The Secret to Earning Passive Income in Retirement.
I’ve spent most of my professional life studying and writing about personal finance…
Heck, I even wrote The Wall Street Journal’s Complete Personal Finance Guidebook.
So, I tend to field a lot of questions from friends, colleagues, and readers about the dos and don’ts of managing your money. And by far, the biggest question I get is…
“Jeff, how do I create a passive income for myself in retirement… so I don’t have to worry about running out of cash?”
It’s a good question, but it’s like asking, “What’s the best way to skin a cat?” The answer, of course, is there’s more than one way…
That said, there is one strategy everyone approaching or enjoying retirement absolutely needs to know about.
It’s a strategy I learned, in a roundabout kinda way, from my father…
Somewhere in the long ago, I was a newbie to the stock market—an 18-year-old college kid looking to mimic the successes of my dad, who was a high-ranking corporate executive at one of the most recognizable consumer-product companies in the world.
Once when I was visiting him—I was in 9th grade, I think—he showed me a copy of the Value Line Investment Survey, a newsprint gray newsletter stuffed with analysis on hundreds of U.S. stocks.
At that age, I didn’t know diddly about the charts and all the numbers on each page. But I did know that my dad lived a luxurious life and that he had made quite a pretty penny investing in stocks.
So, as a college kid with a couple hundred bucks to spare, I opened my first brokerage account by driving to the Charles Schwab branch in New Orleans and filling out an application (this was 1984, many years before email and internet). And then I set about reading up on how to choose stocks.
What I came to learn is that there are numerous ways to skin the stock market. But the way that resonated most with me was dividend investing.
In my still-developing teenage brain—and having been raised by lower-middle-class grandparents on a fixed income—getting rich quick through momentum investing seemed a lot like casino gambling. Buying deep-value companies in turnaround mode sounded interesting, but it relied on making industry and corporate assessments beyond my skill set at that time.
But dividends… now that was a strategy I could understand and get behind.
The premise is crayon-simple: You buy a high-quality company stock that pays a meaningful dividend, then go about your life as the money flows in every quarter, or sometimes every month. To young me, it felt like a way to get free money!
Better still, if your dividends rise, your income goes up and so does the value of the stock, since higher and higher dividends naturally push the stock price up over time.
I’m older and wiser now, so I use a variety of investing strategies. But I’m still always on the lookout for solid companies paying market-beating dividends.
They’re among the best investments you can make on Wall Street. And crucially, you can use them to create an income for yourself during retirement.
Which brings me back to that question I get asked all the time…
Too many people spend down their savings during retirement, rather than using them to create a source of passive income.
Let me show you what I mean…
A few years back, I invested in a tobacco company called Altria.
Altria is perennially shunned by the feel-good, social-investing crowd because of its business. I’m not knocking those concerns… I just refuse to base my investment decisions around them. I just want to own solid companies selling in-demand products, and which pay nice dividends.
When I grabbed Altria in May 2020, the shares were paying dividends of $0.86 per quarter, a yield of nearly 9.4%. That’s a crazy-high yield on such a stalwart consumer company.
A $10,000 investment meant $936 per year in dividend income.
Over the intervening years, however, Altria has continued to raise its dividend… which management has always tried to do. Altria is a dividend stalwart, just the kind of stock I love to find on Wall Street.
Today, Altria is paying $0.94 every quarter, or $3.76 per year, meaning that original $10,000 investment is now spinning out nearly $1,023 in income… every year. That’s a yield on investment of more than 10%.
Now, apply that same strategy to five or 10 high-quality, dividend-paying stocks… or master limited partnerships… or Canadian income trusts. (I’ll be telling you more about these incredible income-generating investments in the coming days.)
Instead of eating away at your nest egg, you’re using it to generate a very nice and very passive income simply by owning the right stocks that pay fat dividends.
It troubles me when I talk to friends and they want to chase high-flying, overvalued momentum stocks, and they fail to realize the myriad, simple ways like this that you can use to generate generous passive income to fund your retirement.
So, on September 7, I’m hosting a free online event called the Passive Income Workshop.
At this workshop, I’m going to discuss eight ways like this that you can generate big passive income now and in retirement…
I’m talking about ways to capture hands-free retirement cash payouts 32,300%… 36,700%… 47,000% bigger than the returns offered by America’s largest bank.
To claim your free e-ticket—simply click here now.
You buy. You get regular income. You go away and enjoy your life. And your investments are busy working for you while you’re out looking for other cats to skin.
