UTG - Want $5000 In Dividends Each Year? Invest $60000 In These 3 Picks

2023-11-10 07:35:00 ET

Summary

• Earning a passive income from the market is easily achievable by using income investing.
• You can earn an extra $5000 every year simply by buying and holding three high-quality picks.
• Your retirement needs to be funded by an outstanding income source. So why not generate your own?

Co-authored by Treading Softly.

When I was working at banking, when I would ask if there was anything else I could do for them, a frequent response would be if I could give them the winning lottery numbers. Another popular option would be if I had any extra money that I could simply put into their account. I get it. I mean, most of us would love an extra infusion of money, either one time or on a consistent basis, especially if we didn't have to do any additional work or output any additional energy to have it.

The idea, or the concept of just getting free money, sounds too good to be true for most people. And yet, many people don't realize that, when it comes to the stock market, there are plenty of opportunities to receive regular cash infusions into your account from the market. If you have to do nothing more than simply hold specific securities or companies, the style of investing that focuses on these types of holdings is frequently called dividend investing. A subcategory of that is income investing - those are investors who specifically approach the market looking for the market to provide them with a steady, livable income that they can enjoy month after month, quarter after quarter.

I have made it part of my life's mission to educate and inform as many individuals as possible about what I call my unique Income Method. It's a philosophy that allows us to approach the market in such a way as to earn a high, livable income without having to do anything other than simply invest in companies. I don't like to play the games with options. I don't try to time the market and swing a trade. I like things to be as simple and sustainable as possible. Thus, my Income Method is one that is very straightforward.

Today, I want to take forth the simple idea: what if you had $60,000 to invest and you were looking to get just over $5000 annually from that money? How could you unlock that type of free money from the market? This is the kind of passive income that so many people dream about effort up front, and then nothing more is needed from you thereafter.

Let's dive in!

What can $5000 do? A lot

What is $5,000 to most of us? When we look at the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) data, which is released annually, we can see how great of an impact $5,000 would be for most 65 and older individuals.

According to their data, the average annual income for those 65 and older is just over $75,000, while the median is $47,620. This means that while, on average, $5,000 is only 6% of their annual income, for over half of the polled individuals, $5,000 is over 10% ! This means an additional $5,000 annually is a 10% income boost.

That's a major increase for those living on a fixed income.

This is an additional $5000 that can be used to reduce debt, buy groceries, allow them to travel or see the world. Or even be reinvested and allow that money to grow even further. The beautiful thing about receiving income passively from the market is that you don't have to do anything extra for it. While you're still enjoying your retirement, this money is hard at work being earned and provided to your account.

So, what three picks could you buy and receive over $5000 annually from? The first two are high-quality, closed-end funds. A closed-end fund, or CEF, is simply a fund that is managed by a portfolio management company and invests in various sectors or equities within the market. Investing in a fund or buying the shares of a fund allows you to leverage the experience of a portfolio manager and unlock large sums of income from the market through their experience and expertise, allowing you to do anything else that you enjoy.

The first two things or picks that I would buy would be Reaves Utility Income Trust (UTG) and Cohen&Steers Infrastructure Fund (UTF), which both yield over 9% and pay their dividends monthly - meaning you can enjoy monthly income from both of these holdings. These two funds invest in vital U.S. infrastructure or utilities, providing the very basic functions our society needs to operate. As long as people are using their cell phones, turning on their internet, or flipping a switch to turn on their lights, the companies that these funds own will continue to be paid strong income, which in turn will be provided to you through dividends.

The third pick would be Antero Midstream Corporation (AM), which yields over 7%. AM invests in and operates natural gas pipelines. While so many in the market are concerned about going green or trying to reduce their carbon footprint, many of these companies are relying on a combination of renewable energy as well as natural gas to make that happen. Natural gas is considered the "clean energy" when compared to other fossil fuels. Natural gas demand continues to climb swiftly. While it does go through a seasonal cycle where winter sees higher demand than the rest of the year, it's also in a state of secular demand increase, where, year-over-year, demand continues to rise as more utilities switch their coal-fired power plants to natural gas and natural gas demand is seeing sharp rises overseas and exports from the United States of natural gas are expected to continue to rise.

Conclusion

$20,000 invested in each of these three stocks would generate an average yield of over 8.4% and over $5,000 annually. How does an extra $5000 annually sound to you? Would it make much of a difference, or would it go unnoticed?

For most of us, we would greatly enjoy an extra $5000 annually available for us to be able to spend. Assuming that you have 40 years of retirement, $5000 would easily be $200,000 of extra spending money.

When it comes to retirement, I don't want you to be someone who is suffering from a lack of income or an income stream that is unreliable and undependable. Instead, I want to be someone who has an abundance of income to be able to do what they love. Applying my unique Income Method to your retirement is extremely simple. As we see today, even a small amount of money in three individual holdings can produce a great income stream for you to enjoy for years to come. Now, I don't recommend anybody to invest in only three individual picks or companies. My personal portfolio has over 90 various holdings, as well as the Model Portfolio that is provided to High Dividend Opportunities members.

We recommend that everyone invests in at least 42 individual holdings within their own personal portfolios at a bare minimum - our Rule of 42 . This way, you have tons of income coming in from various sources, powering your retirement to new levels.

That's the beauty of my Income Method. That's the beauty of income investing.

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