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Investing in income stocks for dividends - worth it?
is it worth it? You state the average yield on a stock as 2-3%, but seem to have come up with this by looking at the yield of an S&P500 index.  Not every stock in that index is paying a dividend and many of them that are paying have such a low yield that a dividend investor would not even consider them.  Unless you plan to buy the index itself, you are distorting the possible income by averaging in all these "duds". You are also assuming your income is directly proportional to the amount of yield you could buy right now.  But that's a false measure because you are talking about building up your investment by contributing $2k-$3k/month.  No matter what asset you choose to invest in, it's going to take some time to build up to asset(s) producing $20k/year income at that rate.  Investments today will have time in market to grow in multiple ways. Given you have some time, immediate yield is not what you should be measuring dividends, or other investments, on in my opinion.  Income investors usually focus on YOC (Yield On Cost), a measure of income to be received this year based on the purchase price of the asset producing that income.  If you do go with dividend investing AND your investments grow the dividends themselves on a regular basis, it's not unheard of for YOC to be north of 6% in 10 years.  The same can be true of rental property given that rents can rise. Achieving that with dividends has alot to do with picking the right companies, but you've said you are not opposed to working hard to invest correctly, so I assume researching and teaching yourself how to lower the risk of picking the wrong companies isn't something you'd be opposed to. I know more about dividend growth investing than I do property investing, so I can only provide an example of a dividend growth entry strategy: Many dividend growth investors have goals of not entering a new position unless the current yield is over 3%, and only then when the company has a long, consistent, track record of growing EPS and dividends at a good rate, a low debt/cashflow ratio to reduce risk of dividend cuts, and a good moat to preserve competitiveness of the company relative to its peers.  (Amongst many other possible measures.)  They then buy only on dips, or downtrends, where the price causes a higher yield and lower than normal P/E at the same time that they have faith that they've valued the company correctly for a 3+ year, or longer, hold time. There are those who self-report that they've managed to build up a $20k+ dividend payment portfolio in less than 10 years.  Check out Dividend Growth Investor's blog for an example.  There's a whole world of Dividend Growth Investing strategies and writings out there and the commenters on his blog will lead to links for many of them. I want to point out that income is not just for those who are old.  Some people planned, and have achieved, the ability to retire young purely because they've built up an income portfolio that covers their expenses.   Assuming you want that, the question is whether stock assets that pay dividends is the type of investment process that resonates with you, or if something else fits you better.  I believe the OP says they'd prefer long hold times, with few activities once the investment decisions are made, and isn't dissuaded by significant work to identify his investments.  Both real estate and stocks fit the latter, but the subtypes of dividend growth stocks and hands-off property investing (which I assume means paying for a property manager) are a better fit for the former.  In my opinion, the biggest additional factor differentiating these two is liquidity concerns.  Post-tax stock accounts are going to be much easier to turn into emergency cash than a real estate portfolio.  Whether that's an important factor depends on personal situation though.