Rental income vs dividends has been haunting me for years, seriously. Like, I’m sitting here in my cramped home office in Texas on a random Tuesday afternoon in December, cold brew going flat beside me, AC humming because it’s somehow still 70°F outside, and I’m staring at my spreadsheet trying to figure out why I ever thought being a landlord was a good idea.
Back in 2018 I bought this little duplex in a kinda sketchy-but-gentrifying part of town. Thought I was gonna be the next real estate mogul, you know? Fast-forward and I’m the guy getting 2 a.m. texts about a busted water heater and a tenant who paid rent three weeks late with a sob story that honestly broke my heart but also my cash flow. That rental income felt great when the checks cleared, but man, the headaches.
Why I fell in love with dividends first (and kinda cheated on rentals)
Before the duplex, I was all about dividends. I’d throw money into boring blue-chip stocks and dividend ETFs – think SCHD, VYM, some individual names like Procter & Gamble because my mom literally uses their detergent. Those quarterly deposits hitting my brokerage account felt like magic. No tenants, no toilets, no 3 a.m. emergencies. Just… money appearing. Passive? Hell yeah. Predictable? Mostly.
But here’s the embarrassing part: I got cocky in 2020, sold a chunk of my dividend portfolio to buy that second rental property right when everyone else was panic-selling. Thought rental income was “real” wealth while dividends were just paper gains. Rookie mistake.
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Rental income vs dividends: the actual numbers from my screwed-up life
Let’s get real with numbers (approximate, because I’m too lazy to dig up exact tax forms right now):
- My duplex throws off about $1,800/month net after mortgage, taxes, insurance, and setting aside for repairs. That’s $21,600 a year if nothing breaks. But something always breaks. Last year a new roof ate half my annual profit.
- My dividend portfolio (around $350k invested) spits out roughly $14,000–$16,000 a year depending on raises and reinvestment. Zero effort. Zero angry texts.
So on paper, rental income wins. But factor in time, stress, and that one time I spent an entire Saturday unclogging a tenant’s kitchen sink myself because plumbers cost a fortune on weekends? Dividends feel like the clear winner some days.
The hidden costs nobody talks about with rental income
Look, I love my tenants (most of them). One family has been there five years, pays on time, even mows the lawn sometimes. But the turnover? Brutal. Painting, cleaning, new carpet after every move-out – that’s thousands gone. And don’t get me started on eviction moratoriums during COVID. I was basically providing free housing for months while still paying the mortgage. Dividends didn’t care about pandemics – they just kept paying.
Why dividends still make me sleep better at night
Dividends are boring, and I mean that as the highest compliment. I can log into my Vanguard account from my phone while waiting at Whataburger and see money growing. No screening tenants, no background checks, no praying the hot water heater lasts another year. And liquidity – if I need cash tomorrow, I sell shares. Try selling a rental property in a week.
But here’s where I contradict myself: that rental income vs dividends debate isn’t black-and-white for me. The rentals have appreciated like crazy. That duplex I bought for $220k is probably worth $380k now. Dividends don’t give you that kind of leverage (unless you’re on margin, which… no thanks).
My biggest regrets and what I’d tell younger me
Honestly? I’d tell 2018 me to buy more SCHD and skip the second property. The stress isn’t worth it for the extra cash flow. But I also can’t ignore that real estate turned $50k down payment into $160k equity. Dividends didn’t do that.
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So… rental income vs dividends – what’s actually better for you?
It depends on your personality, seriously. If you hate dealing with people and surprise expenses, go heavy dividends. If you’re okay getting your hands dirty (literally) and want forced appreciation + tax advantages, rentals might be your thing.
Me? I’m shifting. Selling one rental next year, plowing proceeds into more dividend stocks and ETFs. Keeping one property because I’m attached like an idiot. Balance, I guess.
Anyway, that’s my messy take on rental income vs dividends from someone who’s lived both sides. What about you – team rental, team dividends, or team “I just buy Bitcoin and pray”? Drop a comment, I actually read them while procrastinating on landlord stuff.
(Quick credible reads if you want smarter people than me:
- Investopedia on Dividend Investing
- BiggerPockets for real estate cash flow truths
- Vanguard’s guide to dividend funds)
Talk soon – back to ignoring my overflowing inbox of tenant emails. 😅
