Anyone successfully living off dividends & interest?

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abuss368
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Re: Anyone successfully living off dividends & interest?

Post by abuss368 »

sycamore wrote: Wed Sep 16, 2020 8:26 am
abuss368 wrote: Wed Sep 16, 2020 6:37 am Could a strategy include Vanguard High Dividend and Vanguard International High Dividend rather then individual dividend paying stocks?
Yes. Those funds are "better" in that they have somewhat less idiosyncratic risk than using individual stocks. What would be your reasons for using those funds in place of, say, a total stock market fund?
No reason as I was thinking out load. I would prefer those two funds over individual stocks or even sector funds (which introduce a whole other risk aspect) like REITs.
John C. Bogle: “Simplicity is the master key to financial success."
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CyclingDuo
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Re: Anyone successfully living off dividends & interest?

Post by CyclingDuo »

000 wrote: Wed Sep 16, 2020 8:30 am
CyclingDuo wrote: Wed Sep 16, 2020 6:27 am
advice789 wrote: Tue Sep 15, 2020 5:00 pm Appreciate this chat. Stimulated me to a more disciplined portfolio approach to retirement income planning. Am also seeking such a portfolio of different financial assets, hard assets like real estate, and guaranteed sources( pension, soc etc.). Will likely add to div portion of the portfolio. Am also thinking to add more foreign assets as currency risk is not well hedged. Seems to be a correlation between countries with higher GDP growth rates, stable or relatively lower debt levels and currency appreciation. US is the opposite hence currency exposure is a longer-term risk
Certainly that goes along with the subject of producing income streams. This article points out 7 additional income streams beyond stocks and bonds:

Image
https://www.marketwatch.com/story/stock ... yptr=yahoo

Surprised that income from work (outside of a small business) - be it full time, part-time, consulting, etc... was not included, but it certainly is key as well.

CyclingDuo
Pretty much everything in that list other than bonds and maybe P2P lending is equity in a business of some kind, no?
I get what you are saying. Allow me to think out loud...

I guess it depends on how you define "business of some kind" and "equity". Obviously, equity is involved if you purchase investment real estate, farmland, REITs, or develop your own product, produce it and sell it (be it cookies, salsa, pasta sauce, cakes, an app, a video game, some software, or a widget that does something).

One of the items on the list that I mention often - royalties - can cover a myriad of things. In my case, some of it is related back to prior decades as a full time professional performer where royalties are received from work done many years ago via recordings that still get aired and or purchased or used in commercials or films. Just to give one example, there was a 2 1/2 hour live performance I did at an opera house (which was just one of about 70 live performances I did a year for 25 years), and years later a company decided to use a short 10 second cut of my singing from the original live performance for a commercial on television in Europe. I had no investment or equity involved - from a business standpoint - making the live performance as it was part of my annual salaried position and I did nothing to arrange the recording of the live performance as the venue did all of that for every opening night performance of a new production throughout each season. The union required royalty payments for all artists involved to be paid as a small addition to our salary because it was being aired live on the radio and television, and would be replayed a few times throughout Europe. Yet, years later, I started receiving royalty checks while that silly commercial was running for several years (and the cut they used of my singing and what I was singing about had absolutely nothing to do with the product that was being sold in the commercial). No matter, I was perfectly content receiving the royalty payments. Again, I did nothing from a business standpoint or equity investment to get that sort of a royalty stream.

Other times, when making an actual organized recording in the recording studio with full orchestra, conductor and fellow singers - that was a separate contract to do involving royalty agreements where each deal was inked through your agent that could have included a one time payment, an upfront payment plus a small percentage of every CD or digitalized sale or radio playing of the recording - or whatever combination that could be agreed upon between the parties involved. That was more of a side hustle that tied in with the regular full time gig of being a full time live performer for live audiences in classical music venues. Some classical performers make a lot more recordings than others because of their fame and talent level, but it only accounts for about 6% of their income as live performance and teaching are the two largest contributors to income for professional classical musicians. Now, if you land a gig such as singing and doing the voice overs acting of Gaston in Disney's animated Beauty and the Beast, it pays a heck of a lot more than than the royalties from making a recording as one of the featured singers in Puccini's Madama Butterfly. The former sells millions and millions of copies, the latter would be very fortunate to make a dent or even a go of selling up to 100K copies over its' entire lifespan, and very few top classical recordings reach 1M+ copies ever sold. Broadway musical recordings are the top sellers in the classical music/broadway world, and only a few classical musicians have stepped into the limelight where their names became a household word. Luciano Pavarotti being the most famous in the past few decades to achieve that type of notoriety as he was able to cross over to the popular side. Most great classical artists, you would never know of if you were not into classical music. Recordings are a part of the business of classical music, but I'm not sure how to define equity investment in it from the standpoint of a performer outside of the sweat equity involved to sing, play, or conduct and record something they do on a normal basis as routine in their live performances.

For many of my teaching colleagues in music, the same is true for their royalties on music they have composed and is published or aired in live performances or recordings. Ditto for college and university professors who author textbooks and books they have written in the past with the royalty streams of income from work done in recent years, to years long ago when the work was done. Whether or not any of that was or is a primary business with equity involved could be debated. Plenty of sweat equity, sure. :D Even rather famous and oft used textbooks, the payback in terms of upfront payments and any subsequent royalty payments are a small percentage of one's income as the volume of sales is low and the lifespan is often not as long lasting of a duration as one would think. Yet, every now and then somebody hits a homerun that lasts for more than a decade or two and they inked a good deal for the royalty stream. So again, more of a side hustle and often tied in with research and sabbatical work that is required of certain faculty members to retain their positions.

Compared to a full time author or studio recording artist, or composer for films or musicals, etc... where it is the primary business and treated as such, yes - your point about it being a business with some sort of equity being involved to "run their business" rings true.

I guess we could also address the circumstance about somebody asking if they could run a pipeline across your land, or put a few wind turbines up on your land, or a cell tower on your land and you would be compensated with some sort of upfront lease payment that is designed to run for a set number of years, and then a longer running royalty agreement from the utility or energy company based on the amount of electricity produced from each unit, or however the cell towers and pipelines compensate landowners. Obviously, equity is involved in owning the land - but not sure the original equity in the "business" of owning that land initially had anything to do with the subsequent placement of items owned by the utility/energy companies on that land and providing a lease and royalty stream of income. Nice work if you can get it and there are tons of wind turbines throughout our state on privately owned farmland (Warren Buffett's Mid-American Energy - now renamed Berkshire Hathaway Energy). We have somewhere between 4200 and 5000 wind turbines in our state (haven't seen the latest count). No additional equity investment required from the landowner who either inherited the land from family, or purchased it along the way long before wind turbines came along.

Anyway, just thinking out loud regarding your question if all of the items on the list outside of what you mention require equity in a business of some kind...

My personal experience with items on the list include stocks, bonds, investment property, REITs, royalties - and the one I mentioned as what I thought should have also been on the list: income from full time/part-time/consulting work which produces an income stream and is needed to invest in most of the others. Farmland has always interested me as one set of my grandparents had a farm, but we never personally invested in any as the good stuff is ridiculously expensive in our state and the rental rates per acre just don't make it an enticing offer as rental rates have decreased while per acre price has gone up.

Image
https://www.agweb.com/article/iowa-farm ... 20increase


CyclingDuo
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patrick013
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Re: Anyone successfully living off dividends & interest?

Post by patrick013 »

CyclingDuo wrote: Wed Sep 16, 2020 10:58 am Farmland has always interested me as one set of my grandparents had a farm, but we never personally invested in any as the good stuff is ridiculously expensive in our state and the rental rates per acre just don't make it an enticing offer as rental rates have decreased while per acre price has gone up.

Image
In the area of your choice tell the farmer's co-op you're available for a sale-and-leaseback
arrangement. You should be able to get at least a 10 year lease with a return that is
acceptable. At least 5% and probably higher than that.
age in bonds, buy-and-hold, 10 year business cycle
000
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Re: Anyone successfully living off dividends & interest?

Post by 000 »

CyclingDuo wrote: Wed Sep 16, 2020 10:58 am I get what you are saying. Allow me to think out loud...

I guess it depends on how you define "business of some kind" and "equity". Obviously, equity is involved if you purchase investment real estate, farmland, REITs, or develop your own product, produce it and sell it (be it cookies, salsa, pasta sauce, cakes, an app, a video game, some software, or a widget that does something).

One of the items on the list that I mention often - royalties - can cover a myriad of things. In my case, some of it is related back to prior decades as a full time professional performer where royalties are received from work done many years ago via recordings that still get aired and or purchased or used in commercials or films. Just to give one example, there was a 2 1/2 hour live performance I did at an opera house (which was just one of about 70 live performances I did a year for 25 years), and years later a company decided to use a short 10 second cut of my singing from the original live performance for a commercial on television in Europe. I had no investment or equity involved - from a business standpoint - making the live performance as it was part of my annual salaried position and I did nothing to arrange the recording of the live performance as the venue did all of that for every opening night performance of a new production throughout each season. The union required royalty payments for all artists involved to be paid as a small addition to our salary because it was being aired live on the radio and television, and would be replayed a few times throughout Europe. Yet, years later, I started receiving royalty checks while that silly commercial was running for several years (and the cut they used of my singing and what I was singing about had absolutely nothing to do with the product that was being sold in the commercial). No matter, I was perfectly content receiving the royalty payments. Again, I did nothing from a business standpoint or equity investment to get that sort of a royalty stream.

Other times, when making an actual organized recording in the recording studio with full orchestra, conductor and fellow singers - that was a separate contract to do involving royalty agreements where each deal was inked through your agent that could have included a one time payment, an upfront payment plus a small percentage of every CD or digitalized sale or radio playing of the recording - or whatever combination that could be agreed upon between the parties involved. That was more of a side hustle that tied in with the regular full time gig of being a full time live performer for live audiences in classical music venues. Some classical performers make a lot more recordings than others because of their fame and talent level, but it only accounts for about 6% of their income as live performance and teaching are the two largest contributors to income for professional classical musicians. Now, if you land a gig such as singing and doing the voice overs acting of Gaston in Disney's animated Beauty and the Beast, it pays a heck of a lot more than than the royalties from making a recording as one of the featured singers in Puccini's Madama Butterfly. The former sells millions and millions of copies, the latter would be very fortunate to make a dent or even a go of selling up to 100K copies over its' entire lifespan, and very few top classical recordings reach 1M+ copies ever sold. Broadway musical recordings are the top sellers in the classical music/broadway world, and only a few classical musicians have stepped into the limelight where their names became a household word. Luciano Pavarotti being the most famous in the past few decades to achieve that type of notoriety as he was able to cross over to the popular side. Most great classical artists, you would never know of if you were not into classical music. Recordings are a part of the business of classical music, but I'm not sure how to define equity investment in it from the standpoint of a performer outside of the sweat equity involved to sing, play, or conduct and record something they do on a normal basis as routine in their live performances.

For many of my teaching colleagues in music, the same is true for their royalties on music they have composed and is published or aired in live performances or recordings. Ditto for college and university professors who author textbooks and books they have written in the past with the royalty streams of income from work done in recent years, to years long ago when the work was done. Whether or not any of that was or is a primary business with equity involved could be debated. Plenty of sweat equity, sure. :D Even rather famous and oft used textbooks, the payback in terms of upfront payments and any subsequent royalty payments are a small percentage of one's income as the volume of sales is low and the lifespan is often not as long lasting of a duration as one would think. Yet, every now and then somebody hits a homerun that lasts for more than a decade or two and they inked a good deal for the royalty stream. So again, more of a side hustle and often tied in with research and sabbatical work that is required of certain faculty members to retain their positions.

Compared to a full time author or studio recording artist, or composer for films or musicals, etc... where it is the primary business and treated as such, yes - your point about it being a business with some sort of equity being involved to "run their business" rings true.

I guess we could also address the circumstance about somebody asking if they could run a pipeline across your land, or put a few wind turbines up on your land, or a cell tower on your land and you would be compensated with some sort of upfront lease payment that is designed to run for a set number of years, and then a longer running royalty agreement from the utility or energy company based on the amount of electricity produced from each unit, or however the cell towers and pipelines compensate landowners. Obviously, equity is involved in owning the land - but not sure the original equity in the "business" of owning that land initially had anything to do with the subsequent placement of items owned by the utility/energy companies on that land and providing a lease and royalty stream of income. Nice work if you can get it and there are tons of wind turbines throughout our state on privately owned farmland (Warren Buffett's Mid-American Energy - now renamed Berkshire Hathaway Energy). We have somewhere between 4200 and 5000 wind turbines in our state (haven't seen the latest count). No additional equity investment required from the landowner who either inherited the land from family, or purchased it along the way long before wind turbines came along.

Anyway, just thinking out loud regarding your question if all of the items on the list outside of what you mention require equity in a business of some kind...

My personal experience with items on the list include stocks, bonds, investment property, REITs, royalties - and the one I mentioned as what I thought should have also been on the list: income from full time/part-time/consulting work which produces an income stream and is needed to invest in most of the others. Farmland has always interested me as one set of my grandparents had a farm, but we never personally invested in any as the good stuff is ridiculously expensive in our state and the rental rates per acre just don't make it an enticing offer as rental rates have decreased while per acre price has gone up.

Image
https://www.agweb.com/article/iowa-farm ... 20increase


CyclingDuo
Thanks for sharing your experience.

I think royalties are probably the most different from all the others insofar as they are passive (unless litigation is required) yet not guaranteed like bonds.

Yeah, finding farm or timberland to buy seems a challenge as most of the land remotely near urban areas is priced for capital appreciation from expected future development and too expensive to cover the agricultural return. And buying land far away from where one lives is also a hassle. I have resorted to buying REITs that give me the specific exposure I want to land as a hard asset.
softwaregeek
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Re: Anyone successfully living off dividends & interest?

Post by softwaregeek »

If I could find a nice piece of farmland that I could invest in, and get a reasonably certain rate of return on a long term lease to a farmer, I would be all over that. But honestly, it's outside of my competence. So I'm better off buying an ETF, where I might lose money, but I won't get ripped off.
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