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Dividend Growth Portfolio Completed

|About: Vanguard High Dividend Yield ETF (VYM), VYMI
Summary

Div growth portfolio is 50/50 VYM and VYMI etfs.

Next goal is to either save up cash or build up an income portfolio.

Theoretically I could be retired in a year by age 44.

I have flip flopped on my strategy for a while between pursuing dividend growth or an income portfolio. I decided a few months ago it was better to put my money into dividend growth, as it benefits the most from compound growth over time. Building a dividend growth portfolio is painful. You literally feel like Sisyphus, pushing a giant boulder up a hill, and not making any progress.

At any rate, I finally have my dividend growth portfolio complete, and now all I will need to do is ongoing maintenance (re-balancing from time to time), but otherwise I am done with it. I have $440k invested 50/50 into Vanguard's High Dividend Yield Indexes, both US and Foreign. The tickers are (VYM) and (VYMI). With this amount of investment, I should receive around $15k-$16k in dividends this year and I expect that amount to grow around 6%-8% every year. Current yield is around 3.5%.

IMHO, a dividend growth strategy is the most conservative investment strategy. Its is the gold standard in terms of safety and building a portfolio that can last "forever" if one simply spends dividends and none of their capital.  The other benefit of a dividend growth strategy is that you virtually guarantee that you will see income growth, outpacing inflation, almost every year. The downside is it is also the most difficult strategy to pull off. Even harder than the total return strategy which uses a 4% withdrawal rate.

I am choosing to stop now at $15k-$16k because this amount is almost at the base amount of what I consider is needed to retire early, which is $18k per year, $1,500 a month. IMHO, this is base amount of money someone needs to retire overseas as a perpetual expat. My div growth portfolio should hit $18k in the next 1-3 years, which is close enough for me to consider that part of my portfolio a done deal.

Now, I have a choice to make. I can either focus on saving up cash or I can focus on building up an income focused portfolio. I only need about $2k per month, $24k per year, to retire in the US, at least initially. So, I can achieve this either way. For one I could simply save up enough cash to hold me over until dividend growth pushes my portfolio to $24k per year. I think around $50k should do it. Or, I could instead focus on building up an income portfolio that generates around $8k per year. My guess is I would need around $100k for that.

In the long run I will want more money than $2k per month, but I don't see this as an issue since my div growth will accelerate over time. Also at age 60 I'll be able to tap into my pension (18+ years and counting vested, and current estimated value of $500k+) and the extra $100k I have in my 401k/Roth IRA currently.

I think I can save up the $50k in cash in one year if I decide I want to retire asap. I'm 43, and my rough plan going back 10+ years ago was to early retire around 45. So, I am right on target.

Disclosure: I am/we are long VYM,VYMI.