I try to drip/buy in ASAP the didivdend stocks to get to 1500€/year on dividends and let that run for 20 or so years and buy vwce only after
Thank you for watching and for the comment. I am unfamiliar with VWCE. But I know the dividend holdings you go with. Keep on dollar cost averaging into your portfolio for a couple decades and I bet you'll be a happy camper at the end. Consistency is key.
Loved your video. One dissenting comment: Don't you think comparing the performance of JEPQ to that of VOO instead of QQQM is unfair? Apples to Oranges...
Absolutely. You are 100% correct. QQQM is the better benchmark for JEPQ. They are both based on the same index, and I think QQQM is a better 'long-term investment' for people that don't *need* cash now. I strictly used this example to show that price return and total return can be WAY different. I wanted an example that shows a win for both depending on the metric shown. QQQM wins both so it didn't help make the point as much (:
If you’ve been buying a stock on a regular basis (e.g. $100/share/mo for 12 months. Say the stock doubled in that time. If you sell 1 share on the 13th month, is that $100 gain capital gains? What about selling a second share the next day? Is that $100 gain now ordinary income?
That is a great question. Every time you buy that stock your broker will create a 'tax lot' for that specific purchase. As long as you wait at least a year to sell that specific lot, you will recognize the favorable long-term capital gains. If you sold everything, you would have 'mixed capital gains'. The specific tax lots that were over a year old would be long-term, and the ones held under a year are short-term capital gains (basically ordinary income, the bad taxes). Each lot will be considered separately and will not impact the other lots.
I agree with this. It is why I prefer an ETF like SCHD instead of individual stocks. Will some cut dividends? For sure. But with 100 quality dividend payers with low debt and solid balanced sheets, I feel good about the dividend growth 'as a whole'.
@@JeffTeeplesand also if a company does cut their dividend Schd would most likely rotate that company out of the etf and replace with something else. That’s the beauty of this Schd.
Sooo, SCHD is 81 dollars a share and yields 2.83 per year? If you have a million dollars of SCHD you would have 12,345 ish shares? Which would yield 34,936.35 per year? Approximately? Am I understanding it right?
That looks correct. It would be more assuming you gradually got to that accumulation of SCHD. But if you sold everything today and went all in on SCHD, in a year, your dividend payout would be over $30k for that first year and then grow each and every year after. In five years, your dividend income should be around $49k/yr.
You got it. $35k per year doesn't sound like much, but historically SCHD has just over doubled the dividend per year, per share. If you lived on the $35,000 without reinvesting it, along with other cash-flows like social security, pensions, JEPQ for higher yield, or anything else, the SCHD portion would be paying you ~$70,000 in 7 years (using the historical, and current, dividend growth rate). That is where it separates itself from JEPQ, money markets, and high yield savings over time. Those other ones yield whatever the current federal fund rate (or VIX in JEPQ case) is, and will not 'consistently grow' like SCHD. Again, the $70,000 happens without investing an extra penny back into it. You still have the 12,345 shares. The yield on cost is the unsung hero here. In the short term, many people (myself included right now with 2 little kids, and a mortgage) may need to lean on higher yielding assets to pay the bills without work income (my wife and I use JEPQ), but over time, SCHD continues to add value to your life by crushing inflation (even the high inflation last few years).
That is what I love about SCHD. Regardless of how many shares we have, it continues to outpace inflation over the years. As soon as we have enough to pay the bills and live comfortably (along with other income sources in retirement), we are good to go forever. It requires a lot, but I love breaking the calculators of 'when it will run out'.
Hey Oleksa. I would have to take a hard look at my portfolio mix if qualified dividends no longer received a tax advantage. It wouldn't make 'that' big of a difference, but I may move dividends to my retirement accounts and hold more growth in my taxable (assuming long-term capital gains still get the special tax rates). If long-term capital gains also loses the tax hack, then I guess we are technically right back to where we were (:
Hi Jeff!! Amazing Videos, really appreciate your work. I'm 55yo and my 500K portfolio is 80% SCHD and 20% JEPQ. Please advise if I should go for 100% SCHD, or any better replacement of JEPQ if needed. Thanks.
I plugged both into the fund overlap checker and there is very little overlap. I personally would keep both for the diversity if both are performing well.
Hey Syed. Thanks for watching and for the question. I think an 80/20 mix of SCHD/JEPQ is a good way to go. The answer will also depend. SCHD will 'grow' its dividend a lot more over the years than JEPQ. SCHD averages doubling its dividend every 6 years or so. This means if you receive $25,000 of dividends per year, you will get around $50,000 in 6 years time without reinvesting a penny back. The 'yield on cost' makes the 'effective yield' WAY higher of SCHD when we zoom out. JEPQ 'more like' a high interest savings account or money market. The yield is based on the current market volatility. Instead of steadily growing like SCHD, it will randomly bounce up and down based on how juicy the call options are at the time. If 100% SCHD would pay your bills now, it will definitely cover them later because it outpaces inflation. JEPQ is great to mix in if you need more now. Or, you can take the dividends from JEPQ and reinvest them in SCHD. That is a fun 1-2 punch as well. Short answer: I think 80/20 or 100 SCHD both work depending on what you're looking for. There is not one 'right answer' for that one.
@@JeffTeeples Thanks Jeff for detailed analysis and guidance. I absolutely agree with your SCHD approach and long term advantages and will go for 100% SCHD as already lost a lot of my savings on High Yield Traps like QYLD and some other ETFs. Just added JEPQ in my portfolio because being Canadian 15% withholding tax is deducted from all USA based dividends. But as you highlighted, only SCHD is more than enough.
Good morning from St.Louis County. My Dad retired from McDonell Douglas before Boeing acquired it. Do you think Boeing will ever restore its dividend? I know Boeing is having issues now but I'd like hear your opinion on on the matter since your people for Boeing. Thanks as always for your content. I mostly by SPLG and FTEC now with a sprinkle of QQQM but I feel nostalgic about Boeing and was going to purchase shares because my Dad work there as did my lady prior to the merger.
Thanks for watching and for the question. Always good to see one of the first supporters of the channel in the comments. I love your mix of SPLG, FTEC, and QQQM. I roll with (basically) the same and it does a great job over long periods of time. I can't speak too much about the state of Boeing in 2024. I left in 2017, but my wife still works there, and I better keep it down. They are having leadership issues to put it mildly. I don't think they will continue the dividend in the near future, BUT, I hope to be wrong about that. I think Boeing will succeed long-term when some quality issues are cleaned up and leadership is shaken up. We have seen multiple times that they have a free lifeline from the government when things get dicey. That will continue into at least the near future.
Thanks for watching Jane. There are so many great ways to invest. The only requirement is to pick a system that works for your goals and to stay the course when things look rough. We need to take our emotions out of it.
@@JeffTeeples Thank you so much Jeff. Yes! You are so correct! I kind of regretted what I did in June before I found your channel... I invested too much in NVDA... and now I don't have money to buy other stocks when they are low... and I bought NVDA when it was at its peak... I guess I have to wait until when it comes back up in order to sell... or else I will lose too much money.
Hey Preston. AVGO makes the cut in my individual stock portfolio (that has doubled the returns of the market since inception on 4/20/2023). It's early, but I love AVGO in my tech sector.
@@JeffTeeples i hope so! Growth: VGT 95%, SOXQ 5% (i might start adding some VUG to not be so susceptible to tech) S&P: Voo 100% Dividend: SCHD 50% (core) Various dividend ETF’s (DIVO, SCHY, JEPQ) and Stocks (probably too many) over REITS, BCDs, Covered Call, Preferred Stocks, Utilities, Oil and Gas. The most risky is probably a couple of YMAX ETFs, but they make up less than 0.7% of my entire portfolio. 👍🏽
I think they changed that recently. That is a major bummer. I was told that 20% was the worst it would be when I initially got the link. But if it is only $25 now, I will need to update what I say. Sorry about that, I didn't mean to be misleading there. I'll look into it and make sure I'm accurate moving forward.
He's great. He gets a lot of people commenting that dividends don't work, they aren't free (because they come from share price), growth has X% return, etc. He doesn't care. He's stayed the course and done an incredible job with his system. It will continue to work indefinitely because he has a deep understanding of what he is doing and why he is doing it.
That puts you in rarified air my friend. Well under 5% of people know that. And I worked with A LOT of people. In fact, I would be willing to bet that well under 25% of people could tell you the difference between a qualified dividend and ordinary income (in general, nothing to do with the limits). You are definitely on the right path.
@@JeffTeeples thank you Jeff. We have close to 2 million in assets and no mortgage in our primary home. Imagine earning average of 10% a year and not have to pay federal income tax under 120k in income. I also live in a state income tax free state so really no income tax😀😀😀
So if you make $120k/yr as a married couple, you are taxed at 12% ordinary income rate. Now if you have $30k in qualified dividends or long term gains, is that all taxed at 0%? Or once you break the 12% tax bracket at $123k, is the rest of the $27k taxed at 15% or still 0%??
Hey Jon. This is a great question. You would move from 0% to 15% on the amount that exceeds the $123k (which is actually ~$94k taxable income, but I'm doing the math on the standard deduction to get to $123k). Instead of moving to the 22% ordinary income, the qualified dividends would jump to 15%. It's always better per dollar earned, but not always 0%.
Thanks for the shoutout and congrats on your investing & channel! (loakland told me about you)
No problem on the shout out. I'm a long time fan of your channel. I think it should be required viewing for dividend investors.
Lance is one of the good ones! Not surprised he let you know (:
I so agree with you Jeff. GenEx is the best channel, I would have quite investing if I didn't find his channel
Thanks Jeff! Your videos are awesome!!!
Hey Sean! Thank you for the generous super chat! That is above and beyond and I appreciate it. I also see you're a channel member. Awesome stuff!
I want to focus on my channel membership (long-term) so that I don't have to take as many (or any) sponsorships to get by. Still thinking of ways to enhance and feature it without being too spammy. I left making $14,000 per month at my job and am stuck at about $1,000 now. Would do it again in a heartbeat (:
At the end of the day, I'm here to help as many people as possible down the simple path to financial freedom.
Schd for life for me. But I have a 3 fund portfolio with Voo/VGT also. I’ve struggled for a while with the whole growth vs. dividend dilemma. There’s no wrong answer just what’s best for you.
VGT is only giving you the technology sector which may not continue to outperform. Historically (the last 100 years) small cap value has outperformed everything else. Large cap value has also outperformed large cap growth by a wide margin historically. The problem is most people don't look beyond the last 10-15 years of performance which is why they're overweight in large cap growth and tech in general which hasn't been great by comparison throughout history.
Hey Kevin. I couldn't agree more. There really is no 'one size fits all' with investing. It's one of the things that makes this stuff fun. Each person I work with has different goals & style.
Spot on. I agree with you on this one. Need to zoom out and take in as much data as possible. However, I would caution looking at too broad of 'categories' if it isn't what we are deciding between. The specific ETFs or mutual funds are what matter. But with those, to your point, we want as many years as possible.
@@commonsense5555 everyone has to do what you feel is best for you. I don’t see myself staying with VGT for next 20 years but AI isn’t going anywhere in next decade. My 401k grew 36% in last 12 months with good bit of info tech so I’m very pleased with it.
@@Kevinw4040 In the short term it may do well but historically speaking it'll likely underperform SV and LV in the long term.
I do both. I invest into growth and dividend stocks, along some ETF like JEPI and SCHD as my core positions in my IRA (I called my "hybrid portfolio"). I usually re-balance every 6 months and place the long term capital gains into my cash core account. Is been working for me so far along with my pensions. I been retired the last 8 months. Great video, Thanks!
Very nice Julio. It is great to find what works for us and to stick with it. I think you have a great thing going. Congratulations on retirement! A lot of people never get there (and that is what I aim to fix with this channel).
growth stocks to begin, and then transifiton into dividend stocks for stability
Thanks for watching and for the comment. I think you nailed the general direction here for most investors. Growth makes sense in the accumulation phase when we have over a decade to stay the course. And more dividend stocks or ETFs for stability in retirement.
I am literally adjusting my weekly travel based on your weekend videos so I can listen on my way back. Keep it up Jeff. 👏
Hey Ryan. I appreciate your consistent support of the channel. Thanks for watching and leaving comments. I love the process of making these videos and I don't see my passion dying anytime soon.
I'm definitely enjoying focusing on dividend income and cash flow. My plan continues to be to buy a share of SPYI and SCHD every Monday no matter what the stock market is doing to continue to DCA like you said. Thanks for the video.
Hey Leonard. Love the consistent strategy. Sticking to your system will produce great results over many decades. It's when we try to outsmart and out-time the system that we get in trouble. You're staying the course and building those shares. Keep it going for many years to come.
I prefer a hybrid approach.
Until rates are lowered and the economy stabilizes I am investing in undervalued dividend stocks near the end of the rate cuts I will rotate out of the dividend stocks while they are selling at a premium and rotate into growth stocks that are selling at a discount.
When the growth stocks are at fair value again I will keep them but start buying undervalued dividend stocks that have the potential for both capital gains and dividend growth.
I love this balanced approach. It is how I go about it too with my target allocations. I've only been buying SCHD for the past couple years. Once VGT and QQQM continue crashing, I will automatically buy the dip on them to get them back to allocation. I agree with your take, and have automated the process. It makes it impossible to not by the 'comparative' dip within my portfolio.
keep pumping out those financial informational videos Jeff!
Will do Kevin. Thank you for watching and supporting the channel! I appreciate it. We are slowly growing.
I would focus in growth and the changing to dividend when close to retire,unless people have 500k in dividend index fund it would not make sense
Hey Sandy. I agree with that overall. Younger people should tilt towards growth if they can stay the course during a 50% drop and keep piling money in to buy more shares. Then tilt to value in the later years.
Thank you so much for guiding my family with your videos. 🙇 Thanks to you, all I invest in is SCHD , JEPQ and VGT. 40,20,40% many blessings!
Thank you for the kind words. I think that is a great mix! It will be important to stick to your allocations as the market changes. If VGT crashes more than SCHD, be sure to buy more VGT to get it back to its 40%. Same concept the other way around. Stay the course and win this game long-term.
Very nice. So, the retired couple in your example filing jointly with taxable income < $94000 will literally pay $0 capital gains(qualified dividend) tax on the SCHD annual dividend, right?
Thanks for watching and for the question. You're right, and it is pretty wild.
When you add the standard deduction, couples can have (in 2025) up to $126,000 in taxable income and pay $0 on qualified dividends.
Amazing video as usual!
Thanks for the positive feedback. I appreciate you taking the time to watch it.
Thank you
You're welcome Darnell. Thank you for watching the video. I hope it was helpful.
I dig your style. Well done.
Thanks Matt. I appreciate you taking the time to watch the video and for the kind words.
Another valuable video! Thank you, Jeff!
Thanks Nate! I appreciate you consistent support of the channel. You go above and beyond with the membership, and I hope to make that worth it over the years.
As I have mentioned before - and thank you again for always responding- it would be great if you began your comparison in scary 2008 and put in VTI as a “positive “control”. You would need to use VIG as the dividend stock since SCHD does not go back so fast, as you know
Thanks for watching and for leaving a comment. The only thing I'm not crazy about for that scenario is how growth heavy the 'dividend' ETF would be (compared to SCHD).
I like to use SCHD + QQQM/VGT because it weirdly 'creates' an 'index' that is balanced (from a growth / value ratio, and PE) to VOO or VTI.
SCHD is picking 'different' value companies, and QQQM and or VGT is selecting 'different' growth companies. VTI and VOO are historically 'roughly' 50/50 between growth and value (lately higher in growth, but zoomed out it is around 50%)
I completely agree with you that VOO or VTI are great anchors to have (even 100% works well).
In the downturns, SCHD will be the best (by far), VTI in the middle, and QQQM or VGT terrible. In the boom markets, same, only opposite. I try to show the growth / value comparisons in most of my videos, and what is 'best' for different people.
Thank you Jeff. Excellent video. Great breakdown between growth and dividend investing. I have a combo myself. Love GenEx so thank you for supporting him. Both you and he are outstanding in the UA-cam world and are great educators. Wish I had mentors like you two (and Rob as well ) when I was young. I truly believe quality people such as yourself will be making the generational change to help and guide the younger to an investing pathway for a brighter retirement in their later years. Keep on doing the great job. Looking forward to more great videos from you (and GenEx). Be well.
Thanks Lance! Your feedback always comes from a generous perspective. I'm not surprised one bit after learning more about you from our few exchanges. You have done and seen A LOT in your life, and it is clear you want to give back to the world and see those around you flourish.
I'm a young buck on 'that mission', but I hope to take a similar path of helping people (in a different way than what you did, mine more on the finance side, but also from a connection standpoint).
Getting out of the corporate grind has opened my eyes so much more than I thought it would. I didn't realize I was stuck in the rat race. I was busy moving up the ranks and 'winning', being the best at what I did, putting in the hours and making more and more money. I was oblivious to the great things around me in my life.
wow that SCHD example was impressive, thanks
Thanks Ed. It really is impressive. All real numbers so zero 'projections' there. We don't know what the next 10 years will look like of course, but SCHD is a high value play that will be solid over any stretch of time. It did struggle compared to growth by comparison the past couple years, but it is still slowly moving up on both price and dividends.
@@JeffTeeples it did struggle = great time to buy more 😉
Hey Jeff, GenEx is the bomb. I have been watching him for a while. Great video as always.
He really is. Nothing flashy or flavor of the month with that guy. Quality investing in all markets. Thanks for watching this one and for dropping a comment.
Has any ever tried out the scenario where let's say you have about 20-25 years and you put it all in growth like VGT, QQQ, etc and after 25 years, move it over to dividend stocks like SCHD? Would that work? You would have to sell those and pay a lot of taxes but you would have more from the growth? Or is it better to start off buying SCHD, VGT, O etc? What would give you best return and live off your dividend if you have about 20-25 years in a Roth? I'm a new subscriber to your channel. Thanks!
Thanks for watching and for the great question. Most back tests will show that having growth with QQQ and VGT for long periods of time will have higher returns. But it also depends on the time range that you are doing.
A growth tilt is better assuming you are dollar cost averaging money into the market over multiple decades. However, I don't think it should be 100% growth.
When you are 10 years from retirement, start slowly selling some long-term capital gains from QQQ and VGT to buy more SCHD. When you are 5 years, convert even more to SCHD.
The 'right answer' will depend on the individual investor, but 'generally speaking' this is how it should go for a typical risk profile. I'm 42 and I like an even mix of dividend/value and growth in my portfolio. For me, it is SCHD and VGT+QQQM.
Thank you for the video. Very helpful.
Thanks for the kind words Ivan. I appreciate your support of the channel over the past few months. I extra appreciate you being a channel member! It helps and means a lot. I hope to make the videos for years to come!
It would be interesting to see a spreadsheet called Retiring on SCHG and how that compares to your retiring on SCHD one. Sell shares of SCHG that would be equivalent to what SCHD would pay and see where it ends up. Or use 4% rule once a year. Not sure how to set that up exactly (when to sell - once per year or end of every month). Maybe too much work!
That is a good thought experiment. The retire on SCHG spreadsheet would have been *way* better in the past decade (using the 4% rule combined with the small dividends). A retire on VGT or QQQM would have been even better (by a long shot) than the SCHG.
What happens is the 4% rule with VGT, SCHG, VOO, VTI, SCHG, etc (any growth or cornerstone ETF) will 'win' by a lot more in most scenarios compared to SCHD.
But, SCHD has 'the highest odds' of making it safely to your death bed. When the market crashes, SCHD stays fairly flat (down a little) and the growth ETFs plummet face first. This drastically changes the '4% value' of the withdrawals. In a bad market, the money runs dry quickly.
In a great or even average market, you will have a much greater surplus compared to boring things like SCHD.
The secret is, SCHD will 'make it' (assuming dividends were covering bills to start with 3.5%) in 'nearly all' scenarios over 30 year projected stretches. You'll die with less money in most cases, but you don't run out because of the dividend growth (regardless of share price).
Thanks Jeff. In our traditional IRA, we are taking the jepq dividends and buying schd. After a year of this, would we then be able to take the jepq dividends as cash and have the distributions taxed as long term capital gains? And would pulling schd dividends as cash be similarly taxed as qualified dividends? The dividend scenarios I can grasp….the tax stuff is tricky.
Hey Aurea. Great question.
The answer to the JEPQ dividends is no in any account. If you hold it for at least a year, the dividends will still be paid as ordinary income. Even if you held it for 10 years. If you sell some shares of it to create the gains, then you would have long-term capital gains which are better for taxes (treated same as qualified dividends).
However, none of this will matter in a traditional IRA. These qualified and long-term gains vs ordinary income only matter in a taxable account. All income is treated identically from a traditional IRA. It doesn't matter if it was ordinary dividends, qualified dividends, long-term capital gains, short term capital gains, or interest income. It will all be treated as 'ordinary income' when you withdraw the money to live on.
In a taxable account, the SCHD dividends will be qualified, and shares sold that you held for at least a year are long-term capital gains. Unfortunately, the JEPQ dividends are 'ordinary income' everywhere, including in a taxable account.
For example, I have JEPQ and SCHD in my taxable account. I need the cash-flow now, and I don't want to pay the penalty before 59.5 years old. If I was over 59.5 years old, I would definitely prefer JEPQ in a tax protected account (Roth or traditional).
All (well, over 90%) of the JEPQ dividends I receive are taxed as 'ordinary income'. This adds to my wife and my taxable income as if we made more ordinary income that year.
The SCHD dividends from my taxable account do not add to my ordinary income. They are taxed at 15% instead of 22% (like the JEPQ).
But again, if SCHD was in a traditional IRA, it would be ordinary income when you take out the dividends. Traditional IRA income does not benefit from the favorable taxes regardless of how the income was generated. It will always be 'as if you made more money' that year and will add to your federal tax table marginal tax rate.
Hi Jeff, does compounding work if you didn’t invest in dividends and did a VOO etf instead? Dividend people say their dividends compound and snowball, but does that mean the VOO compounds aswell or not?
Thanks for watching and great question. Absolutely! VOO *technically* usually compounds better than dividend ETFs when we consider total return (dividends (with the growth) + price appreciation).
This is why a lot of people use the 4% rule to 'create cash-flow' in retirement using something like VOO or VTI. Live on the dividends + ~2.5% withdrawals to make the 4% per year.
The 4% rule usually ends with a higher net worth on your death bed. This is why many consider it *better* overall. However, the HUGE red flag is that a bad year will REALLY hurt your odds of making it. Especially early on in retirement.
Someone could 'start' retirement with a 6.5% yield or so (50% JEPQ / 50% SCHD). Then reinvest about a third of the dividends and live on the rest (4 to 4.5%). A market crash of 50% will actually make cash-flow more powerful.
But the short answer is yes, VOO compounds just as well, if not better, in most cases, than dividend growth ETFs.
@ thank you responding so clearly, you are great :) I am learning something here. Wait last question, why does a crash make cash-flow more powerful? Is it because you still have income and your fund hasn’t crashed as much?
There are solutions and adjustments with any portfolio mix, so take this with a little grain of salt here, but the high level reason is...
With VOO, you're making withdrawals to pay the bills. If you live on the '4% rule', which is widely accepted and a solid barometer to go by, albeit not perfect, you would do the following (technically there are inflation adjustments and other little things, but I'm going to keep the numbers round and simple):
Year 1: $1,000,000 portfolio. Withdraw $40,000 to live, 4% of the value.
Year 2: $500,000 (after a huge market crash): Withdraw $20,000 to life, 4% of the value. Realistically, withdraw 8% to actually live, and you've down over half already. Again, extreme crash cash here to make the point.
With dividends, say mostly SCHD + JEPQ to create 6%, you will never sell a share.
Year 1: $1,000,000 portfolio. $60,000 cash, $20,000 reinvested.
Year 2: $650,000 portfolio (probably more with SCHD protection). $62,000 cash (with slight dividend growth, probably would be higher growth in reality), $22,000 reinvested.
Again, this math isn't perfect for the real world here, but the general idea is that it is 'nearly' impossible to run out of money with something like SCHD if you can pay the bills with the current cash flow, and reinvest some as well.
VOO will 'usually' grow to a high amount in most markets. But the dividend approach will *almost always* work in any market, and will *usually* have a little less net worth on your death bed.
@ sorry but to get to that $1,000,000 portofolio, so if VOO compounds the same or better, isn’t it better to use VOO to grow the fund, or will it grow at the same rate if I start with SCHD + JEPQ?
It is. Well, it depends. That is the primary argument in favor of VOO over dividend portfolios.
Again, it *usually* grows better over the years while using the 4% rule. But a crash will destroy the compound effect and make you take out more than 4% to live the same life. It is less predictable than dividend ETFs paying and growing over the decades (which not appreciating in price as much).
Look at it this way. Again, not accurate numbers here, but more core concepts:
We run 1,000 scenarios of VOO vs dividend mix.
In 950 scenarios, VOO makes it to the finish line without running out of money.
In 999 scenarios, dividend growth makes it to the finish line without running out of money.
In 900 scenarios VOO gives a higher value on your death bed than the dividend mix.
In 100 scenarios the dividend mix gives a higher value than VOO on the death bed.
In 50 scenarios, the crash wiped out the portfolio before you died with VOO
In 1 scenario, the dividend mix wiped out the portfolio before you died.
VOO is *better* 90% of the time. But growing dividends will *make it* more often. You have to define your version of *better*.
Hello! I want to know if yearly inflation is calculated in most calculators you find online but also in promising UA-cam videos from creators showing you a formula table with time to retire. Because having 800,000 USD with those monthly investments in 30 years won’t have the same value than having them today
I think some online calculators have a field for inflation. The ones you pay for that are full on retirement software definitely have that variable.
But inflation is real. I account for it as 3% by default. As long as your dividend growth rate exceeds 3% you will increase your purchasing power. That is why SCHD is so nice (10 year average dividend increase of 11% per year is crazy).
Also, price appreciates with most of these ETFs as well. So that $800,000 will outpace inflation (over long periods of time) by quite a bit (assuming you're not taking out principle to live). I consider this a bonus in most of my tools. I'm a worst case scenario kind of guy lol.
Jeff, excellent video. There are some pretty crappy dividend paying companies that are in the dividend payer data.
Hey Michael. No doubt. It is why I don't like HUGE data that includes everything for stuff like this. Again, it is great to have because it is accurate for what it is. The problem is that it doesn't directly pertain to the investments we actually invest in.
For example, QQQM only has 100 (mostly) growth stocks. SCHD only has 100 quality dividend stocks. VOO, 'the market', is only 500 of the largest US companies (growth and value). VGT is just over 300 tech companies, etc.
If I look at 'all dividend payers' vs 'all non-dividend payers', it doesn't tell me much. I mean, it proves dividend paying companies are generally 'good' and 'well established', but still, not overly pertinent for a use case.
Wa searching for your last video last night and didn't see anything!!! And then
Today!!
Haha, glad you found it! Thanks for watching and for leaving a comment as always. I'm catching up a bit myself here, was out of service area for the past few days.
Hi Jeff, Can you please make a video on JEPQ elaborating it's actual income and growth strategy. JEPQ description claims holding 80% NASDAQ stocks for growth and trading ELNs on 20% only for additional income. But as a matter of fact 80% holding is always lagging growth in proportion to QQQ whenever Index grows. Same thing is happening with JEPI. Both ETFs claim for potential growth from 80% reserved holdings seem misleading and contradictory and their performance almost resemble with QYLD and XYLD.
Hey Syed. I've tried to mention that in videos and often times people (JEPQ fans) get mad at me. JEPQ will very likely fall short of QQQ over any long stretch of time. This is because the call options that produce the premium income come at the expense of slicing into the growth ceiling.
JEPQ guarantees premium income by selling the options. But, when the price goes sky high, opportunity cost is lost. Someone on the other side is paying a little money for the right to buy the stock at a set price. When the market goes up, JEPQ doesn't get to realize all of the gains. It 'traded' some for the guaranteed income. When it goes down, JEPQ is better off than QQQM (still drops in price, but also collected the income from the party that never got to 'strike' at the agreed upon price).
QQQM is a better long-term investment than JEPQ unless you *need* cash flow now (typically retirees). I need cash flow now, for example, so I have a chunk of JEPQ. The 8-10% dividend helps pay my bills since quitting my job. If I still worked my job that I quit to start this channel, I would only hold QQQM because it will produce better results long-term.
Hi Jeff, Thanks for detailed response and providing in depth understanding about JEPQ functionality.
I absolutely agree with your point of view for opting or avoiding JEPQ based on personal financial circumstances.
Thanks for always providing valuable information and knowledge through your amazing videos and also by responding comments of your followers and admirers of your work.
Good video!
Thanks Alex. One of those polarizing topics that has multiple winners.
Hello Jeff! Do you have something in mind, when it's going about the most efficient formula for the amounts of SCHD and JEPQ? Is there any math behind this topic, to understand the best correlation, like for instance 30% of JEPQ and 70% of SCHD, to have optimal income + growth? Thanks for sharing!
Thanks for watching and for the great question. I don't have any specific math with historical evidence because JEPQ is too new.
However, for me personally, I think SCHD is 'better' for long-term, consistent growing cash-flow to beat inflation.
JEPQ is better if you need more yield now to pay the bills, but it won't 'grow' the dividend as much. It is based on call options that vary with the markets volatility instead of companies that consistently pay and grow dividends like SCHD.
I think the right mix depends on your total portfolio value. The higher it is, the more SCHD I would add (to pay bills now and grow more later).
This week- stocks/ETF are on sale😂.
Hey Mohit. Sure thing, it makes my 24/7/365 recommendation even more powerful for long-term investors. Buy, buy, buy! (: When they rise? Buy! When they drop? Buy! How about sideways? Buy! (:
more like for the next 6 months+
Thanks for explaining the tax definitions…What would a 50/50% (dividend/4%) retirement distribution look like? Also, with different percentages?? Thanks!
This is a fantastic perspective. I feel like it is always the 4% rule *or* the dividend cash-flow. I'm guilty of this too when comparing the options.
Technically, a hybrid can be a great way to approach it. Also, the lower the % of withdrawals the better than chance of making it. Using 3% gets close to 100% success rate (in general). Using 5% or 6% gets pretty messy in many historical scenarios.
If we used half and half, it could look something like this:
If you need 3% of the portfolio to live:
50% of the portfolio in dividend ETFs and stocks producing 4% dividends. This gives us 2% of our funds to live on.
50% in index funds using the 4% rule. Your dividend will be at least 1%, so that gets you another 0.5% to live on before selling to make the 4% rule work. Then we would only have to sell 1% of the index portfolio to get another 0.5% to live on.
Basically, treating both separately and making them contribute evenly. Of course any combo could work with some tweaking.
I hope to have the portfolio balance (some day) to produce 3% dividends and not sell anything. But within that, I would love a nice chunk to be VOO, VGT, and QQQM. This just means I need a sizable piece of SCHD and JEPQ. I have planned on the 'hybrid' approach for a long-time. Dividend is my 'fall back' if things don't go as well as planned.
I believe that Hartford funds research into dividends vs growth results is looking at S&P 500 stocks. So the argument that there’s bad growth stocks isn’t relevant because they have to be doing pretty good to be in the S&P 500. Narrowing the results to S&P 500 stocks is comparing apples to apples
Even if they are looking at the entire market there’s also bad stocks that pay dividends so the bad stocks cancel each other out imo
It is the same story no matter how we slice it. Dividend paying stocks will have better returns than non-paying dividend stocks. I think that is common sense for the reasons I mentioned in the video (I've also read so many data filled books on factor investing that it hurts, lol). I think we are 'kinda' on the same page, but I'm not 100% sure.
I was mainly trying to make the point that 'dividends' aren't technically a 'factor' for investing for alpha. I'm not saying they aren't good, I love them and all 25 stocks I own pay a dividend, but I don't think you understand what I meant by apples to apples in this case. I was strictly referring to big data studies (such as value vs growth) vs 'actual investments' that often times show very different results. People under or over perform *big time* within each category. It's hard to explain in one short video.
You are right there are also bad stocks that pay dividends. No doubt about it. But we are talking about 'per company' probabilities here.
I think if you pick 1,000 dividend stocks vs 1,000 non-dividend stocks, you will have far more 'duds' in the non-dividend. But if you screen out a lot of key metrics, and get it down to 10 of each, it can look different. I'm still not sure if I'm making sense here, I tried (: Mass data vs selective data.
I do love dividends! Almost all of my investments pay dividends so yes I believe we’re on the same page. At the 10:40 mark you started talking about the Hartford fund research saying that dividends investments outperform non dividend investments. Then you said that unfocused data wasn’t always pertinent.
I was just pointing out that the Hartford fund results only used S&P 500 stocks so there shouldn’t be many “bad” stocks skewing the data.
Hi Jeff, Isn't one advantage of living off dividends is consistency of dividend or income growth in retirement over the 4% rule? For example if someone retires with $500k and is invested in growth ETF's is the downside risk because of high beta and big swings in income?
Hey Chris. Absolutely! It is common to hear the argument against dividend investing to look something like this:
Growth and index funds will outperform dividend ETFs most of the time. It is capping your ceiling if you have a dividend portfolio instead of the 4% rule strategies.
The truth is that they are exactly right! More times than not, high yield dividend investing will not keep up with the heavy growers.
However, to your point, dividend growth investing WILL give us close to 100% success rate if it produces the cash-flow needed to get by without dipping into the principal amount. The floor is higher, and I care way more about that (the retired me, that is).
I will be heavy dividend (JEPQ in Roth and SCHD in taxable) in retirement. I am focusing on a balance of SCHD, VGT, QQQM, and VOO in the accumulation stage to take advantage of the better total returns. But I would rather die with 3 million than 10 million if it meant having 100% chance to cover me to get there (:
Jeff could you please help me with the following question, when you outperform the market with growth assets (without them it doesn't seem possible to beat the makret), but excluding dopamine, what this outperformance can give to investor, my understading these are two main things:
1) All the assets in portfolio are more secured in general, even in case of market decline; So if you have income stocks, dividend-growth stocks, and growth stocks, then after several years of holidng growth stocks you will have secured buffer, to have positive numbers for overall portfolio even when makret crashes.
2) Potential to have bigger numbers, on the brokerage account sometime in the future. (what I don't like about growth stocks, is that you need to pay taxes when you sell them 😁)
Am I missing something? Thank you!
Thanks for watching and for the great question. It is a hard one to answer, and I guess that is why well over 90% of investors fall short of the markets returns over long periods of time with their handpicked strategies.
'The Market' being the S&P 500, or VOO, is a natural combination of the growth stocks, value stocks, dividend stocks, dividend growth, etc. It has a touch of all the things, so it makes it extremely hard to beat.
When growth stocks and ETFs go to the moon, the market will crush dividend and value ETFs, because it has a nice chunk of the growth stocks and will scale up with them. This is 'how it works' for people that have gotten in during the past (and historical) bull run lately.
The less known fact is that value has outperformed growth over the past 100 years. When those 'runs' happen, the market will crush the performance of growth stocks and ETFs because it holds, and scales up, the dividend and value holdings.
It's like a cheat code. Today's handpicking winners are tomorrows losers. The market is always sliding in the middle.
How to beat it? Have better growth stocks and better value stocks than the market, and keep them balanced with target allocations in all markets. My mix has never fallen short of the market since I started investing in 2010 (to be fair, I was 100% the market in my first 2 years, so I tied it).
It's not because I'm smart, it's because I keep the growth and value side of the portfolio in balance and don't get caught up in the runs. I am falling short this year by a little, but we'll see how the year ends up. The probabilities of beating the market when you try to CRUSH it (with big tilts) approaches 0% over long periods of time. The reversion to the mean is inevitable in all markets, we just don't know the timeline.
As far as the taxes are concerned, growth ETFs are the best because 100% of your taxes will be long-term capital gains. At worse, it will be taxed the same as qualified dividends, and you take the gains on your on timeline.
Great video, at the end you mention the 4% rule balance will beat the dividend method at the end of life. Wondering if that taxes taxes into account with qualified dividends being exempt from taxes up to a certain amount. Love the channel. Thanks
Hey Thomas. It does consider the tax implications. This is because the 4% rule to sell long-term holdings to create long-term capital gains. This income is treated the same way as qualified dividends from a tax perspective.
To be clear, the 4% rule (index holdings or market ETFs + selling to create income) will beat dividend portfolios in 'most' scenarios, BUT, the dividend portfolio has way high odds of 'making it'. Dividends have a higher floor and lower ceiling. I'll take that in retirement any day, personally.
Realistically I'll use a hybrid approach.
Thanks Jeff
I really appreciated you showing how to view total returns on Seeking Alpha.... been frustrated with only seeing price returns. Would love to find an easy way to compare several stocks or ETFs total returns at once, without having to create my own spreadheet every time... ideas?
Thank you for watching the video and leaving the kind words. I think Seeking Alpha allows us to compare 7 ETFs (or stocks) at a time. That isn't too bad, but I'm sure there are better sites online to view more at once.
I've created a spreadsheet to do this, and I pull a screener from Seeking Alpha once per week to update the data. It is in Excel (and Google Sheets) for my channel members. Updating these spreadsheets that I maintain for the channel costs some time each week, so I do have it set to $2.99 per month to join. It is completely optional & if the channel keeps growing I may share some of the basic ones (like the ETF comparer) for free. I'm still trying to navigate how to go about some of these things.
Hi Jeff, Could you please advise if 100% SCHD Portfolio would not be meant as putting all eggs in one basket ? I mean in case of any issue with fund or Asset Manager (Charles SCHWAB), whole investment could be at risk because SCHD Fact Sheet clearly reflect this statement with details "Not FDIC Insured • No Bank Guarantee • May Lose Value". In such scenario, what should be the safest strategy to protect our investment especially when we are close to retirement age.
This has been a hot topic over the past year or so. Especially when Schwab had some problems for a bit there.
The short answer is that it is very safe. Your eggs are in 100 quality dividend stocks that have a history of growing the dividends and that have clean balance sheets. Could one or two, or 5 cut dividends? Absolutely. But it has never not grown its dividends since inception in an single year.
The language you mentioned form the fact sheet is standard for ETFs.
All that said, I personally like to keep my money in multiple ETFs. I have SCHD, VOO, VGT, QQQM, JEPQ, and a money market VMFXX. Along with 25 individual stocks. This is for safety in returns and performance, not for worries of one 'going under'.
Thanks Jeff for guidance and support. I meant SCHD as one basket (which surely has 100 quality diversified stocks), but I agree with your clarification for adding other Index ETFs in portfolio to mitigate any fear of investing with just single Asset managing organization. Your prompt response and help is always highly appreciated.
What website are you using for your charts?
Hey Jacob. I use Seeking Alpha for most of my research. I will also use E*Trade from time to time (because most of my assets are there). Seeking Alpha is superior for research though. I aggregate my portfolios to Seeking Alpha, which puts the relevant articles and research there by default when I see how things are going. I only log into brokers (E*Trade and M1 Finance) when I need to buy something.
Do you invest in any gold ETFs? I noticed that none of them pay dividends, however, would they help diversify a portfolio?
Hey Mark. I don't invest in gold ETFs personally, but a lot of very smart people do. I think it helps diversify a portfolio for a variety of market conditions. It isn't a part of my personal long-term strategy.
Jeff, just bought 10k of fidelity FDVV! I'm on the fence of getting rid of it and putting the cash into SCHD/SCHG! What do you think increase my position in FDVV or trade for SCHD/SCHG?
Thanks for watching and for the question. I like SCHD better than FDVV as a long-term dividend payer and grower. SCHD has been a bit beat up the past couple of years by comparison, but I still prefer the consistent dividend payments and growth. It also has nice 'long-term' steady price appreciation as well.
FDVV does have a total return of 147% compared to SCHD 143% since FDVV's inception. It is a quality dividend ETF. I don't like the lower yield and more importantly, the lack of dividend growth at 2.89% dividend CAGR in the last 5 years. SCHD is at 12.88% in that time.
SCHG is a different animal because it is on the growth ETF side of things. I think it is a high quality growth ETF that is right up there with the best of the best.
Short answer is that I would personally prefer SCHD and SCHG over FDVV. But I think all three are solid.
@@JeffTeeples Jeff, Thank you for answering my question I'm sticking to only SCHD/SCHG 50/50 combo!! In my broker I have SCHD/VGT, Roth is SCHD/SCHG and my T. IRA IS SCHD/SCHG/JEPQ/FDVV currently but I'll sell both JEPQ/FDVV for the top dogs SCHD/SCHG! Thanks again Jeff, look forward to your new videos!
I have vwce for growth 1k/month and vici, o, main, obdc for dividend 100€ each/month. I have a tax exemption of 1500€/year on dividends in my country. So I try to drip/buy in ASAP the didivdend stocks to get to 1500€/year on dividends and let that run for 20 or so years and buy vwce only after
Thank you for watching and for the comment. I am unfamiliar with VWCE. But I know the dividend holdings you go with. Keep on dollar cost averaging into your portfolio for a couple decades and I bet you'll be a happy camper at the end. Consistency is key.
Loved your video. One dissenting comment: Don't you think comparing the performance of JEPQ to that of VOO instead of QQQM is unfair? Apples to Oranges...
Absolutely. You are 100% correct. QQQM is the better benchmark for JEPQ. They are both based on the same index, and I think QQQM is a better 'long-term investment' for people that don't *need* cash now.
I strictly used this example to show that price return and total return can be WAY different. I wanted an example that shows a win for both depending on the metric shown. QQQM wins both so it didn't help make the point as much (:
@@JeffTeeples Thanks.
If you’ve been buying a stock on a regular basis (e.g. $100/share/mo for 12 months. Say the stock doubled in that time. If you sell 1 share on the 13th month, is that $100 gain capital gains? What about selling a second share the next day? Is that $100 gain now ordinary income?
That is a great question. Every time you buy that stock your broker will create a 'tax lot' for that specific purchase. As long as you wait at least a year to sell that specific lot, you will recognize the favorable long-term capital gains.
If you sold everything, you would have 'mixed capital gains'. The specific tax lots that were over a year old would be long-term, and the ones held under a year are short-term capital gains (basically ordinary income, the bad taxes).
Each lot will be considered separately and will not impact the other lots.
@@JeffTeeples much thanks. Always wondered about that and you definitely satisfied my curiosity. 👍
The one big downside to dividend stocks is that the company can cut the dividend or get rid of it completely
I agree with this. It is why I prefer an ETF like SCHD instead of individual stocks. Will some cut dividends? For sure. But with 100 quality dividend payers with low debt and solid balanced sheets, I feel good about the dividend growth 'as a whole'.
@@JeffTeeplesand also if a company does cut their dividend Schd would most likely rotate that company out of the etf and replace with something else. That’s the beauty of this Schd.
Have Jeff , do you have any video reviews or opinions about options funds like Spyi or spyt?
Hey Mike. I don't yet, but I've been watching SPYI pretty closely for a while now. I think there is a good chance I'll make a video on that one soon.
Sooo, SCHD is 81 dollars a share and yields 2.83 per year? If you have a million dollars of SCHD you would have 12,345 ish shares? Which would yield 34,936.35 per year? Approximately? Am I understanding it right?
That looks correct. It would be more assuming you gradually got to that accumulation of SCHD. But if you sold everything today and went all in on SCHD, in a year, your dividend payout would be over $30k for that first year and then grow each and every year after. In five years, your dividend income should be around $49k/yr.
You got it. $35k per year doesn't sound like much, but historically SCHD has just over doubled the dividend per year, per share.
If you lived on the $35,000 without reinvesting it, along with other cash-flows like social security, pensions, JEPQ for higher yield, or anything else, the SCHD portion would be paying you ~$70,000 in 7 years (using the historical, and current, dividend growth rate). That is where it separates itself from JEPQ, money markets, and high yield savings over time. Those other ones yield whatever the current federal fund rate (or VIX in JEPQ case) is, and will not 'consistently grow' like SCHD. Again, the $70,000 happens without investing an extra penny back into it. You still have the 12,345 shares.
The yield on cost is the unsung hero here. In the short term, many people (myself included right now with 2 little kids, and a mortgage) may need to lean on higher yielding assets to pay the bills without work income (my wife and I use JEPQ), but over time, SCHD continues to add value to your life by crushing inflation (even the high inflation last few years).
That is what I love about SCHD. Regardless of how many shares we have, it continues to outpace inflation over the years. As soon as we have enough to pay the bills and live comfortably (along with other income sources in retirement), we are good to go forever. It requires a lot, but I love breaking the calculators of 'when it will run out'.
Still tuned in…love it !
What is your plan in case government cancel dividend favors? I hear more and more voices of taxing those.
Hey Oleksa. I would have to take a hard look at my portfolio mix if qualified dividends no longer received a tax advantage. It wouldn't make 'that' big of a difference, but I may move dividends to my retirement accounts and hold more growth in my taxable (assuming long-term capital gains still get the special tax rates).
If long-term capital gains also loses the tax hack, then I guess we are technically right back to where we were (:
@@JeffTeeples does it mean getting back on the job market?
For me personally? I hope not. I want to continue growing this channel for years to come. I'm passionate about this stuff.
Hi Jeff!! Amazing Videos, really appreciate your work.
I'm 55yo and my 500K portfolio is 80% SCHD and 20% JEPQ. Please advise if I should go for 100% SCHD, or any better replacement of JEPQ if needed. Thanks.
I plugged both into the fund overlap checker and there is very little overlap. I personally would keep both for the diversity if both are performing well.
Hey Syed. Thanks for watching and for the question. I think an 80/20 mix of SCHD/JEPQ is a good way to go.
The answer will also depend. SCHD will 'grow' its dividend a lot more over the years than JEPQ. SCHD averages doubling its dividend every 6 years or so. This means if you receive $25,000 of dividends per year, you will get around $50,000 in 6 years time without reinvesting a penny back. The 'yield on cost' makes the 'effective yield' WAY higher of SCHD when we zoom out.
JEPQ 'more like' a high interest savings account or money market. The yield is based on the current market volatility. Instead of steadily growing like SCHD, it will randomly bounce up and down based on how juicy the call options are at the time.
If 100% SCHD would pay your bills now, it will definitely cover them later because it outpaces inflation. JEPQ is great to mix in if you need more now. Or, you can take the dividends from JEPQ and reinvest them in SCHD. That is a fun 1-2 punch as well.
Short answer: I think 80/20 or 100 SCHD both work depending on what you're looking for. There is not one 'right answer' for that one.
I agree with this. They are a nice combo for dividend investors.
@@JeffTeeples Thanks Jeff for detailed analysis and guidance. I absolutely agree with your SCHD approach and long term advantages and will go for 100% SCHD as already lost a lot of my savings on High Yield Traps like QYLD and some other ETFs.
Just added JEPQ in my portfolio because being Canadian 15% withholding tax is deducted from all USA based dividends. But as you highlighted, only SCHD is more than enough.
great sunday video !
Thanks Kumar. I appreciate you taking the time to watch it and for leaving a positive comment.
Good morning from St.Louis County. My Dad retired from McDonell Douglas before Boeing acquired it. Do you think Boeing will ever restore its dividend? I know Boeing is having issues now but I'd like hear your opinion on on the matter since your people for Boeing. Thanks as always for your content. I mostly by SPLG and FTEC now with a sprinkle of QQQM but I feel nostalgic about Boeing and was going to purchase shares because my Dad work there as did my lady prior to the merger.
Thanks for watching and for the question. Always good to see one of the first supporters of the channel in the comments.
I love your mix of SPLG, FTEC, and QQQM. I roll with (basically) the same and it does a great job over long periods of time.
I can't speak too much about the state of Boeing in 2024. I left in 2017, but my wife still works there, and I better keep it down. They are having leadership issues to put it mildly.
I don't think they will continue the dividend in the near future, BUT, I hope to be wrong about that. I think Boeing will succeed long-term when some quality issues are cleaned up and leadership is shaken up. We have seen multiple times that they have a free lifeline from the government when things get dicey. That will continue into at least the near future.
Great video Jeff as always! Thank you so much for sharing this!
Thanks for watching Jane. There are so many great ways to invest. The only requirement is to pick a system that works for your goals and to stay the course when things look rough. We need to take our emotions out of it.
@@JeffTeeples Thank you so much Jeff. Yes! You are so correct! I kind of regretted what I did in June before I found your channel... I invested too much in NVDA... and now I don't have money to buy other stocks when they are low... and I bought NVDA when it was at its peak... I guess I have to wait until when it comes back up in order to sell... or else I will lose too much money.
They stock for this would be avgo
Hey Preston. AVGO makes the cut in my individual stock portfolio (that has doubled the returns of the market since inception on 4/20/2023). It's early, but I love AVGO in my tech sector.
33% growth
33% s&p500
16.5% SCHD
16.5% various high yielding (>8%)dividend ETFs/stocks
Everything DRIP’s
Love it! That is a well balanced portfolio (assuming the holdings within each 'type' are quality).
@@JeffTeeples i hope so!
Growth:
VGT 95%, SOXQ 5% (i might start adding some VUG to not be so susceptible to tech)
S&P: Voo 100%
Dividend: SCHD 50% (core)
Various dividend ETF’s (DIVO, SCHY, JEPQ) and Stocks (probably too many) over REITS, BCDs, Covered Call, Preferred Stocks, Utilities, Oil and Gas. The most risky is probably a couple of YMAX ETFs, but they make up less than 0.7% of my entire portfolio.
👍🏽
20% off or $25 off my man? I’m not getting no 20% discount on seeking alpha
I think they changed that recently. That is a major bummer. I was told that 20% was the worst it would be when I initially got the link. But if it is only $25 now, I will need to update what I say. Sorry about that, I didn't mean to be misleading there. I'll look into it and make sure I'm accurate moving forward.
Genex is my guy i love that dude "no homo" hes real so is his situation.
He's great. He gets a lot of people commenting that dividends don't work, they aren't free (because they come from share price), growth has X% return, etc. He doesn't care. He's stayed the course and done an incredible job with his system. It will continue to work indefinitely because he has a deep understanding of what he is doing and why he is doing it.
Yes. We know about the qualified dividend under 120k for married couple.
That puts you in rarified air my friend. Well under 5% of people know that. And I worked with A LOT of people. In fact, I would be willing to bet that well under 25% of people could tell you the difference between a qualified dividend and ordinary income (in general, nothing to do with the limits). You are definitely on the right path.
@@JeffTeeples thank you Jeff. We have close to 2 million in assets and no mortgage in our primary home. Imagine earning average of 10% a year and not have to pay federal income tax under 120k in income. I also live in a state income tax free state so really no income tax😀😀😀
Oh man I'm getting more jealous at we talk about this! Haha, kidding, super cool though for real!
@@JeffTeeples you are doing just fine. I like your research and learned a lot from them. I m also little older than you. I m 51.
So if you make $120k/yr as a married couple, you are taxed at 12% ordinary income rate. Now if you have $30k in qualified dividends or long term gains, is that all taxed at 0%? Or once you break the 12% tax bracket at $123k, is the rest of the $27k taxed at 15% or still 0%??
Hey Jon. This is a great question. You would move from 0% to 15% on the amount that exceeds the $123k (which is actually ~$94k taxable income, but I'm doing the math on the standard deduction to get to $123k). Instead of moving to the 22% ordinary income, the qualified dividends would jump to 15%.
It's always better per dollar earned, but not always 0%.