Dividend Growth and Bond Ladders Addendum

Here is another combination that delivers a continuing withdraw rate of 5% of your original balance (plus inflation).

Combination 5:

Dividend Yield A: 3.4% with 5.0% per year growth.
Dividend Yield B: 4.6% with 5.0% per year growth.
Interest C: 7.0% with 0.0% growth.
Interest D: 7.0% with 0.0% growth.

Combination 5 uses DVY’s 3.4% initial dividend yield and a 4.6% initial dividend yield for the second stock component. Both match the dividend growth rate of the S&P500 index. Combination 5 requires fixed income components at 7.0%.

All of these are reasonable in today’s market.

Have fun.

John Walter Russell
September 24, 2007