$8,550 a Month and Zero Bonds: The Dividend Portfolio Retirees Are Building Instead
Skipping bonds in retirement sounds reckless, but a growing number of retirees are building six-figure income portfolios without a single Treasury note. The question is whether the yield is worth the risk hiding inside this strategy.
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Pulling in $8,550 a month adds up to $102,600 a year, and the portfolio below aims to cover that with six US-listed income holdings and no bonds. Based on mid-October 2026 yields, the combined yield comes in at about 5.8%. Dividing $102,600 by that yield shows you need roughly $1,757,000 in capital.
What a Zero Bond Portfolio Gives Up
Treasuries offer real, low-risk income right now. The 10-year Treasury yields 5.2%, and 52-week bills yield 4.4%, so this portfolio’s yield still sits above the 10-year. The two income sources work very differently, though. A bond’s income is contractual, and its price mostly moves with interest rates. Dividends, REIT payouts, business development company distributions (BDC), and options premiums are all discretionary, so they rise or fall with business conditions and market swings.
Bonds also tend to hold up when stocks fall, so a retiree can sell them in a bad year instead of selling stocks. That matters because of sequence risk: selling stocks during an early-retirement decline locks in losses the portfolio may never recover from. Without bonds, the portfolio lacks that buffer. Over the past month, as the 10-year yield rose 0.4 points, Realty Income (NYSE:O) fell 7%, and Ares Capital (NASDAQ:ARCC | ARCC Price Prediction) lost 3%. That was a mild decline, and a deeper bear market would test a zero-bond portfolio more severely.
Schwab’s Dividend Fund Supplies the Growth
A wildly popular investment option, the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) holds quality-screened dividend payers. A 40% weight comes to $702,754. At a 3.2% yield, that produces $22,497 a year. Its latest quarterly payout of $0.2665 was up from $0.2525 the quarter before. This is the growth engine, but it’s also the lowest-yielding fund in the mix.
JPMorgan’s Covered Call Fund Trades Upside for Income
Another big name, JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI) owns large-cap stocks and sells call options on them for income, which caps its upside. A 20% weight equals $351,377. At a trailing 8.0% yield, that pays $28,161. Monthly payouts in 2026 have run from $0.34134 to $0.44761 per share, with the latest being the lowest.
Nasdaq Version Adds Yield and Overlap
This ETF (NASDAQ:JEPQ) uses the same strategy on Nasdaq stocks. A 10% weight is $175,689. At 11.3%, it produces $19,854. Its 2026 payouts have run from $0.46572 to $0.70497. The two JPMorgan funds overlap. Both hold Alphabet, Amazon, Apple, and NVIDIA, and NVIDIA alone makes up 7% of JEPQ. Together they put 30% of the portfolio into a single strategy.
Monthly Checks Backed by AFFO Coverage
Realty Income is a net-lease real estate investment trust (REIT) that pays monthly. A 10% weight equals $175,689, and at 5.9% that pays $10,449. The annualized dividend of $3.252 is about 73% of 2026 adjusted funds from operations (AFFO) guidance. AFFO is a common measure for a property company because GAAP earnings subtract depreciation on buildings that often hold their value. In September, the company raised its monthly dividend for the 136th time.
Ares Capital and the Dividend Coverage Question
Ares Capital is the largest publicly traded BDC, a company that lends to midsize private businesses. A 10% weight is $175,689. At 10.3%, it pays $18,077. Second-quarter core earnings of $0.47 covered about 98% of the $0.48 dividend. Net asset value per share fell to $19.35 from $19.94.
Johnson & Johnson Brings Stability Over Yield
Johnson & Johnson is a healthcare company and a longtime dividend grower. A 10% weight is $175,689. At a 2.0% yield, it pays $3,561. The $5.36 forward dividend is about 46% of the low end of the company’s adjusted EPS guidance. Its job here is stability, and it’s doing a good job at that.
Safe Only With a Cash Reserve
Going without bonds can work for a retiree, but only with a separate cash reserve. Holding two years of income, or $205,200, in Treasury bills on top of the portfolio means withdrawals can continue through a downturn without selling anything. This setup fits retirees whose Social Security or a pension already covers essential bills. It doesn’t fit anyone who depends on every dollar of this income.
On taxes, dividends from Schwab’s fund and Johnson & Johnson are mostly qualified, which means they’re taxed at 0%, 15%, or 20%. REIT payouts, BDC distributions, and options-premium income are mostly taxed as ordinary income, so those holdings fit best in an IRA. Return of capital is the investor’s own money coming back, and it reduces cost basis.
Most of the income rests on Schwab’s fund and Johnson & Johnson raising their dividends. The JPMorgan funds and Ares Capital produce the payouts most likely to change. Each year, two numbers need a check: whether Ares Capital’s core earnings still cover its dividend, and whether the JPMorgan funds’ trailing 12-month distributions are holding steady.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
