Dividend growth and high yield

[Helen winger]

Early retirement in about 3 years at 52, I've got some concerns Currently 70% dividend growth stocks and 30% in higher yield positions like REITs. It seems to be popular opinion to focus on companies that consistently raise payouts and the income will compound over time and while that makes sense for a 30 year horizon, but I'm looking at maybe needing this income in 3 years, and not 30
I'm out here doing math thinking, why wait for dividend growth when I could be collecting 5%+ now instead of 2.5%? but then I read about dividend traps and unsustainable payouts dong some research, so now I'm nervous about chasing yield into sketchy territory
I guess I know these thigs and even advice people but here I am needing second opinions for my own case

 

[Aviat10n]

I think you're getting hung up on the current yield number, which is a classic preretirement stressor. Remember, total return is what matters, especially in the three years leading up to retirement.
instead of moving to sketchy 5% yielders, think about maintaining your current growth holdings and simply selling shares when you need income.
your 2.5% dividend stock that appreciates 10% over three years is far safer than a 5% REIT that drops 10% in value. focus on quality companies that won't suddenly cut the payout right when you need it

 

[Pawp4w]

you know, your instinct to move away from growth is on spot on. you're transitioning from the accumulation phase to the distribution/preservation phase.

my advice is not to liquidate your growth holdings all at once. Shift the portfolio gradually over the next 3 years. For the high yield you seek, focus on highly diversified high-yield ETFs (like Vanguard or Schwab funds) instead of cherry picking individual stocks. Diversification is your best defense against a dividend trap.

 

[Alan]

Basically, it’s about balance. You don’t want to blow your income by chasing yield, but you also don’t want to panic sell growth stocks right before retiring. A gradual transition over the next few years usually works best.