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.