I was reviewing my income received the other day for my dividend account and after realizing it is way too low I had a quick thought…should it matter when dividends are paid by the companies I am investing in? Should the payment date of the dividend actually come into consideration when choosing individual dividend stocks to invest in? As always with personal finance I think the answer is that it depends.
Should it matter when a Dividend payment is made?
In an unrelated article author Robert Laura provides his approach to dividend income through a laddered equity approach. The example he provides:
Like CDs, many blue-chip companies pay their dividends at different times, including quarterly and annually, as well as in different months. By strategically buying stocks with sequential dividend payments, investors can generate consistent income well above current CD rates and other packaged products. Take for example these three companies:
Jan – KMB
Feb – PG
Mar – JNJ
Apr – KMB
May – PG
Jun – JNJ
Jul – KMB
Aug – PG
Sep – JNJ
Oct – KMB
Nov – PG
Dec – JNJ
Assuming each company maintains their current dividend and payment date, they combine to provide a monthly paycheck throughout the year.
Using his system he would have a monthly “paycheck” which is a very interesting and attractive thing to have as a retiree and considering the 3 stocks he chose have a long history of dividend payments it should increase yearly (but as well all know nothing is guaranteed).
I could see this being an amazing tool for a retiree or near retiree looking for an income stream based on dividends, but right now I am still in the accumulation phase. As such, I don’t think planning today for when 40 year old’s Evan’s Dividends hit his bank account should take a higher priority then using all the metrics to determine when I pick up chunks of the dividend champion list.
Checking when My Dividends Are Paid
Just for kicks I took a quick look at my holdings to see when I get paid out:
- Jan –
- Feb – AFL, JNJ, MMM, PBI, WAG
- Mar – BDX, CB, CTL, LEG, NFG, SWK, VFC
- Apr –
- May – AFL, JNJ, MMM, PBI, WAG
- June – BDX, CB, CTL, LEG, NFG, SWK, VFC
- July –
- Aug – AFL, JNJ, MMM, PBI, WAG
- Sept – BDX, CB, CTL, LEG, NFG, SWK, VFC
- Oct –
- Nov – AFL, JNJ, MMM, PBI, WAG
- Dec – BDX, CB, CTL, LEG, NFG, SWK, VFC
Wow, I may have left some gaping holes of income for Future Evan, but he can deal with it then since present Evan was nice enough to set this thing up for him.