Can You Actually Live Off Dividends? Let's Do the Math
Building Passive Income That Actually Gives You Peace of Mind
I've been putting money into dividend stocks for a while now - Indonesian stocks on the IDX, some US names, bits across different markets. But here's the thing: I'm not chasing some retire-at-35 fantasy. I'm building a safety net that lets me sleep better at night.
That's what dividend investing is really about for me. Peace of mind.
FIRE and Why Dividends Fit
You've probably heard of FIRE - Financial Independence, Retire Early. The community is split between two camps:
Growth investors who pile everything into index funds, let it compound for 15-20 years, then sell small portions to live on (the 4% withdrawal rule).
Dividend investors who build portfolios that pay regular income without touching the principal.
I lean toward dividends because the psychology is different. When markets crash 30%, growth investors have to sell at a loss to pay bills. Dividend investors? Companies still pay dividends (most of them, anyway). Your income stream stays relatively stable even when your portfolio value drops.
That stability matters when you're thinking long-term.
The Math People Skip
Quick example: you want $2,000 monthly passive income. At a realistic 5% yield, you need $480,000 invested. Factor in 10% taxes, and you actually need closer to $530,000.
That's not "retire next year" money for most people. But it's achievable over 10-15 years of consistent investing.
The problem? People look at that number and give up. Or worse, they don't run the numbers at all and just hope it works out.
The Consistency Over Everything
Here's what actually works:
Pick a few solid companies and stick with them. I'm not trying to own 50 different stocks. I focus on maybe 5-10 quality companies that consistently pay dividends and have decent business fundamentals. BUMI, DEWA, a few others. That's it.
Why? Because the goal isn't diversification for diversification's sake. It's accumulating enough shares in good companies to make the dividends meaningful.
When you spread your money across 30 stocks, you end up with tiny positions in each. 50 shares here, 80 shares there. The dividends are too small to matter. You're diversified, sure, but you're also not building real wealth in any single position.
Better to own 500-1,000+ shares in 5-8 companies you actually understand and trust. The dividends become meaningful. You can track performance. You actually know what you own.
Accumulate shares, not yields. Every month, same routine: dividends come in, they get reinvested into the same companies. Buying more shares. This is the part most people miss - they chase high yields instead of building share count.
100 shares paying $0.50 each = $50. But if you reinvest and build to 200 shares, that same $0.50 becomes $100. Then 300 shares, 400 shares. The dividend per share stays roughly the same, but your total income grows because you own more of the company.
Monthly consistency beats occasional big buys. I don't wait for the "perfect" price to dump in a huge amount. Every month, whether the market is up or down, I buy more shares in my core holdings. Some months I'm buying at a premium, some months at a discount. Over years, it averages out.
This is the boring part nobody talks about. No excitement. No "10X gains." Just the same companies, month after month, slowly building position size.
Track your actual numbers. I know exactly how many shares I own, what my portfolio yields, and what my monthly income is. The calculator helps with projections, but knowing your real numbers keeps you honest about progress.
Real Examples: What 10 Years of Reinvesting Actually Looks Like
Let me show you two cases - one Indonesian stock, one ETF income - to illustrate how this actually plays out.
PTBA (Indonesian coal company): This one's more volatile but shows the same principle. Let's say you started with 1,000 shares at IDR 3,000 per share in 2015 (IDR 3 million total investment). A video of PTBA compounding effect by Mabuk Saham will show you the real calculation.
PTBA historically pays 30-50% of profits as dividends. Some years it's massive (when coal prices spike), some years it's modest. Average it out to maybe IDR 200-300 per share annually.
If you just collected dividends for 10 years? You got your cash payments, still own 1,000 shares.
If you reinvested during the down years when coal prices were low? You accumulated shares cheap. By 2025, you might own 2,000-2,500 shares depending on timing. When coal prices spiked recently and PTBA paid IDR 500+ per share in dividends, your income was 2-2.5x higher than someone who never reinvested.
JEPQ (US monthly dividend ETF): Say you bought $10,000 worth in 2025. At roughly 9% annual yield paid monthly, you'd collect around $900/year in dividends.
If you spent those dividends? After 10 years, you still have your original position, collecting $900/year.
If you reinvested every monthly payment? You're now sitting on ~$24,000 in total value (assuming modest 5% price appreciation). More importantly, your share count doubled. That $900 annual dividend is now $1,800+ because you own twice as many shares. Same dividend per share, double the income.
The math is simple but the discipline is hard. Most people see a big dividend payment and spend it. The ones building wealth? They buy more shares with it.
Every reinvestment increases your position. Every increased position means higher absolute dividend income next time, even if the dividend per share stays flat or even drops slightly.
This is how you go from $50/month in dividend income to $500/month to $5,000/month over 10-15 years. Not by finding miracle stocks. By consistently reinvesting in the same quality companies.
It's About Options, Not Escape
The real power isn't in some magical dividend yield. It's in owning more shares of companies that pay you regularly.
Think about it: when you own 1,000 shares of a company paying $0.30 per share quarterly, that's $300 every three months. Reinvest that into more shares. Next quarter, you have 1,050 shares. Then 1,100. Then 1,200.
Five years of this? You might have 2,000+ shares. Same dividend rate, but now you're collecting $600 per quarter instead of $300. That's the compounding effect people talk about but don't actually show you.
I'm not trying to quit my job tomorrow. I'm building something that gives me options.
Options to take a lower-paying job I actually enjoy. Options to take time off if I need it. Options to not panic if things go sideways at work.
That's the peace of mind piece. Every dividend payment is a small reminder that I'm less dependent on any single income source than I was last month. And every reinvestment is adding more shares to the pile.
Right now, my dividend income covers maybe 20-30% of monthly expenses. All of it gets reinvested back into the same core companies. The share count grows, the dividends grow with it.
I know exactly how many more shares I need in each holding to hit my target income. That's better than most people can say.
Run Your Own Numbers
The calculator is there if you want to see what it would take for your situation. Your expenses, your risk tolerance, your timeline.
But here's what it won't tell you: which companies to pick and whether you'll stick with them long enough to make it work.
That's on you. Find a few solid companies. Buy shares consistently. Reinvest the dividends. Track your share count. Repeat for years.
It's not complicated. It's just not fast.
Dividend investing isn't sexy. It's slow, it's repetitive, it's boring. But it's the closest thing I've found to building real financial security without gambling on market timing or crypto moonshots.
The calculator shows you the destination. Consistency gets you there.
Try the Dividend for living calculator here
Built this calculator as part of my practical finance toolkit. Free to use, no signup required. Just honest math for people who want to know where they stand.