Quick Read
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DIVO Yield Reality Check: DIVO’s trailing yield is inflated by 30% due to discretionary year-end specials that may not recur.
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Portfolio Gaps: DIVO, DGRO, and MAIN reveal discrepancies between trailing income and actual forward rates, skewing the perceived income.
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Reliable Holdings: Duke Energy and Southern Company stand out as the only holdings with guaranteed scheduled dividend increases.
Replacing $8,600 per month or $103,200 annually with portfolio income at age 61 appears straightforward. However, the largest allocation in a popular income-focused fund comes from a source that hasn’t guaranteed its payout.
Portfolio Weights
The fund primarily includes:
- DIVO (Amplify CWP Enhanced Dividend Income ETF) – Approx. 25%.
- DGRO (iShares Core Dividend Growth ETF) – 15%.
- VNQ (Vanguard Real Estate ETF) – 15%.
- MAIN (Main Street Capital) – 10%.
- Other holdings include Duke Energy, Southern Company, and AbbVie, each at 5%.
Understanding Income Reliability
DIVO’s trailing distribution totals $3.01 per share, while the forward annualized rate is $2.34, underscoring a significant gap attributed to an outsized year-end payment.
Two Additional Holdings with Income Gaps
- DGRO: Trailing total of $1.48 vs. a forward rate of $1.32.
- MAIN: Trailing total of $4.32 vs. a forward rate of $3.18.
Reliable Income Generators
Duke Energy’s recent payment increment to $1.085 per share and Southern Company’s raise to $0.76 highlight their reliable income stream for retirees.
Age 61 Considerations
At 61, retirees face a gap before government benefits kick in, requiring a portfolio capable of sustained income.
Key Takeaways
- Focus on forward rates, not trailing yields.
- Evaluate payment histories for variability.
- Compare returns against risk-free income benchmarks.
If your retirement savings exceed $1 million, consider comprehensive strategies to ensure continued income. Access a detailed guide on retirement income strategies tailored for wealth accumulation.
