What's the best approach to Dividend investing?

Mr_Cautious

Hi all.
I'll cease getting a pay check soon and my investment objective is all about income generation. Rightly or wrongly I have settled on investing in solid dividend yielding companies as the preferred option - in the current market.
So, I'd like thoughts on how to best approach a strategy of investing in dividend earners as a means of providing income. ??? I would be aiming for 3%-4% yield on a £500K portfolio.
I am slithering between picking a basket of ETF's for Dividend 'aristocrats' across multiple regions OR to hand pick 30 or so individual stocks (from the lists of Div. Aristocrats) and holding them on a platform like TD or Halifax.
Note:- I'm all ISA'd up and pension contributions are maxed so these investments will be focused on capital growth.
Hope you can help and thanks in advance.
Mr Cautious

kidmugsy

Visit The Motley Fool, look at the Investment Trusts and Unit Trusts board, and read the writings of "Luniversal". Compare his "buckets" of income ITs, and his justification for them, with the alternatives.

You might find that Investment Plans are a cheap way to hold ITs: scroll down to p.45.
http://www.theaic.co.uk/sites/default/files/statistics/attachment/AICStats31Mar15.pdf

Jsscmm

On the same forum, hyp (high yield portfolios) are another common thread... Personally I feel that a basket of ITs is lower risk but HYP is an option.

Vanguard do a high yield etf with 1000+ companies in it as another option.

Either way, picking low cost platform is helpful. See snowman so spreadsheet or monevators comparison.

I'm slightly puzzled by you looking for capital growth via dividends though.

Mr_Cautious

Jsscmm wrote: »

I'm slightly puzzled by you looking for capital growth via dividends though.

Thanks for the pointers. I am not looking for capital growth via dividends - probably bad wording on my part. My capital growth will (hopefully) come from my ISA and Pension investments which are long term growth orientated.

Any opinions on the number / and sector focus of IT's I should spread investments over in order to create some balance - at least within this aspect of my portfolio? Appreciate the help so far.

atush

I agree that going for single companies over ITs, etfs and income funds to highly risky. By all means, set asode 10-20% of your portfolio for this, but i'dbe going collective for the rest.

and given the high state of the markets, i'd also hold 2-3 years of required income in cash, so as to not draw from funds during a downturn (and to use the dividends to reinvest during some of that time)