Did you hear about the 20-year-old who recently won the lottery and turned down a $1 million lump sum for $1,000 per week instead?

This isn’t terrible. Since $1,000 per week works out to $52,000 per year in passive income.

However, these payments don’t escalate to keep pace with inflation.. And to give you an idea of why this is important, let’s turn to a story told by Rambo creator David Morrell.

In the 1970’s Morrell sold the First Blood screenplay rights for $90,000 with a $45,000 payment for each future sequel or spin-off. Unfortunately, this contract did not included any provisions for inflation or cost-of-living adjustments.

In 1985, Morell received $45,000 for Rambo: First Blood Part II.

In 1988, he received another $45,000 for Rambo III.

Meaningful money for the time.

In 1987, the median home price in the United States was roughly $97,900.

But, in 2019, he received $45,000 for Rambo: Last Blood. That year the median price of a new car was $38,000.

Over 34 years, Morrell’s sequel payments went from covering nearly half the cost of an average home to barely buying a mid-range SUV. The dollar amount never changed, inflation simply eroded its purchasing power.

I bring this up for a fun thought experiment.

What if you received a one-time, post-tax lump sum of $500,000?

Could you construct a conservative dividend portfolio that consistently beats inflation through dividend growth and long-term total returns?

For this exercise, there’s no leverage and no options trading.

We simply invest $100,000 into each stock at its current price.

Abbott Laboratories is a healthcare company that makes both retail products and high-tech medical devices. You might enjoy an ice cold bottle of peach Pedialyte after working out, or you might require a lifesaving pacemaker. Abbott makes both products.

The company has paid dividends every quarter for over 100 years. And, Abbott has raised its dividend every year for 54 years.

These aren’t small raises, either.

Abbott has an inflation-beating 5-year compound annual dividend growth rate of 10.38%.

At a current share price of $125.50, a $100,000 investment would purchase 797 shares. Each share pays $2.52 in annual dividends, producing $2,008.44 in income over the next 12 months.

American States Water Company is a water utility with the unique distinction of maintaining the longest dividend growth streak in the United States. The firm has raised its dividend every year for 71 consecutive years. And, American States Water has an inflation-beating 5-year compound annual dividend growth rate of 8.66%.

This is a straightforward business model with the company providing water to over 1 million customers across 10 different states.

At $73.10 per share, a $100,000 investment would buy 1,368 shares. With an annual dividend of $2.02 per share, this position would generate $2,763.36 in income over the next year.

The most conservative stock on today’s list and a company that’s dividend growth rate fails to keep pace with inflation. So why invest?

The Coca-Cola Company is one of the world’s largest non-alcoholic beverage companies. Coca-Cola's product portfolio includes soft drinks, juices, coffee, and bottled water. And, while the company’s 5-year compound annual dividend growth rate is only 4.46%, the stock’s 10-year average annual total return of 8.33% still outpaces inflation.

The company has also increased its dividend for an impressive 63 consecutive years.

At a share price of $70.10, a $100,000 investment would buy 1,426 shares. Each share pays $2.04 annually, resulting in $2,909.04 in dividend income over the next 12 months.

Old Republic International Corporation is a blue chip insurance company that writes specialty and title policies. The firm has been in business for over a century and has also paid uninterrupted dividends for 84 years.

What makes Old Republic especially appealing is its frequent special dividend payouts.

These one-time distributions give the company an enormously high starting yield.

Old Republic International has an upcoming $2.50 special dividend that will be paid in January 2026. The company also currently pays a $1.16 total annual dividend that is backed by a 5-year compound annual dividend growth rate of 6.67%.

At $45.50 per share, a $100,000 investment would purchase 2,197 shares.

Including the special dividend, Old Republic is set to pay $3.66 per share in total dividends, generating $8,041.02 in income for the next year.

Union Pacific Corporation has been in business since 1862.

The company operates a railroad network in in 23 western states. And, the firm has a near-duopoly on all railway freight west of the Mississippi River.

Additionally, Union Pacific has paid dividends every year for 126 years. This is a timeless investment since rail transportation is the easiest and cheapest way to move large quantities of goods across land. Despite the invention of trucks and airplanes, neither managed to disrupt Union Pacific’s business model.

Union Pacific Corporation has a 5-year compound annual dividend growth rate of 6.99% and a 10-year average annual total return of 14.29%. Even though this is an old company, it still keeps pace with the general market.

At $234.25 per share, a $100,000 investment would buy 427 shares. With an annual dividend of $5.52 per share, this position would generate $2,357.04 in first-year income.

These five conservative dividend investments totaling $500,000 would pay a combined $18,078.90 in their first year of ownership. And that’s without considering any of the dividend raises that should occur over the next 12 months.

This figure works out to $1,506.58 per month, or $376.64 per week, in dividend income. Less than the $1,000 per week guarantee that the lottery winner received.

However, these five stocks have an average 5-year compound annual dividend growth rate of 7.43%. At this pace, an investor’s dividend income should double every 9.7 years. So, an investor would earn $753.28 per week by 2034, and $1,506.56 per week by 2043.

Despite starting with half the lottery winner’s jackpot, this portfolio would surpass the lottery winner’s fixed $1,000 weekly payout in just under 20 years.

And within 30 years, these five stocks would generate more than $3,000 per week in dividend income, with the investor maintaining full ownership of the underlying assets too.

Successful investing is often less about making the right moves and more about avoiding the wrong ones. With our guide, 13 Retirement Investment Blunders to Avoid, you can learn ways to steer clear of common errors to help get the most from your $1M+ portfolio—and enjoy the retirement you deserve.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.