How the portfolio size is worked out
A dividend yield is the yearly dividend as a percentage of the share price. To find the portfolio that produces a given income, divide the yearly income you want by the yield.
Portfolio needed = monthly income × 12 ÷ dividend yield
At a 3.5% yield, $1,000 a month takes about $343,000 invested. A broad US stock index fund yields much less, recently around 1 to 1.5%, so the same income would take $800,000 or more, while higher-yield dividend funds sit around 3 to 4%. Starting with $20,000 and adding $750 a month at a 7% total return, you would reach $343,000 in about 16 and a half years.
Dividends vs selling shares
Living on dividends feels safe because you never sell shares, but a dollar of dividend is not worth more than a dollar of growth. High-yield stocks can lag the wider market, and dividends can be cut when companies struggle. Many people combine dividends with a planned withdrawal rate instead; the withdrawal rate calculator shows that approach.
Common questions
How much do I need to invest to make $1,000 a month in dividends?
About $343,000 at a 3.5% yield, or $400,000 at 3%.
What is a realistic dividend yield?
Broad index funds yield around 1 to 1.5%; dividend-focused funds commonly 3 to 4%.
Are dividends taxed?
Usually, unless held in a retirement account. Qualified dividends get lower tax rates in the US.
This calculator gives estimates for planning. Real returns, rates and prices change, so treat the result as a guide rather than a promise. Read how we build and check our calculators.