Financial Term Explorer
Target Dividend Income
The dividend income goal set for financial independence. Typically based on covering living expenses.
📝 Definition
**Target Dividend Income** is the investor's income goal from dividends. For FIRE pursuers, this typically equals or exceeds living expenses.
In Simple Terms
If you need $2,000/month, that's $24,000/year. At 4% yield, you need $600,000 invested.
Example
Monthly target $3,000 ÷ 4% yield × 12 = $900,000 needed
💡 Practical Tips
- 1Set targets based on after-tax dividends.
- 2Break goals into milestones.
⚠️ Common Mistakes
Pre-tax calculations underestimate required assets.
❓ Frequently Asked Questions
How to set target dividend income?▼
Monthly expenses × 1.2 (buffer) ÷ yield = required capital.