Right here’s my 2026 2nd Quarter revenue replace as a companion put up to my 2026 1st Quarter asset allocation & efficiency replace. Despite the fact that I don’t deal with high-dividend shares or covered-call methods, I nonetheless monitor the revenue from my portfolio as a substitute metric to cost efficiency. The full revenue goes up far more steadily and constantly than the quantity proven on brokerage statements, which helps encourage constant investing. Right here’s a quote from Jack Bogle (supply):
The true investor will do higher if he forgets concerning the inventory market and pays consideration to his dividend returns and to the working outcomes of his corporations. – Jack Bogle
Inventory dividends are a portion of earnings that companies have determined to distribute on to shareholders, versus reinvesting into their enterprise, paying again debt, or shopping for again shares. They’ve explicitly determined that they don’t want this cash to enhance their enterprise, and that it will be higher to distribute it to shareholders. The dividends could endure some short-term drops, however over the long term they’ve grown quicker than inflation.
Right here is the historic progress of the S&P 500 complete dividend, which tracks roughly the most important 500 shares within the US, up to date as of 2026 Q1 (by way of Yardeni Analysis):
Admittedly, share buybacks have grown as a preferred option to take care of further money, as proven in these charts (Yardeni). Many corporations like that buybacks should not anticipated to proceed eternally, not like dividends. This helps clarify why the dividend yield on the S&P 500 is just round 1% now. That is why I additionally monitor the totals of each (buybacks + dividends), additionally proven beneath.
Monitoring the revenue from my portfolio. Three of the first “timber” that produce “fruit” in my portfolio are Vanguard Complete US Inventory ETF (VTI), Vanguard Complete Worldwide Inventory ETF (VXUS), and Vanguard Actual Property Index ETF (VNQ).
Within the US, the dividend tradition is considerably conservative in that shareholders anticipate dividends to be secure and solely go up. Thus the beginning yield is decrease, however grows extra steadily with smaller cuts throughout onerous instances. Firms do buybacks as effectively, actually because they’re simpler to discontinue. Right here is an up to date chart of the trailing 12-month (ttm) dividend per share during the last 15 years paid by the Vanguard Complete US Inventory ETF (VTI) by way of WallStNumbers.com.
European company tradition tends to encourage paying out the next (typically even fastened) share of earnings as dividends, however that additionally means the dividends transfer up and down with earnings. The beginning yield is presently larger however could not develop as reliably. Right here is an up to date chart of the trailing 12-month (ttm) dividend per share during the last 15 years paid by the Vanguard Complete Worldwide Inventory ETF (VXUS).
Within the case of Actual Property Funding Trusts (REITs), they’re legally required to distribute at the least 90 p.c of their taxable revenue to shareholders as dividends. Traditionally, about half of the overall return from REITs is from this dividend revenue. Right here is an up to date chart of the trailing 12-month (ttm) dividend per share during the last 15 years paid by the Vanguard Actual Property Index ETF (VNQ).
The dividend yield (dividends divided by worth) additionally function a tough valuation metric. When inventory costs drop, this share metric often goes up – which makes me really feel higher in a bear market. When inventory costs go up, this share metric often goes down, which retains me from getting too euphoric throughout a bull market.
Lastly, the final revenue element of my portfolio comes from curiosity from bonds and money. Vanguard Quick-Time period Treasury ETF (VGSH) and Schwab US TIPS ETF (SCHP) are instance holdings, with the precise quantity various with the prevailing rates of interest, the actual charges on TIPS, and the present charge of inflation.
Dividend and curiosity revenue yield. To estimate the revenue from my portfolio, I exploit the weighted “TTM” or “12-Month Yield” from Morningstar (checked 7/7/26), which is the sum of the trailing 12 months of curiosity and dividend funds divided by the final month’s ending share worth (NAV) plus any capital good points distributed (often zero for index funds) over the identical interval. My TTM portfolio yield is now roughly 2.44%.
In dividend investing circles, there’s a metric referred to as yield on price, which is calculated by dividing the present dividend by the unique buy worth. In different phrases, whereas my portfolio yield at present is could also be decrease than say a goal withdrawal charge of three%, that’s as a result of the present market worth can be loads larger. Resulting from rising dividends on common over time, my yield-on-cost based mostly on my portfolio worth from 10 years in the past is over 5%.
What concerning the 4% rule? For giant-picture functions, I help the easy 4% or 3% rule of thumb, which equates to a goal of accumulating roughly 25 to 33 instances your annual bills. I’d lean in direction of a 3% withdrawal charge if you wish to retire younger (nearer to age 50) and a 4% withdrawal charge if retiring at a extra conventional age (nearer to 65). It’s only a fast and soiled goal to get you began, not a quantity despatched down from the heavens!
In the course of the accumulation stage, your time is best spent specializing in incomes potential by way of higher profession strikes, bettering your skillset, networking, and/or searching for asymmetrical (limitless upside, restricted draw back) entrepreneurial alternatives the place you have got an possession curiosity.
Our dividends and curiosity revenue should not routinely reinvested. They’re merely one other “paycheck”. As with our different variable paychecks, we will select to both spend it or make investments it once more to compound issues extra shortly. You would use this cash to chop again working hours, pursue a distinct profession path, begin a brand new enterprise, take a sabbatical, carry out charity or volunteer work, and so forth. You don’t have to attend till you hit a magic quantity. Our life path has been very completely different due to this philosophy. FIRE is Life!