Goal Calculation
To receive $8,000 per month ($96,000 annually) in dividends from an investment of $1.5 million, we need to determine the required dividend yield:
- Annual Target Dividend Income: $96,000
- Investment Amount: $1,500,000
- Required Dividend Yield = (Annual Dividend Income / Investment Amount) × 100
- Required Dividend Yield = ($96,000 / $1,500,000) × 100 = 6.4%
Therefore, it is necessary to invest in ETFs that offer an annual dividend yield of 6.4% or higher.
1. U.S. ETFs with a Dividend Yield of 6% or More
Here are some popular U.S. ETFs that provide a high dividend yield:
1) Vanguard High Dividend Yield ETF (VYM)
- Dividend Yield: ~3.5%–4%
- Overview: Focuses on large-cap U.S. companies that offer high dividends. It is relatively stable and suitable for long-term investors looking for steady dividend income.
2) Schwab U.S. Dividend Equity ETF (SCHD)
- Dividend Yield: ~3.5%–4%
- Overview: Invests in U.S. companies with a strong dividend growth history, offering stability and relatively low costs.
3) iShares Select Dividend ETF (DVY)
- Dividend Yield: ~4.5%–5%
- Overview: Focuses on high-dividend U.S. stocks across various industries, offering a well-diversified portfolio.
4) Global X SuperDividend ETF (SDIV)
- Dividend Yield: ~8%–9%
- Overview: Invests in high-dividend stocks worldwide. While it provides a high dividend yield, it can be volatile.
5) Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
- Dividend Yield: ~4%–5%
- Overview: Selects high-dividend, low-volatility stocks from the S&P 500, making it a good option for stable dividend investors.
6) Vanguard Real Estate ETF (VNQ)
- Dividend Yield: ~4%–5%
- Overview: Focuses on REITs (Real Estate Investment Trusts), which provide strong dividend income from real estate-related businesses.
7) SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
- Dividend Yield: ~4.5%–5%
- Overview: Selects high-dividend-paying companies from the S&P 500, offering a stable dividend return.
2. Example ETF Portfolio for a 6.4% Dividend Yield
To achieve a 6.4% or higher dividend yield, a combination of high-dividend ETFs can be used:
- VYM (3.5% yield) – Stable, large-cap ETF
- DVY (4.5% yield) – High-dividend stock-focused ETF
- SDIV (8% yield) – High-risk, high-yield ETF
By allocating investments strategically among these ETFs, the target dividend yield of 6.4%+ can be achieved.
3. Investment Risks and Considerations
1) Dividend Stability
- Higher-yield ETFs often come with higher risks. SDIV, for example, offers high dividends but can be volatile. Diversification is key to managing risk.
2) Taxes
- U.S. dividend income is subject to a 30% tax for foreign investors. This tax should be factored into net returns.
3) ETF Fees
- Management fees (MER) vary among ETFs. Higher fees can reduce long-term returns, so choosing low-cost ETFs is recommended.
4. Conclusion
To earn $8,000 per month ($96,000 per year) in dividends, a $1.5 million investment must yield at least 6.4% annually.
Among the ETFs listed, Global X SuperDividend ETF (SDIV), Schwab U.S. Dividend Equity ETF (SCHD), and Vanguard High Dividend Yield ETF (VYM) are strong candidates.
By carefully balancing dividend yield and risk, this strategy can help achieve the desired monthly income goal.
