🔝Considering a Dividend Strategy Alongside a Permanent Portfolio – Does It Make Sense?

[frugal]

Hi everyone,

I’ve been studying the Permanent Portfolio approach and I understand its focus on stability and diversification across assets like stocks, bonds, gold, and cash. I’m curious about the potential role of a dividend-focused strategy in this context.

Would it make sense to integrate dividend-paying stocks or ETFs alongside a Permanent Portfolio to generate additional income, or would this compromise the portfolio’s intended stability and risk profile?

I’m particularly interested in hearing from those who have experience combining dividend strategies with long-term, low-volatility portfolios. Any insights, pros, or cons would be greatly appreciated.

Thanks in advance!

[mathjak107]

any stock can create income . it’s just on you to pay yourself instead of the company doing it for you .

so at the end of the day it’s only about total return and appreciation.

if you wanted to take a shot with something simple , perhaps the small dogs of the dow are an interesting play .

they are the 5 highest yielding dow stocks

currently

2026 Small Dogs of the Dow (Based on Dec 31, 2025 data):
Verizon (VZ): 6.7% yield
Nike (NKE): 2.4% yield
Coca-Cola (KO): 2.9% yield
Merck (MRK): 3.0% yield
Procter & Gamble (PG): 2.9% yield

[dualstow]

I would do it only if you're fairly young, and have time to watch the dividends increase along with expenses (inflation).
If you're older, just get your income from bonds.

[mathjak107]

it’s pretty irrelevant if dividends increase or not .

it’s only about the appreciation.

dividends are a withdrawal method not a gain by itself .

it’s assumed if a stock is increasing the payout and giving you back your money then its doing well but the blue chip graveyard is full of failed dividend payers .

so stocks are stocks and dividends are not like interest.

[frugal]

any stock can create income . it’s just on you to pay yourself instead of the company doing it for you .

so at the end of the day it’s only about total return and appreciation.

if you wanted to take a shot with something simple , perhaps the small dogs of the dow are an interesting play .

they are the 5 highest yielding dow stocks

currently

2026 Small Dogs of the Dow (Based on Dec 31, 2025 data):
Verizon (VZ): 6.7% yield
Nike (NKE): 2.4% yield
Coca-Cola (KO): 2.9% yield
Merck (MRK): 3.0% yield
Procter & Gamble (PG): 2.9% yield

Hi

Any good ETF for that portfolio ?

Regards

[frugal]

I would do it only if you're fairly young, and have time to watch the dividends increase along with expenses (inflation).
If you're older, just get your income from bonds.

Hi

Which bonds you mean?

Regards

[mathjak107]

damn , wrote a reply and hit report on my damn phone instead of post .

at the end of the day it’s your portfolio value that determines your draw , not what money company’s hand you back .

taking 4% from berkshire to live on vs a 4% dividend is the same thing except berkshire has better taxation since you don’t pay taxes on 4% , you only pay on the gain .

so our draw rate does not care if its dividends , interest , or appreciation or a combination of them all .

it’s only appreciation and the value of your portfolio in total that matters if one is planning to live on your portfolio

[dualstow]

Which bonds you mean?

Well, of course the pp has long-term U.S. treasuries. Outside of treasuries, I feel like it’s hard to select bonds. In fact, it’s beyond my ken. Those who want something tax-friendly may buy municipals.

I used to own pure corporate bond funds but got rid of them. Now, I own a lot of Wellesley, the Vanguard fund, in a Roth IRA. I don’t know what bonds are right for you, frugal.

[dualstow]

it’s pretty irrelevant if dividends increase or not .

I’m more focused on total return than dividends, but in the context of a dividend strategy, I think increases are pretty relevant.
It’s a wiser strategy than chasing REITs with 11% payouts that end up falling 50% and cutting that dividend.

Choosing stocks that consistently raise their dividends over decades is a good strategy as dividend strategies go, even if it may lose out to a focus on total return.

[mathjak107]

except that chasing these dividend aristocrats can be near impossible.

years ago i decided to track a bunch of the dividend kings

The so called dividend aristocrats are only on the list until they aren’t .

I did some looking in to them many many years ago .

you keep seeing just invest in this group and call it a day .

however what constitutes this group changes all the time so get ready for lots of selling trying to keep up as they get bumped and replaced AFTER THE FACT THEY DID NOT LIVE UP TO EXPECTATIONS . you could be behind the curve here very easily .

these dividend aristocrats are not somehow immune to all the things that effect company's and stocks . Just like other companies, their outcomes change.

in 2009 there were 52 stocks that met the group’s strict criteria.

As of 2012, there were 51.

But of those 51, 13 were different than the original set. So over the course of just 3 years, there was a 27% change in the group’s composition.

in fact going back to 1989's list :

Of those 26, seven are still on the list today, ten were removed because they either cut or froze their dividend, four were removed for an unknown reason, and the remainder were aquired at some point. So at least ten of the 26 had an outcome that is different from the assumption of dividend growth every year through thick and thin.

[dualstow]

For me, it’s not just a theory. I literally* did this from 2004 until about 2015, and then I started moving away from it.
Would I have been better off just buying total stock market, domestic? Oh yes. But I am fine with the results. I didn’t necessarily stick to Dividend Aristocrats, and I did have to trade here and there.

Still have Chevron, Pepsi and a few others. I mostly don’t pay attention to them, but I took a look when Kevin K’s ‘Cockroach Portfolio’ thread came up. Total return is best, but I like having the cash cushion from these dividends, plus the pp’s long bonds. I use it all for living expenses. And psychologically, it really helps when the market is down.

*Forgive me for the literally

[Jack Jones]

I like dividends. If one of your goals is capital preservation, they allow to push the difficulty of that decision on to the managers of the companies you invest in. The business is saying, this is capital that we can afford to return to you without impairing our business. When you sell your shares, you must decide how much capital you can afford to eat. I'd rather trust the managers of my businesses with capital allocation decisions like this.

[frugal]

Hi !

Why don't you live on CASH portion of PP ?



Why you need dividends or bonds?



Regards

[dualstow]

Speaking for myself, frugal, my pp is not my total. I never could hold that much gold or cash. If I had no Vp, I probably could live off the cash portion.

[Jack Jones]

Hi !

Why don't you live on CASH portion of PP ?



Why you need dividends or bonds?



Regards

That's too much cash for me. Dividends and bonds allow you to focus on ensuring you have enough cash FLOW to meet your needs.

[mathjak107]

the cash portion of the pp has an important job to do .

it’s the other side of the barbell that averages out the bond side to about an intermediate term bond .

by spending down the cash side you will either unbalance the fixed income side or have to sell other assets to refill the cash side .

so it’s best to pretend the portfolio is one portfolio that you have no access to as far as spending chunks down .

just rebalance as you normally would and continue to sell the winners , refill cash and buy what fell the most