We all know investing is hard. Building a nest egg of $1 million or more can take a lifetime.

But let’s say you do it. You have $1 million (or more) and the time has come to switch from a growth mindset to an income mindset. How could you generate $4,000 per month in dividend income alone? Is it even possible?

Of course. You just need to know where to look. So, here’s a few ways to do it using Vanguard exchange traded funds (ETFs).

Vanguard High Dividend Yield Index Fund
First up is the Vanguard High Dividend Yield Index Fund (VYM). This ETF has a nearly 20-year history and has performed well over that time. It boasts a lifetime 8% total return compound annual growth rate (CAGR). Moreover, its 3.1% dividend yield and 0.06% expense ratio give value-oriented investors plenty to smile about.

Top sectors include financial services (22% of total holdings), industrials (12%), and technology (11%).

Investing $500,000 in this fund would yield $15,500 in annual dividend income, or $1,292 per month.

Vanguard Real Estate Index Fund
Next is the Vanguard Real Estate Index Fund (VNQ). This real estate-focused ETF has a history dating back to 2005. Its 7.4% CAGR over the last 19 years is solid, and its 4.2% dividend yield isn’t too shabby either.

The fund’s holdings are almost entirely within the real estate sector, with 99.1% of assets invested in the industry.

Investing $500,000 in this ETF would generate $21,000 in annual dividend income, or $1,750 per month.

Vanguard International High Dividend Yield Fund
Last is the Vanguard International High Dividend Yield Fund (VYMI). This ETF focuses on non-American stocks with high dividend yields. Started in 2016, it has a shorter track record than the other ETFs noted here, but it does boast a solid 7.5% CAGR over its lifetime. Add to that a beefy 4.7% dividend yield and a below-average 0.22% expense ratio, and this ETF is one to consider for income-seeking investors.

The ETF’s top sectors are financial services (36%), energy (10%), and industrials (10%).

Investing $500,000 in this ETF should generate $23,250 in annual dividend income, or $1,938 per month.

Income-seeking investors would be wise to consider these Vanguard ETFs. Even for those with more modest sums to invest, these funds can generate much-needed portfolio income.

— Jake Lerch

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Source: The Motley Fool