Top 9 stocks and ETFs

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Research has shown that dividend stocks become attractive in a rate-cutting environment as investors use these stocks for defensive and offensive portfolios. Data from Ned Davis Research says dividend stocks have historically outperformed the market following the Federal Reserve's first interest rate cut.

But earning a significant dividend income per month is a long game, and you don't have to wait for interest rate cuts to play it. It is possible to ignore the daily financial news cycle and focus on long-term investments to achieve your financial goals.

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About five days ago, a dividend investor shared his success on Reddit's r/Dividends and said he earned about $3,900 in dividend income. The investor said that aside from a dividend ETF, he doesn't “chase yield” and instead focuses on dividend growth stocks.

The screenshots of his portfolio details shared by the investor showed that his total portfolio return was around 2.16%. Based on this, community members estimated the current total value of the portfolio at about $2.2 million, and the investor said this estimate was roughly correct. However, he said his initial investment was about $1.67 million.

When asked how he managed to save $1.6 million on his initial investment, the investor said:

“Since I was in my mid-20s, I started saving as much as I could, but I prioritized owning property. I believe the first thing a young person should do is save up to buy a house. And then build from there. I only started investing. I entered the market in March 2020, so it was very lucky for me.”

The Reddit user, who said he was 55, was asked multiple times when he started investing. Here was his answer:

“Believe it or not, I was only recently 50 when the pandemic started. Before that, I only had my 401(k), which was and still is very modest for my age, and maybe 20,000 in a Betterment account. Account. Declining during the pandemic. “Over time, I learned more about investing and started investing my savings.”

The investor was generous enough to share his stock holdings. Here are some of the top stocks and funds in his portfolio.

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Schwab US Dividend Equity ETF

The Redditor, who makes $3,900 a month, said the Schwab US Dividend Equity ETF (NYSE: SCHD) is among the largest holdings in his portfolio. The ETF tracks the Dow Jones US Dividend 100 Index and gives you access to some of the top dividend stocks trading in the US, including Home Depot, Coca-Cola, Verizon, Lockheed Martin, Pepsi and AbbVie, and many others. Since SCHD's holdings are predominantly conservative dividend payers, it is suitable for investors who are nearing retirement and are looking for consistent dividend income.

Vanguard Dividend Appreciation Index Fund ETF

The Vanguard Dividend Appreciation Index Fund (VIG) is ideal for anyone who wants to invest in companies that continually increase their dividends. The fund tracks the S&P US Dividend Growers Index. The fund's portfolio consists of around 337 stocks, most of which are large capitalization companies. Apple, Microsoft, Broadcom, UnitedHealth, ExxonMobil and Procter & Gamble are among the ETF's top holdings.

JPMorgan Nasdaq Equity Premium Income ETF

The Redditor, who earns about $3,900 in monthly dividend income, said he doesn't “chase yield” except when it comes to JEPQ, which is among the largest holdings in his portfolio and yields about 9.2% brings. The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) is a covered call ETF that pays monthly dividend income. The ETF invests in Nasdaq companies and generates additional income by selling call options.

Real estate income

Realty Income Corp (NYSE:O) pays a monthly dividend and has a dividend yield of over 5%. The stock is up about 7% so far this year, with further upside expected amid a softening rate-cutting environment that would help major U.S. retailers, the REIT's biggest tenants.

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) is one of the Redditor's largest holdings, generating about $3,900 per month in dividends. The healthcare products company has increased its dividend for over six decades. However, Johnson & Johnson is embroiled in lawsuits and analysts are awaiting further clarity on these legal headwinds.

3M

Industrial conglomerate 3M Co (NYSE:MMM) is a strong dividend stock in the Redditor's portfolio, generating a monthly profit of about $3,900. The company has increased its dividend for 64 consecutive years. 3M Co (NYSE:MMM) is up 64% this year.

Duke Energy

Duke Energy Corp (NYSE:DUK) has a dividend yield of about 3.6% and has been paying regular dividends for 98 years. Earlier this month, Jefferies discussed its top utility stock picks amid the energy transition and data center demand. Duke was one of the stocks the company is bullish on.

Coca Cola

Coca-Cola Co (NYSE:KO) is among the Redditor's largest holdings, generating about $3,900 in dividends each month. With 62 years of consecutive dividend increases and a strong business, KO has become a natural dividend stock choice for investors looking for long-term stable income. Billionaire Warren Buffett is the company's largest shareholder with a whopping $25 billion stake.

Cisco systems

Cisco Systems Inc (NASDAQ:CSCO) yields over 3% and has increased its distributions annually since 2011. Cisco CFO Scott Herren said at a recent conference that the company expects to receive approximately $1 billion in AI product orders in fiscal 2025, representing 30% growth in hyperscalers the company saw in the second half of 2024 alone .

Are you looking for higher yield opportunities in a changing market?

The changing interest rate environment has created an incredible opportunity for income investors to earn huge returns, but not through dividend stocks… Certain private market real estate investments offer retail investors the opportunity to capitalize on these high-yield opportunities, and Benzinga has identified some of the most attractive options that you should consider.

For example this Advancement Income Fund from EquityMultiple seeks stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, Ascent Income Fund is a core investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum amount of just $5,000. Benzinga Readers: Earn a 1% boost on your first EquityMultiple investment when you sign up here (accredited investors only).

Don't miss this opportunity to benefit from high-yield investments when interest rates are high. Check out Benzinga's favorite high-yield picks.

Wondering if your investments can give you a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset's free tool connects you with up to three verified financial advisors working in your region, and you can survey your matching advisors for free to decide which one is right for you.

This article “55-Year-Old Who Made $3,900 Monthly Income in Just 5 Years” Stock Portfolio: 9 Best Stocks and ETFs originally appeared on Benzinga.com