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Maximizing Your Retirement: Three Wise Choices for $500 Monthly Income

Good Morning, Income Investors!


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During your adult life, most people pursue careers, earning money in exchange for their time and skills. Every dollar earned is probably from the time you spent on the job. The more you work, the more you can save for an emergency, and for your future. 


But those earnings which are essentially compensation for your time and efforts, don’t continue to pour in the same way in retirement. Unless you have a solid pension plan, you need income to sustain your lifestyle without working for it. Financial health always comes in the way of a well-deserved retirement. In a recent survey conducted by the Employee Benefit Research Institute, 7 out of 10 Americans feel confident that they have enough money to live comfortably throughout retirement, but only 32% of the retirees in that category feel confident about their retirement. 


Every dollar that comes in passively through dividends is a step closer to a sustainable retirement. The cash inflow is repeatable and will continue in your sickness and health. 

So what is the value of an extra $500/month to a retiree?


  1. Supplemental Income: An extra $500 goes a long way into covering day-to-day expenses, including groceries, utilities, and transportation costs.

  2. Wellness: An extra $500/month allows you to enroll in wellness activities like Yoga and meditation or indulge in rejuvenating spa treatments.

  3. Quality of life: An extra $500 a month can allow you to afford upgrades or enhancements to your lifestyle. Whether it's improving your living space, investing in hobbies, or enjoying experiences with loved ones, it can bring joy and enrich your overall quality of life.

  4. Legacy Planning: Allocating an extra $500 per month allows retirees to give back to their children, grandchildren, or causes they believe in, fostering a legacy of financial support and philanthropy. It allows you to leave a lasting impact beyond your lifetime. 


Let us now look at three picks where a $75,000 investment would produce over $500 in monthly dividend income


Pick 1: CCD - Yield 10.2%


When interest rates are high, convertibles allow companies to borrow without incurring high-interest expenses. And when the economy faces a recession and stock valuations are poor, convertibles allow companies to raise capital without immediate dilution. As such, these financial instruments are an excellent fit for the current economic climate.


Amidst elevated interest rates, global convertible debt issuance is soaring. Over $57 billion of these securities were issued in the United States alone in 2023. LSEG estimates between $100-110 billion of global convertible issuances in 2024, creating a tremendous opportunity to invest in this inaccessible asset class through diversified funds.


Calamos Dynamic Convertible and Income Fund (CCD) is highly diversified across 602 holdings, with convertible debt representing the bulk of the portfolio. Securities issued by Information Technology, Healthcare, and Consumer Discretionary companies represent the biggest proportion of the fund’s assets.


CCD pays $0.195/month, calculating to a 10.4% annualized yield. Dealmaking in corporate America is strong, and CCD pays you to tap into this opportunity 


Pick 2: O - Yield 5.6%


Realty Income (O) trademarked the name "The Monthly Dividend Company", and continues to live to that title. The REIT has now paid out 646 consecutive monthly dividends with 106 consecutive quarterly increases. 


O maintains the strongest balance sheet among REITs and is using this strength as a competitive advantage. While REITs across the board are playing defense to ride out this rate cycle, O is going on the offense to acquire and expand its asset base. The company plans to make $2 billion in real estate acquisitions in 2024 and management hopes to exceed that guidance. Having an A- rated balance sheet, O is one of the few REITs that can, in the current environment, buy real estate assets at a ~8% cap rate while borrowing at 5%.


The company expects an average annual dividend growth rate of 4% or better, and its 5.6% yield at current discounted valuations makes it an excellent bargain for long-term investors.


Pick 3: RQI - Yield 8.6%


REIT valuations are beaten down in the higher interest rate environment, but potential rate cuts make these income-oriented equity classes a good investment.


Cohen & Steers Quality Income Realty Fund (RQI) is a CEF (Closed-End Fund) with deep diversification into public REITs with its top positions being the leader in each REIT sub-category. RQI employs modest leverage in its investing strategy, an approach that tends to do well in favorable market conditions. With 81% fixed rate financing and a 2.4-year weighted average duration, RQI is well-positioned to ride out this rate cycle and refinance at better costs. 


When the Fed cuts rates, RQI is poised to deliver excellent total returns, not only from valuation improvements of its underlying holdings but also through reduced borrowing costs. The CEF distributes $0.08/share monthly and has an 8.6% annualized yield.


Conclusion


At the end of the day, an extra $500 a month represents far more than just a numerical increase in income. For some, it may be just extra cash to enjoy, but for others, it can give them that peace of mind in their golden years. 


At High Dividend Opportunities, we aim to have your savings and investments work very hard to deliver the retirement you deserve. Our comprehensively designed portfolio comprises over 45 securities, targeting a +9% overall yield to keep paying through good and bad market conditions. This is the beauty of our Income Method.


 

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Stop wondering if you will have the income you need in retirement; start growing your income stream now. We are the largest community of income investors and retirees, with over 8,000 members. Our "Model Portfolio" targets a +8% yield, with the highest and safest dividend stocks, preferred stocks, and bonds. This service is ranked #1 in dividends, income, and retirement. If you are looking for high, sustainable income, you have come to the right place!




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