Are qualified dividend paying stocks a reliable source of passive income for retirement?

After exhausting all forms of saving for retirement, would adding stocks that pay qualified dividends be a better and less expensive way to earn passive income than paying expense ratios and other fees? The tax rate for some might be lower than drawing from retirement accounts.

Retirement Savings, Stocks
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April 2017

Yes...Yes...and Yes!!!

Not only are taxes lower on dividends then an IRA withdraw, but think of it this way; if you take regular distributions from a mutual fund within your IRA, what happens if the market declines? You would be liquidating shares of your mutual funds to meet your distribution requirements. This depreciation accelerates the lower and longer the market declines. When the market does recover, your account will be worth less than what you started with because you have fewer shares.

On the other hand, if you have a portfolio of solid dividend stocks, you can live off your dividends and not sell any shares of stock even during a market downturn. When the market recovers, your portfolio should too.

Even though you lose the tax advantage, I recommend using dividend stocks in your IRA as well and match your distributions to the portfolio's dividend yield.

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