Buy These 5 ETFs To Replace Your Paycheck

This video explains how to replace job income with passive dividend income from the stock market, focusing on ETFs. It debunks the idea of simply buying stocks and hoping their price increases, highlighting three problems: the risk of no price appreciation, the need to sell to realize profits, and the uncertainty of when profits might occur. Dividends, conversely, are cash payments from company profits distributed to shareholders. The speaker contrasts traditional stock investing with dividend investing. Buying a stock for price appreciation means you only profit if you sell, and you lose ownership. Dividend investing provides cash flow simply for owning the stock, regardless of price fluctuations, and payments are typically made quarterly. However, chasing the highest dividend-paying stocks can be a trap, as these companies may be financially unstable, leading to dividend cuts and stock value loss. The key is to invest in strong companies that pay dividends, not just companies with high dividends. ETFs are presented as a less risky alternative to individual stocks for dividend investing. While individual stocks like McDonald's carry concentrated risk, an ETF holds a basket of stocks, diversifying risk. If one company falters, others can compensate. ETFs offer less upside potential than a single successful stock but provide more stable cash flow and less volatility. The focus is on ETFs with a history of strong dividend growth, aiming for increasing income year after year. Investors are cautioned that investing always involves risk, and past performance does not guarantee future results. The video illustrates the power of dividend investing with a hypothetical scenario: investing $1,000 per month for 30 years. A savings account yields $360,000 with no passive income. Investing for growth at an 8% annual return results in $1.5 million, but requires selling investments for income. However, investing in a portfolio with the same 8% growth and a 4% dividend yield results in $1.5 million in value *and* $5,000 per month in passive dividend income. The most impactful scenario involves a Dividend Reinvestment Plan (DRIP). With DRIP, all dividends are reinvested, compounding growth. Over 30 years, this strategy leads to a portfolio worth over $3.1 million, generating approximately $11,700 per month in passive dividend income. The video then categorizes five types of dividend ETFs: Category 1: Core U.S. Dividend Growth ETFs. These focus on stable, growing U.S. companies with a history of increasing dividends. * **SCHD (Schwab U.S. Dividend Equity ETF):** Personally invested in by the speaker. Focuses on U.S. companies growing profits and dividends. Currently yields ~3.4%, with a 10-year dividend growth rate of ~10.6%. * **DGRO (iShares Core Dividend Growth ETF):** Focuses on companies with at least 5 years of dividend growth. Yields ~2.4%, with a 10-year dividend growth rate of ~8.6%. * **VIG (Vanguard Dividend Appreciation ETF):** Invests in companies that have increased dividends for at least 10 consecutive years. Lower yield (~1.5%) but a 10-year dividend growth rate of ~7.7%. Emphasizes less risk and higher quality. * **VYM (Vanguard High Dividend Yield ETF):** Focuses on higher-yielding U.S. companies. Yields ~2.3%, with a dividend growth rate of ~6.5% per year. Category 2: International Dividend ETFs. These offer diversification and potentially higher returns with increased risk. * **VYMI (Vanguard International High Dividend Yield ETF):** Personally invested in. Focuses on high-dividend-paying international companies. Yields ~3.5%, with an average dividend growth of ~8% over its operating history. * **SCHY (Schwab International Dividend Equity ETF):** Focuses on international high-dividend-paying companies that are growing dividends. Newer ETF with limited historical data. Yields ~2.3% with an average dividend growth of ~8.28%. Category 3: U.S. Dividend Aristocrat ETFs. These focus on companies with a long track record of dividend increases, signifying stability. A dividend aristocrat has increased dividends for at least 25 consecutive years. * **NOBL (ProShares S&P 500 Dividend Aristocrats ETF):** Invests in S&P 500 companies that are dividend aristocrats. Yields ~2.3%, with a 10-year average dividend increase of ~8.5%. * **DGRW (WisdomTree Dividend Appreciation Fund):** Focuses on U.S. quality dividend growth companies. Lower yield (~1.3%) but a high dividend growth rate of ~13% per year over the last decade. Category 4: Midcap Dividend Growth ETFs. These invest in companies valued between $2 billion and $10 billion, offering a balance of growth potential and established business. * **REGL (Regal Funds ETF):** Focuses on midcap dividend aristocrats (over 15 years of dividend increases). Yields ~2.4%, with a 10-year average dividend growth of ~11.6%. * **PEY (Invesco High Dividend Achievers ETF):** Focuses on companies increasing stock price and dividends. Yields ~4%, with an 8.1% dividend growth rate over the last 10 years. * **DON (WisdomTree U.S. MidCap Dividend Fund):** Broader exposure to midcap companies. Yields ~3%, with an average annual dividend growth rate of ~5.9% for the last decade. Category 5: Covered Call ETFs. These are the highest risk category, focused on generating income through options strategies. They offer higher current income but less compounding growth. * **JPI (JPMorgan Equity Premium Income ETF):** Holds S&P 500 companies and generates income by selling options. Generated ~8.2% income over the last 12 months. * **JPQ (JPMorgan Nasdaq Premium Income ETF):** Similar strategy but focused on Nasdaq stocks. Paid out ~10.5% income over the last 12 months. The speaker emphasizes continuous education and consistent investing ("Always Be Buying" - ABB). Market downturns are presented as opportunities to buy more at lower prices, accelerating dividend income growth. The video concludes by reiterating the importance of consistent investment, dividend reinvestment, and focusing on dividend growth, not just current yield, for long-term income replacement. The speaker also mentions a free investing masterclass and newsletter for further education. The video briefly touches upon an executive order creating a "Trump IRA" as a new retirement option, distinct from 401(k)s, potentially for those without employer-sponsored plans like Uber drivers.