What Could Hold Me Back From Investing $100,000 in High Dividend Stocks?

When it comes to investing, there is no right or wrong answer as to how you approach the market. If there is any important lesson about being an investor, it’s that nobody can predict the future, and everyone who has succeeded has done so differently. 

For one Redditor, the question is how to invest and what the next step should be. Admitting that they are fairly new to investing, this individual posted in r/dividends as they attempt to determine if they can generate a substantial passive income through investing. 

The Investing Plan

With this post, the self-admitted new investor is wondering what is stopping them from putting $100,000 into a high-yield dividend stock like PBR. The goal is to earn approximately $25,000 per year in dividends, and they are wondering if there is a real risk associated with this approach. 

The original poster claims to be fully aware of the risks associated with a diversified portfolio, but they question exactly how much risk is involved. There is no denying that the stock market is akin to gambling, and it’s all about risk. 

This is why your risk tolerance is one of the first things any fiduciary financial advisor should ask. During the first half of 2025, it was yet another period in the market when you had to see if you could stomach market turbulence. For some, it was too much, and there was panic selling. However, for those who held strong, they likely made out okay. 

To answer the Redditor’s most important question, yes, there is an obvious risk with their proposed strategy, and any other investing strategy they could think of. 

What To Do Next?

As one commenter points out, this Redditor could invest in XDTE by purchasing almost 2,460 shares at the time of writing and earn around $490 per week in dividends. This would give them around $25,000 a year, but this doesn’t account for the stock being down 13% on the year, which means you’d likely be losing out as well. 

To make this super easy, you would still end up losing $13,000 if you purchased XDTE. This initial loss is very much something to consider. This means the net return is only $12,000. This is an excellent example of why pursuing this dividend strategy is a significant gamble. 

Other ETFs and investments may offer similar investment strategies, but the same level of caution would apply to all of them. Trying to create significant passive income solely through dividend investments is a major gamble. 

Is Dividend Investing Smart? 

The good news is that companies that pay dividends are often financially stable, making them good long-term investments. Additionally, dividend investing can provide a level of protection against market downturns, as this scenario would play out if there were a $100,000 investment in XDTE. 

However, dividends are also taxed as income, so there is another consideration, as generating $25,000 in straight profit is unlikely. You would need to gross more, and to do this, you would likely need far more capital than the initial six-figure investment. 

Yes, many investors view dividend investments as part of their retirement strategy. Some even use dividends as a source of income to improve their lives ahead of retirement. The challenge is that divided investing can be very risky, a fact that the world witnessed during the Great Recession in 2008. 

For a while, many companies ended dividend payouts until the market was back on stable ground. Even companies that paid dividends for decades suddenly stopped. The big takeaway is that dividend investing isn’t quite as straightforward as this Redditor wants to believe, and it comes with significant risk and requires a strong level of risk tolerance. 

The last big caveat is that by focusing solely on dividend investing, you are not investing elsewhere. Said differently, this Redditor would then not be invested in companies that offer share-price growth, which could mean more long-term income and create a more sizable retirement fund.

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