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How to Retire on 8%+ Dividends Paid Monthly
Dear Reader,
You’ve no doubt heard pundit after pundit say that you need at least a million dollars to retire well.
Heck, we’ve all heard it so often, I bet it’s the first number most people think of when someone says “retirement savings”!
Let me explain why this endlessly repeated fallacy is dead wrong. You’ll actually need a lot less than that.
I’m talking about just $600,000. And in some parts of the country you could easily do it on less: a fully paid-for retirement for just $500,000.
Got more? Great. I’ll show you how you can retire filthy rich on your current stake.
I know that sounds ridiculous in these inflationary times, but stick with me for a few moments and I’ll walk you straight through it.
The key is my “8% Monthly Payer Portfolio,” which lets you live on dividends alone—without selling a single stock to generate extra cash.
And you’ll get paid the same big dividends every month of the year – so that your income and expenses will once again be lined up!
This approach is a must if you want to quickly and safely grow your wealth and safeguard your nest egg through the next market correction, too!
This isn’t just a dividend play, either: this proven strategy also positions you to benefit from 10%+ price upside potential, in addition to your monthly dividends.
That’s the Power of Monthly Dividends We’ll talk more about that price upside shortly. First, let’s set up a smooth income stream that rolls in every month, not every quarter like the dividends you get from most blue-chip stocks.
You probably know that it’s a pain to deal with payouts that roll in quarterly when our bills roll in monthly.
But convenience is far from the only benefit you get with monthly dividends. They also give you your cash faster—so you can reinvest it faster if you don’t need income from your portfolio right away.
More on that a little further on. First I want to show you …
How Not to Build a Solid Monthly Income Stream When it comes to dividend investing, many “first-level” investors take themselves out of the game right off the hop. That’s because they head straight to the list of Dividend Aristocrats—the S&P 500 companies that have hiked their payouts for 25 years or more.
That kind of dividend growth is impressive. But here’s the problem: these folks are forgetting that companies don’t need a high dividend yield to join this club—and without a high, safe payout, you can forget about generating a liveable income stream on any reasonably sized nest egg.
Worse, you could be forced to sell stocks in retirement—maybe even into the kind of plunges we saw in March 2020 or throughout 2022—just to make ends meet.
That’s a nightmare for any retiree, and leaning too hard on the so-called Aristocrats can easily make it a reality: the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), which holds all 69 Aristocrats, still yields just 2% as I write this.
Solid Monthly Payers Are Rare Birds … You can certainly build your own monthly income portfolio, and the advantage of doing so is obvious: you can target companies that pay more than your average Aristocrat’s paltry payout.
Trouble is, only a handful of regular stocks pay in any frequency other than quarterly, so we’ll have to patch together different payout schedules to make it happen.
To do that, let’s cherry-pick a combo of well-known payers and payout schedules that line up. Here’s an “instant” 6-stock monthly dividend portfolio that fits the bill:Procter & Gamble (PG) and AbbVie (ABBV) with dividend payments in February, May, August and November.Target (TGT) and Chevron (CVX), with payments in March, June, September and December.Sysco (SYY) and Wal-Mart Stores (WMT), with payments in January, April, July and October.Here’s what $600,000 evenly split across these six stocks would net you in dividend payouts over the first six months of the calendar year, based on current yields and rates:
You can see the consistency starting to show up here, with payouts coming your way every single month, but they still vary widely—sometimes by $1,025 a month!
It’s pretty tough to manage your payments, savings and other needs on a lumpy cash flow like that.
And the bigger problem is that we’re pulling in $17,300 in yearly income on a $600,000 nest egg. That’s not nearly enough for us to reach our ultimate goal of retiring on dividends alone, without having to sell a single stock in retirement.
ORIT’s average asset life has increased from 28 to almost 30 years over the last four years through active management, which is crucial for maintaining and increasing dividend cover over the long term. This gives us further reassurance that the progressive dividend policy can be maintained in the future.
The Holy Grail of Investing for the Snowball is to own mainly Investment Trusts that pay a ‘secure’ dividend, no dividend is completely secure but some dividends are more secure than others.
A Trust that pays a dividend of 7% returns your capital in 14 years, less if it’s a progressive dividend, then you have a share in your Snowball that pays income at a cost of zero, zilch, nothing.
The dividends could either be re-invested back into the Trust or another Trust earning more dividends to be re-invested back into the Trust or another Trust.
Octopus Renewables Infrastructure (ORIT)14 May 2025
Disclaimer
Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Octopus Renewables Infrastructure (ORIT). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
ORIT shows the tangible benefits of asset diversification…
Overview
Octopus Renewables Infrastructure (ORIT) owns a c. £1bn portfolio of renewable energy generation assets. A key strength is its diversification, with operating assets located in several different countries and spread across different technologies, principally solar, onshore and offshore wind. In the Portfolio section, we look at the tangible benefits of diversification. ORIT also has equity stakes in developers, giving it access to projects at an early stage, with the potential to generate higher returns. 2024’s sale of a fully operational Swedish wind asset for an 11% IRR provides a case study for the ORIT team’s ability to move a project from pre-construction to operation and then sale, generating returns above the trust’s long-term targets.
ORIT currently yields c. 8% and since 2021 has established a track record of increasing its fully covered dividend in step with UK CPI inflation. The dividend target set by the board for the financial year ending 2025, if achieved, would mean the fourth consecutive year of dividend increases in line with inflation. ORIT has a relatively high proportion, 84%, of its energy prices fixed over two years and almost 50% of its assets have inflation linkages over ten years.
ORIT’s high dividend yield is in part a function of its c. 27% discount and in response to this the board has adopted a capital allocation policy that is focussed on reducing debt, buying back shares, and selling some strategically selected assets while maintaining the ability to make selective new investments. We look at this policy in more detail in the Discount section.
ORIT’s manager, Octopus Energy Generation (OEGEN) is one of Europe’s largest investors in renewable energy and the team managing ORIT directly, led by David Bird and Chris Gaydon, has access to over 150 professionals with experience across all aspects of investment and management, covering multiple geographic markets and technologies.
Analyst’s View
ORIT has no direct exposure to the US, where a significant policy shift away from renewables is underway, and is invested across a range of countries that maintain a very constructive approach to renewables. Indirectly, the team reports that equipment supply chains are not affected by tariffs, as generally, the US does not export equipment involved in renewables. Conversely, supply chain pressures could ease if the US imports less. Consequently, the team see the US’s position as, at worst, neutral for ORIT.
In the Dividend section, we show how ORIT’s average asset life has increased from 28 to almost 30 years over the last four years through active management, which is crucial for maintaining and increasing dividend cover over the long term. This gives us further reassurance that the progressive dividend policy can be maintained in the future.
The US is, however, weighing heavily on wider investor sentiment, not least because it clouds the picture for interest rates and inflation, and the knock-on effect for ORIT and its peer group is a continuation of the wide discount. In response, ORIT’s capital allocation policy includes an expanded £30m share buyback programme and a reduction in total debt, funded by asset disposals at or above NAV. These have demonstrated the team’s ability to move a project from pre-construction, through to operation, to generate returns above the trust’s targets. If the very wide discount continues to narrow, investors could achieve returns considerably higher than this.
Bull
Diversification provides quantifiable benefits to power output
An 8% yield backed by a covered dividend growing in line with inflation
Robust capital allocation policy enacted to address the discount
Bear
Investor sentiment toward listed renewables is weak
Capital allocation policy reduces ORIT’s ability to acquire new operational assets
The Snowball will need to build a new position to replace VSL as it winds down.
Deleted from the watch list of the higher yielding shares.
BSIF,FGEN,NESF,RECI,RGL,SEIT and VSL as they are already in the Snowball.
NCYF,HFEL,TFIF,MGCI and SDV as they currently trade at a premium to NAV.
Deleted
GSF as that ship has already sailed.
SHIP,GRP as they are quoted in U$, another layer of complexity, unless you trade from over the pond.
The final decision would be if you want to add diversification to your Snowball or buy another Trust in a sector where you think the safest yields are.
Of course a lot could change before the cash from VSL arrives, so no decision needs to be made just yet.
It’s interesting to see how the UK economy is showing signs of resilience despite the challenges it has faced in recent years. The 0.7% GDP growth in March is a positive indicator, especially when many were expecting worse. The focus on sectors like aerospace, industrials, and real estate seems strategic, given the current economic climate. I’m curious, though, how sustainable this rebound is, particularly with global uncertainties still looming. The emphasis on big-ticket retail items is intriguing—do you think this is a long-term trend or just a temporary opportunity? Also, with the FTSE 100 playing a significant role, how much of this resilience is tied to global market dynamics rather than domestic factors? Would love to hear more about the potential risks that could derail this positive momentum.
Thanks for the commentary. The Snowball is more of a market follower than a predictor of the future. The main criteria is the current dividend/yield and if future dividends will be paid and not drastically altered.
To follow the market you should read the news when the dividend is announced and any interim/final accounts.
The value for the control share VWRP is 130k. Using the 4% rule a pension of £5,200.
If you compound both figures by 7% the Snowball would provide a ‘pension’ of 20% on seed capital and VWRP 10.4%. Gambler or Investor ? The choice is yours my friend.
This 9.7% Dividend Trounced Stocks in a Wild April. It’s Just Getting Started
by Michael Foster, Investment Strategist
About a month ago, Mike Bird, the Wall Street editor for The Economist, tweeted (or “X-ed,” I guess I should say) the following: “You have to concede that there would be a form of stupid, ridiculous beauty in the S&P 500 closing completely flat for April.”
And, well, after all the drama we saw in April, that’s pretty much where we landed.
A Wild – But in the End, Sideways – April for Stocks
I once met Mike for coffee, and he’s a friendly, intelligent person, so it’s easy for me to agree with him here: Yes, the market behaved stupidly in April, starting with the tariff selloff and ending with the first hints of a deal with China (with various back-and-forth moves on tariffs in between). But there’s a lot we can learn from that wild month.
Let’s look at three things that stand out, especially for those of us who aim to invest for high income and a “dividend-driven” retirement.
April Takeaway No. 1: Diversification Works
While stocks have struggled to get into the green this year (and mightily in April!), corporate bonds are up: The benchmark for corporates, the SPDR Bloomberg High-Yield Bond ETF (JNK), has returned a little more than 2% year to date as I write this.
We, of course, prefer to buy bonds through closed-end funds (CEFs), for two reasons:
Active management: CEFs – especially those with well-connected managers – have a big advantage over ETFs. The bond world is small, and it pays to “know people who know people” to get in on the best new issues.
Bigger dividends: The bond-fund bucket of the CEF Insider portfolio has funds yielding up to 13.7% as I write this, and …
Discounts to net asset value (NAV, or the value of the fund’s underlying portfolio), which give us additional upside as they shrink. That’s in addition to gains in the value of the portfolio.
A good example is the PGIM Global High Yield Fund (GHY), which we added to the CEF Insider portfolio in late January. It’s outperformed the S&P 500 since, as of this writing.
GHY Clobbers the S&P 500
Why is GHY beating stocks? The CEF invests in corporate bonds, whose big yields have held up, thanks to the Fed keeping rates higher. That’s letting GHY sustain its 9.7% dividend and attract more investors, especially since defaults have remained low among US and global companies.
It’s a good example of how we can blunt the effect a stock-market crash on our portfolios by investing elsewhere. And of course (and maybe more important!) we diversify our income stream, too. Let’s talk about that next.
April Takeaway No. 2: Dividends Keep Us From “Forced Losses”
GHY, as mentioned, yields 9.7%, or about $80.83 per month per $10,000 invested. That’s a lot more than the $10.25 per month you’d get from an S&P 500 index fund.
The typical index fund’s tiny income stream means that if an investor needed to sell stocks to fund their needs in April, they faced a much higher risk of being forced to do so at a loss. That’s not the case with GHY, with its 9.7% payout. Hence the month was an opportunity for GHY buyers, especially those who bought more when GHY sold off at the start of April.
April Takeaway No. 3: Irrational Investors Give Us an Opportunity
The market also, of course, gets it wrong and overshoots to the downside all the time. That mispricing is something we can pounce on.
Yet again, GHY is an example here. When we added it to the CEF Insider portfolio in January, it was trading at a 3.25% discount to NAV. Now it is trading around par and has moved solidly into premium territory a number of times since our buy.
GHY’s Discount Narrows
As more investors diversify away from stocks and find streams of income to tide them over amidst uncertainty, I expect GHY to see a healthy premium yet again.
These 11.6% (Monthly) Dividends Can Save You From Another “April Surprise”
April’s chaos showed the power of high-yield CEFs like GHY. While the S&P whipsawed, holders of top-notch CEFs didn’t worry. No matter how things panned out, they knew they’d get 7%, 8% 10% and more in cash dividends – every single year.
The best part is, many CEFs – GHY among them – pay dividends monthly. That means you not only get “recession-resistant” income, but your payouts drop into your account right in line with your bills !
Whether I have £500 or £50,000, it’s not about the amount but how wisely I allocate it. The key to success is starting early and staying consistent.
Pound-cost averaging
When I started investing, I found pound-cost averaging to be the most effective method for me. I invest a small amount of disposable income from each paycheque into top companies every month, regardless of their current valuation.
As long as these businesses have solid long-term prospects, I keep buying over the years. It’s a simple and reliable approach to building wealth.
One key principle I stick to is diversification. I spread my investments across different businesses to avoid having all my money tied up in just one, reducing the risk of any single company’s downturn.
Getting started
It couldn’t be easier to begin. First of all, I need a Stocks and Shares ISA or a share-dealing account. The provider I’m most fond of is Interactive Investor
Staying the course
I’ve found that one of the best ways to generate strong portfolio profits is by being part of a solid community of investors. That’s one of the main reasons why I appreciate The Motley Fool UK.
More than anything, investing is a lifelong skill. It takes time, patience, and perseverance to build wealth. Developing a successful portfolio is far from a get-rich-quick scheme, and that’s exactly why it works.
As I mentioned, if I invest £200 per month from scratch, I could grow a portfolio worth £1.3m in 40 years, assuming a 10% annual return. Wealth isn’t about luck, it’s about knowledge, preparation, and time spent in the market.
BRLA leaves the Watch List as the Trust is no longer a candidate for the Snowball. As the price rose the yield fell below 6%
* VPC are returning capital so the future yield is the unknown
Remember although a capital gain is always welcome the only consideration for inclusion in the Snowball is the yield, either the buying yield or the current yield.
