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Millions of young Americans dream of retiring early, but it’s getting harder to exit the workforce by the day. A survey by the TIAA Institute showed that about 21% of Americans between 22 and 34 believe retirement is out of their reach, mainly due to a lack of opportunities and rising costs of living. However, dividend investing is enabling many to discover paths to early retirement.
In July last year, someone asked r/Dividends, a Reddit community of over 660,000 members, whether anyone on the forum was actually living entirely off dividends. The post received over 200 comments, with many success stories and income reports.
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An investor said he was making about $20,000 per month on a portfolio worth about $450,000, mainly due to YieldMax ETFs. YieldMax funds usually generate monthly income by selling call options on stocks.
“I know most in this group likes 5-7% returns in established stocks but new investment vehicles are created and I decided to ride this one,” the investor added.
In a separate comment, the investor said he could retire because of these high-yield dividend funds and urged investors to start early.
“If more young people started early regardless of amount and contributed what they could their financial worries would be over.”
Based on the details he shared publicly on the social media platform, let’s take a look at some of the investor’s top holdings.
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YieldMax COIN Option Income Strategy ETF
YieldMax COIN Option Income Strategy ETF (CONY) was among the biggest positions of the investor. However, he said he sold some of his CONY stake for “tax loss harvesting.” He planned to buy more CONY shares once the “wash period” is over, referring to the wash-sale rule prohibiting repurchasing the same stocks within 30 days of selling them.
CONY is a risky investment since its upside potential is capped due to the covered call strategy. Its performance is linked to a single company operating in the volatile crypto industry. The fund has a distribution rate of 79% and pays monthly. CONY is down 30% over the past year.
The YieldMax MSTR Option Income Strategy ETF
The YieldMax MSTR Option Income Strategy ETF (NYSE:MSTY) generates income by selling call options on MicroStrategy (MSTR) stock. Its distribution rate is about 99%.
YieldMax NVDA Option Income Strategy ETF
YieldMax NVDA Option Income Strategy ETF (NVDY) makes money by selling call options on Nvidia. Recently, the ETF has gained popularity amid the buzz around Nvidia. The fund has a distribution rate of about 52%. NVDY suits investors who believe in Nvidia’s long-term potential but want to hedge against possible declines in the chipmaker’s shares.
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REX AI Equity Premium Income ETF
The REX AI Equity Premium Income ETF targets capital appreciation and generates income by selling call options on AI stocks. The fund’s biggest holdings include Nvidia, CrowdStrike, Palantir, ARM, Micron and Arista Networks. It has a distribution rate of 34%.
YieldMax MARA Option Income Strategy ETF
The YieldMax MARA Option Income Strategy ETF (MARO) generates monthly income by selling call options on crypto mining company MARA Holdings Inc (MARA). The fund has a distribution rate of about 80%. Its value has been down 15% over the past 12 months.
Roundhill Small Cap 0DTE Covered Call Strategy ETF
The Roundhill Small Cap 0DTE Covered Call Strategy ETF (RDTE) generates income by holding small-cap stocks and selling call options with zero expiration days. Its distribution rate is 34%.
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Roundhill Innov-100 0DTE Covered Call ETF
The Roundhill Innov-100 0DTE Covered Call ETF (QDTE) generates income via a zero-day-to-expiration (0DTE) options strategy on the Roundhill Innovate Index. This strategy involves selling call options that expire the same day. The fund has a distribution rate of 104% and pays weekly.
Rex Fang & Innovation Equity Premium Income ETF
The Rex Fang & Innovation Equity Premium Income ETF (FEPI) exposes investors to technology and innovation stocks. The fund seeks capital appreciation and income generation by selling call options. The covered call strategy protects investors from downside risks associated with tech stocks. Some of the fund’s biggest holdings include Micron, Tesla, AMD, Intel, Apple, Salesforce and Nvidia, among many others.
FEPI has a distribution rate of about 25%.
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This article Dividend Investor Earning $20,000 a Month Reveals Top 8 Stocks – Says Your ‘Financial Worries Would Be Over’ If You Start Investing Early originally appeared on Benzinga.com