Dividend Investing: Payment Dates Don't Matter

by Michael on Dec 7, 2012 · 1 comment

Image of Calendar with Payment Date

Here we go again. Every once in awhile I’ll run into an article* about a great set of dividend-paying stocks whose payout dates are lined up to ensure a monthly flow of dividends.

And when I do, I can’t help but roll my eyes.

If you’re interested in picking stocks, there are plenty of things to consider, but the dividend payment date shouldn’t be one of them. Seriously. Ignore it.

If you’re disciplined enough to build a portfolio capable of supporting your income needs in retirement, then you’re disciplined enough to manage your cash flow.

Think of it this way…

Dividends are (typically) paid quarterly. That means that, at worst, you’ll be receiving dividend payments every three months. Consider the hypothetical case of a $1M portfolio with a 3.6% yield — or $36k/year in dividend outcome.

That works out to an average of $3k/month.

At best, if things work out just right, you’ll get exactly $3k/month. At worst, you’ll get $9k every three months. In the latter case, simply deposit the dividend payments in a dedicated savings account and pay yourself $3k/month.

There. Problem solved, and you didn’t have to let something as inconsequential as the dividend payment date influence your stock selection.

Sorry, but deferring to the calendar when selecting your investments is just dumb.

And no, I’m not advocating dividend investing as a preferred strategy, nor I am suggesting that you start picking individual stocks.

*Note: If you must know, it was an article from Kiplinger.

1 Dividend investing Martin August 13, 2013 at 12:12 am

It is called a dividend ladder and although I like it, I am not deciding which stocks to buy just to satisfy it. I have a dividend calendar on my blog (please go and visit it and let me know what you think), but I have it there just to see when I receive my dividends, because I am truly excited when there is a payday and I am thrilled to reinvest them.
So I am not against this, if someone wants to line up his/her dividends, fine, their choice, but I do not do it either.

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