Dividend Stock Investment

[Dejashoot]

We are going to start building a second house in the next couple months. I have some cash on hand and trying to decide if I invest in some dividend stocks and use dividends to off-set a portion of the monthly mortgage or drop a big chunk (50%) towards the house and keep part in cash. Any of you do the passive income thing to pay bills? I’m looking at a 10 year mortgage either way. This is separate from other existing retirement accounts. I still have income to pay for the mortgage either way.

With interest rates and inflation I’m looking for some options.

[Throwin Darts]

Putting cash towards a purchase and not incurring the debt is a guaranteed risk free return of the tax effected mortgage rate. Investing in a dividend stock is not risk free so its not an apples to apples risk comparison.

Your dividend yield and market appreciation after taxes would have to outperform the tax effected rate on the mortgage debt. Could this happen? Sure can, but you'd be incurring additional risk to do so.

It doesn't really make sense to me going down this route but then taking on a 10 year mortgage. If you believe you can really beat the mortgage rate after taxes and frees on an equities trade then you'd be leveraging up and not interested in paying off the home quickly. If you're goal is to pay off the home quickly, which it seems like it is through a 10 year mortgage, then throwing cash at the mortgage fits more with that goal.