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Markets are off to a slow start in September amid volatility and uncertainty around rate cuts and the future trajectory of the US economy. Some point to cracks in the labor market as signs of a possible recession. Amid this, investors are looking for diversified income sources to hedge against risks. Activity on dividend-related discussion boards on Reddit is growing as more retail investors turn to funnel their capital into dividend stocks and ETFs.

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Many beginner investors wonder if it's even possible to make a significant amount of money from dividend stocks. A couple of years back, someone on Reddit asked the r/retirement subreddit if it's possible to retire and live off dividends. There were many interesting responses to this question. We specifically focused on a Redditor's response who claimed to be making about $65,000 per year in dividends from an initial investment of $575,000 to $600,000.

This Redditor's portfolio consists of just three ETFs. He said that just about 10 years before reaching this dividend income figure, he was "broke."

"At the end of 2013, I was broke. I came into 50K from a previous employer who gave me the option of keeping my 323.00 a month pension which was due to start in 10 years or accepting a 50K lump sum. I opted for the lump sum and invested it all in Apple. Eight years later and I'm retired," the Redditor said.

Let's take a look at the funds in his portfolio.

Global X Nasdaq 100 Covered Call ETF

Global X Nasdaq 100 Covered Call ETF (NASDAQ:QYLD) generates income by selling covered call options on the Nasdaq-100 Index. The fund was started in 2013 and has since paid monthly income to investors. The fund yields about 12%. Some of the top holdings of the ETF are Apple, Nvidia, Microsoft, Amazon, and Broadcom.

The Redditor who shared his portfolio said that QYLD is one of the high-yield dividend investments in his portfolio that helps him pay off his mortgage every month. However, many on Reddit believe QYLD is one of the riskiest investments since the ETF underperforms, especially when the broader market is choppy. Nonetheless, the ETF suits those looking to generate high monthly income with a heavy investment. QYLD is up about 1.92% so far this year.

Global X Russell 2000 Covered Call ETF

Global X Russell 2000 Covered Call ETF (NYSE:RYLD) generates income by selling call options on the small-cap-heavy Russell 2000 Index. The ETF yields about 12.3%. Being a covered call ETF, RYLD is also not risk-free and often posts losses during down markets. However, Redditors believe the expected rate cuts in September and possible investor interest in small-cap stocks in the coming months could boost the ETF. Over the past month, the ETF is up about 5%.

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Icahn Enterprises LP 

Billionaire Carl Icahn's conglomerate, Icahn Enterprises LP Common Stock (NASDAQ:IEP), has been a tempting investment for income investors for years, thanks to its previous dividend yield of over 25%. However, the company's fundamentals and recent controversies have worried investors about its dividend safety. In August, Icahn settled with the SEC on charges that the billionaire failed to disclose pledging most of the company's securities for billions in personal margin loans. The settlement comes about a year after Hindenburg Research alleged that Icahn was running "Ponzi-like economic structures" at the holding company.

Nonetheless, the Redditor, who claimed to be making about $65,000 in dividend income per year, said in his post (reminder: it was two years ago) that he invested in IEP for the following reasons:

"IEP is a bit of a different animal. It is a Managed Limited Partnership and although the quarterly payments are called dividends, they are distributions. Because it is an MLP, there is a K1 form at tax time, which really requires a tax pro to fill out, so that is an expense. IEP pays $2 per share quarterly, which used to be about a 15% yield. Carl Icahn owns IEP and owns several varied companies. One of the companies is Icahn Automotive, which owns Pep Boys and AAMCO Transmission, among others."

But a lot of water has gone under the bridge since this post. Last year, IEP cut its dividend by 50% and now pays about $1 per share.

Tax Implications on $65,000 Dividend Income Portfolio

The Redditor making about $65,000 in dividend income from the above ETFs was also asked about the tax implications of his investments. Here's what he said:

"I'm over 59.5 so just federal taxes with no state income where I live. When I request a distribution, I have 18% withheld for taxes. That's more than enough to cover me for dividends, but I will probably owe some for my SS. I do not have the full 65K distributed. I take as needed and am still saving more than at any other time in my life."

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This article 59-Year-Old Retiree Earning $65,000 in Dividends, Reveals Portfolio: Top 3 ETF Picks originally appeared on Benzinga.com