My goal is to avoid selling shares of any investment to pay for expenses during retirement. I want to keep the engine running to deliver more horsepower (dividends) with minimal changes to the engine. Think of it this way, if you owned a red Ferrari, what part of the engine could you remove and still have the same exhilarating driving machine? What part could you give to a friend and still have powerful performance? While I am not a mechanic, I have found very few parts under the hood of a car that were put there without a purpose. Every part is needed.

This means that you don’t sell the fuel injectors in your investment portfolio just because everyone else seems to be selling their fuel injectors. You don’t sell the gears, the valves or the coolant. You see the whole investment engine as a long-term, running and productive engine. You don’t want a lot of pit stops for changing out parts.

What do I do? What do I recommend for you?

There are five key pieces:

  1. Buy quality parts. Don’t buy stuff from the stock market junk yard.
  2. When good “dividend paying stocks” (parts) are on sale, buy them. For ETF investors, consider something like VYM, DVY and DGRO.
  3. Buy stocks/ETFs with a history of growing dividends, with a rational, sustainable dividend.
  4. If you don’t need all of the income from your current engine, buy more parts to build a bigger engine. You want more horsepower, not less.
  5. Reinvest dividends in a bear market. Selectively reinvest dividends in a bull market.

History has shown that buying dividend-paying stocks is one of the best ways to grow a successful mix of investments.

Here is one article that you can think about: