The Simple Dividend Portfolio I’d Start With in 2026

The question I'm asked most often is how to invest. And in my opinion, one of the best ways to build real lasting wealth is through a dividend paying portfolio. This is an ideal starting point if you're new to investing and want to emphasize passive cash flow. Everything I'm going to show you today is completely beginner friendly. I'm not going to give you complicated financial advice that requires a degree to understand or tell you to spend 6 months of learning before you can start. By the end of this 10-minute video, you'll know exactly how to begin building your own dividend portfolio today. First, we'll show you how dividends actually work and then I'll show you the three steps on how to set up your portfolio. Let's jump in. So, first of all, what exactly are dividends? To understand that, let's start with shares. When you buy shares, you're buying a small piece of a company. Businesses sell shares to raise money so they can grow, and in return, you can own a portion of that company. So, let's say that, I don't know, your city doesn't have a proper dog arena. And let's say that your friend Ash, who's a well-known dog breeder and trainer, realizes that people want a place to train and compete. So, what does he do? Well, he decides to build one and to raise the money. He splits his new company into 50,000 shares priced at $20 each. And yeah, you like his idea, so you buy 250 shares for $5,000, which gives you a.5% stake in his business. Ash opens the first arena and it just takes off. Local dog shows fill up every weekend. Trainers are booking months in advance and the value of the business starts climbing. But within 10 years, those $20 shares are now worth $50 each, which means that your $5,000 has grown to $12,500. So yeah, that's the first way you make money in investing. It's through capital growth. But Ash also wants to reward the people who believed in his idea early on. So he decides to pay a dividend, which is a cash payment to investors based on the company's profits. Let's say he pays a dividend that works out to a 4% yield. This means that for every $20 share you own, you receive 80 cents in dividends each year, which is typically split up and paid each quarter. Now, as the business keeps growing, he increases the dividend. Maybe it rises from 4% to say 6% over 5 years. So, not only are your shares worth more, but your dividend income has grown, too. And really, that's the beauty of dividends. You get both the growth and the income. So, when you invest in dividend paying stocks, you're not just waiting for prices to go up someday, but you're also getting paid along the way. Dividend paying stocks are also more stable during a downturn. When markets get rough, which sometimes they do, fund managers and brokers usually hold on to these kinds of stocks because they still generate income. As a result, they're less likely to crash compared to pure growth stocks. Now, let's say Ash's dog arena business keeps expanding. He opens more arenas in nearby towns, builds a national brand, and eventually lists his company on the stock exchange. This basically means that anyone anywhere can invest in his business. After the success you experienced with Ash's business, you decide that you're ready to invest in other companies, too. So, of course, you head over to the stock exchange, which you can access through a brokerage like Fidelity or Schwab, and you see that you can invest in any listed company or something called an exchangeraded fund or ETF for short. This is basically a collection of a lot of different companies bundled into one single investment. So, instead of buying one stock, you're buying a group of them. For example, VYM or the Vanguard High Dividend Yields ETF includes hundreds of dividend paying companies like Johnson and Johnson, Proctor and Gamble, and Coca-Cola. ETFs are great for beginners because they spread your risk. If one company in the fund has a bad year, the others can offset it. You also don't have to spend hours studying every single company's financial statements before you invest. So, if I were just starting out, I believe that dividend paying ETFs are one of the easiest and safest ways to build long-term wealth while also getting paid in the short term. You get two benefits, the stock growth and regular income while keeping your risk manageable. Now, if you have $100 that you're ready to invest right now, I encourage you to join my next beginner's investing master class. It's just less than an hour long and it's completely free. You'll learn how I split my portfolio into three ETFs and how I grew my investments to more than a million dollars. It's not required, but I do believe that it's going to give you the extra boost of confidence. I'll leave the link in the description if you want to join either today or tomorrow. Now, I want to take you through this step by step so that you can see exactly how to set up your dividend portfolio today. There are actually more than 3,000 ETFs that you can choose from and hundreds of thousands of individual companies that you can invest into. So, how do you know which ones to pick? The first and the most time-conuming step is to do a little research. Now, the goal isn't to research every single company that exists because of course that would be impossible. Later on, as you gain more experience, you can absolutely branch out. When you hear about new or interesting companies, you can dig into their performance and decide whether they're worth adding to your portfolio or not. But for now, in this video, I just want to focus on ETFs. This alone narrows your options down to something more manageable. So yeah, you just want to start simple. Google or ChachiBT is your friend. And there are plenty of reliable sites where you can find accurate data on ETF performance like Yahoo Finance, Morning Star, and ETF.com. When I first began, I literally typed in best performing dividend ETFs into Google. And then from that, it just gave me a short list of ideas. And from there, I plugged each one into Yahoo Finance to look into its long-term performance. When you're researching ETFs, you want to pay attention to a few key things. First and foremost, you want to look into the dividend yield. This tells you how much income you'll earn in dividends relative to the current share price. Personally, for myself, I like to aim for a yield that's between 1.5 and 4%. For me, that's usually a good balance between income and growth potential. Second is performance history. You don't necessarily just want to chase a high yield. One of the biggest mistakes beginners make is focusing on the dividend number while ignoring how the fund itself has performed over the last couple of years. So, let's say that you look into a single company like Two Harbors Investments, which has a ticker symbol TWWO. On Yahoo Finance, you'll see that their current dividend yield is around 16%. which yeah, like it sounds amazing at first glance, but if you dig a little deeper, you'll see that since the company launched in 2009, its share price has dropped by around 80%. And yeah, that's a huge red flag. High yields like that often mean that a company is under pressure and using dividends to attract investors. Now, of course, companies can recover and experienced investors sometimes spot turnaround opportunities. But if you're a beginner, you're just starting out, it's my experience that it's safer to stick with just general ETFs that have a consistent history of long-term growth and stable dividend payouts. The first step is the most research-heavy part of investing. So, I'm going to do the leg work with you. Let's have a look at three of my own and my community's favorite dividend paying ETFs and break down why they actually stand out. For each of these, I'm going to look at their historical growth, expense ratio, dividend payouts, top holdings, and the number of shares you need to buy to earn $500 in dividend payouts each month. If you watch any of my other short form videos, you know that SPYD is one of my community's favorite ETFs. It tracks an index of the 80 highest dividend paying companies in the S&P 500, and over the last decade, it's delivered strong returns, except for 2020, of course, when the pandemic disrupted nearly every major business. You'll see this dip across most funds from that period since almost every industry was affected by shutdowns and slower growth. SPYD's top holdings include well-known names like CVS and Best Buy. Many of them, which are large established companies with a consistent history of paying dividends. These businesses may not grow as fast compared to technology companies, but they tend to stay steady even when the market gets rocky. Next, let's look at the expense ratio, which is the annual fee you have to pay the people who are managing the investments in the ETF. SPYD's expense ratio is just 0.07% which is pretty good. It's excellent actually. If you invested $500 a month, which adds up to $6,000 that year, then you pay $4.20 in fees. My rule of thumb is to avoid any expense ratios that charge more than.5%. But generally, the lower the number, the better. At the moment, SPYD's dividend yield is more than 4% and the share price is between $42 and $45. To earn $500 a month in dividends, you'll need to invest around $135,000 or own about 3,000 shares. Yeah, I know it's not a small amount, but remember this is designed to pay you a reliable income year after year, not something that you buy and flip quickly. Since it launched in 2015, SPYD has grown by about 42% overall, averaging just under 9% a year when you include both price growth and reinvested dividends. If you had invested say around $500 a month from the start, your portfolio would now be around $85,000 and you would have collected around $18,000 in dividends along the way, which is pretty decent. Next, let's look at VYM, which gives you exposure to a broad group of US large cap companies that pay above average dividends, including names like Walmart, Johnson and Johnson, and Home Depot. Since this ETF has been active since 2006, you can see how it handled both the financial crisis of 2007 2008 and the pandemic in 2020, which are two major events that you'll often notice when you look at historical performance. Its expense ratio is just 06%. So, you're not losing much of your return to fees, which is a big plus when you're building for the long term. The dividend yield is around 2.5% which is lower than some high dividend paying ETFs, but it reflects a more balanced approach where you're not just chasing the highest yield. You're also paying attention to how the fund grows over time. In fact, the overall growth since inception is about 180%. Which tells you that this fund doesn't just pay income, but it also gives you capital growth. Right now, with each share trading at between $140 to $145, to earn $500 a month in dividends, which is $6,000 a year with a yield of roughly 2.5%, you need to invest about $240,000, which equates to around 1,700 shares. So, if you're building a dividend portfolio for the long haul, VM is one of those funds that gives you both income and growth without too many wild swings. It may not look as flashy compared to high yield options, but the fact that it's stuck around, grown steadily through crises, and kept cost ultra low makes it a solid building block for a beginner. Finally, let's look at SCHD. This fund is one of the most popular dividend ETFs in the United States, and for good reason. It holds major names like Coca-Cola, Chevron, and Cisco. And these companies have a long track record of paying reliable growing dividends. You'll also notice that some names appear in more than one ETF. For example, Home Depot shows up in both VYM and SHD. That's because strong dividend paying companies tend to meet the criteria of multiple funds. When a business consistently delivers profits and rewards it to shareholders, it naturally becomes a top holding across different dividend focused ETFs. If you look at CHD's long-term growth, it's pretty impressive. Since launching in 2011, it's delivered an overall return of around 220%, which is the highest of the three ETFs that we've looked at so far. Its expense ratio is just 06% which is as low as you'll find anywhere really. On top of that, SHD currently offers a dividend yield of about 3.8%. Which means that it pays a little bit more income than VM without taking on excessive risk. If you want to dig deeper into dividend growth, just type the fund name followed by dividend history into Google. If we check's data on stock analysis, we can see that its dividends have grown by an average of 5.8% per year over the last 5 years. This means your annual income from this ETF has increased every year, even outpacing inflation. You can also view exactly how much SCHD has paid per share each quarter and when those payments were actually made, which helps you plan for your reinvestments and withdrawals. Right now, SCHD trades between $25 and $28 per share. If you wanted to earn $500 a month in dividend income, about $6,000 a year, you need to invest roughly $160,000, which works out to be around 6,000 shares. So, this is what it looks like when you're researching and choosing dividend earning ETFs for your portfolio. You don't necessarily have to start with several different funds. You can just pick one that you understand and like, learn how it behaves, and just build from there. Let's say CHD stands out to you because it offers a strong history of dividend growth and a steady yield that isn't inflated by short-term hype. You decide to start small and buy $500 worth of shares. You open an account on a brokerage like Fidelity or Schwab, set up a Roth IRA for the tax advantages, transfer your funds, and make your first purchase. But then what happens next? A common mistake that I see with a lot of people is that they invest once, and they just kind of stop there. In reality, the goal is to keep adding to your investments. You can commit to, say, $500 each month, set up an automatic transfer so that this way it happens without you ever thinking about it. Each deposit increases your ownership and compounds your returns. At first, you might focus on SCD and then later as your confidence grows, you could add maybe VM or SPYD to diversify or you could add other ETFs that track another index like the NASDAQ 100. Over time, this becomes a well- balanced dividend portfolio that pays you regularly and grows steadily in the background. So, what is this approach called? It's called dollar cost averaging. You basically invest a fixed amount every month no matter what the market is doing. Whether SCD dips or rises, you keep ping. It's a pretty simple method, but it works because it removes emotion from investing and builds wealth over time through consistency. As your income increases, you can then raise your monthly contributions. Maybe a year from now, $500 becomes $550, then $600, and then so on. Personally, my investments motivate me to work hard so that I can increase my income because I know that the more I earn, the more I can invest and therefore the more security I have. Finally, you need to decide what to do with your dividend payouts. There are basically three main approaches you can take. Your first option is to follow what's called a dividend reinvestment plan or DRIP for short. This automatically reinvests your dividend payouts back into the same ETF or stock that earned them. So, for example, if you earn a $25 payout from VM, that amount is instantly used to buy more shares of VM, which then increases your overall investment without you needing to do anything at all. Your second option is to do this thing called self-reinvestment, where you take the dividends you received from one fund and use them to buy into another. So, for example, you might collect a payout from VM and reinvest it into a NASDAQ 100 ETF like QQQM instead. This might be a good choice if you want to start diversifying your portfolio, or if you want to shift your portfolio to having more volatility but more growth potential. And finally, you can choose to take out your dividends as income. In this case, the payouts go directly into your bank accounts, which you can then use as an additional income stream. But honestly, if you're just starting out, Drip is usually my go-to option. In the early stages, your dividend income will be pretty small, so it makes sense to reinvest everything to speed up your growth. However, over time, as your portfolio expands and your payouts become more meaningful, then you can experiment with self-reinvestment or start using your dividends as income. Personally, I set up my dividend portfolio to have half drip and half self-reinvestment because I like to sometimes choose where to reallocate my money. However, I'm planning on shifting this to taking out my dividends maybe in the next 10 or 15 years if I choose to take a couple steps back from my business. My biggest hope is that everyone can start making good investments so that they can get to financial freedom faster. And if you found this helpful and you want to see how my community allocates their portfolio with other ETFs, you can check out my beginner's investing master class. It's just less than an hour, completely free, and many of my students have grown their portfolio significantly after joining it. Click here and I'll see you soon.