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For some people, especially those drawn to the charm of tech stocks and speculative plays, the investing journey begins with high-risk, high-reward strategies.

However, as their financial goals change, many shift their focus to more stable, income-generating holdings. High-yield dividend stocks, in particular, have become a favorite for those seeking both growth and a reliable passive income.

For many, dividend stocks represent the best of both worlds, namely, the potential for capital appreciation and the safety of regular payouts. Still, transitioning from a high-risk portfolio to a dividend-focused approach asks for careful planning, especially when dealing with larger sums of money.

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Enter an investor with $700,000 tied up in risky stocks. After suffering significant losses, the individual is looking to pivot toward safer, dividend-paying investments. His goal is to build a $1 million portfolio that yields 10% in dividends annually.

As he puts it in a Reddit post, “I have taken a lot of losses. I haven't made any profits yet. I just kept adding most of my income to my portfolio. I'm currently at -$60,000 so I am deciding to move toward safer investments.”

The investor’s post has sparked a lively discussion in the comments, with Reddit members of the r/Dividends community offering a mix of practical advice, cautionary tales and specific investment recommendations.

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Let’s dive deep into Redditors’ suggestions.

Portfolio Shift: From High-Risk to High-Yield Dividend Stocks – Reddit's Suggestions

Consider a Balanced Portfolio

Many commenters recommended a diversified ETF approach to achieve both long-term growth and reliable income.

“If growth is more important than dividends, you could just roll over to a simple 3-ETF portfolio like 60% [Vanguard S&P 500 ETF (NYSE: VOO)], 30% [Schwab U.S. Dividend Equity ETF (NYSE: SCHD)], 10% [Vanguard Growth ETF (NYSE: VUG)]... Lower yield but solid growth. If you want more yield, increase SCHD, for more growth increase VUG, etc.,” a Redditor suggested.

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Another Reddit user also recommended the investor stick to a portfolio of three funds, and based on his goals, increase the sum in one or the other.

“I would stick with a simple 3-fund portfolio VOO/SCHD/[Schwab U.S. Large-Cap Growth ETF (NYSE: SCHG)] and depending on what you want more between growth and dividends you push one or the other up. 65% SCHD, 25% VOO, 10% [Invesco Nasdaq 100 ETF (NYSE: QQQM)] would give you about $26,000 a year with a yield of 2.59% dividend [compound annual growth rate] of 12% and still have a $10.99 CAGR for price appreciation,” the Redditor wrote.

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One comment listed a few dividend-forward holdings and what the investor can earn by putting his money in them.

“SCHD, [iShares Core Dividend Growth ETF (NYSE: DGRO)], [Vanguard Dividend Appreciation ETF (NYSE: VIG)], [WisdomTree U.S. Dividend Growth ETF (NYSE: DGRW)]. These are your dividend growth ETFs. The only cover call ETF you should look at is [Amplify CWP Enhanced Dividend Income ETF (NYSE: DIVO)] and compare it to [Global X NASDAQ 100 Covered Call ETF (NASDAQ: QYLD)]. $30,000 is about what you'll get from this mix,” he said.

Be Mindful of Taxes and Capital Gains

Several commenters touched on taxes and capital gains since transitioning from a high-risk portfolio to a dividend-focused one means managing all the tax implications.

One Redditor simply wrote, “Consider capital gains.”

Another Reddit member expanded on this issue, offering the poster a tip on how to mitigate this.

“You may be able to sell off a lot and lose 15% to Uncle Sam and a chunk more at 18.8% (15%+3.8%). The idea is not to hit the 20% bracket but to move fast enough that the 3.8% hit on [net investment income tax] is acceptable compared to the cost of another big drop,” he said.

Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.

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This article From High-Risk To High-Yield: Investor With $700,000 Wants To Build A $1 Million Dividend Portfolio–'How Much Can I Really Earn Monthly?' originally appeared on Benzinga.com

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