Do you aim for regular dividend payments across the year?

Discussion in 'Share Investing Strategies, Theories & Education' started by Redwing, 23rd Nov, 2018.

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  1. Redwing

    Redwing Well-Known Member

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    Stolen from dividends down under but do you keep a track of when dividends come in and balance this to ensure regular dividends across the year (even if ETF's added in for varying payment dates) and in line with LIC's dividend smoothing, rather than 'lumpy' payments

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  2. Snowball

    Snowball Well-Known Member

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    I don’t bother with it. More likely to lead to buying things for the timing of payments rather than the merits of the investment.

    I just focus on building the portfolio I want regardless of when they pay dividends. On a yearly basis it all evens out.

    And in retirement we need to keep a couple years cash anyway as a buffer so it’s not like there’d be a shortage of cash in between dividend payments.

    ...but I definitely keep track of when they come in! :D
     
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  3. SatayKing

    SatayKing Well-Known Member

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    What's your concept of sufficient cash buffer @Snowball? Only enough to cover overheads such as rates, internet, rego, etc or do you include craft beer and the like? I'm asking this as I've not seen any definition of cash buffer and what it contains. Could be one around but I can't find it.

    Be rather a strain if someone works on the basis "I spend $80k pa so I need to keep $240k aside all the time!" While that is extreme obviously, you never know. People have different concepts and as each household is structured in its own way maybe it's not possible to provide a clear definition.

    For me it is the annual costs of keeping the roof over my head, insurances, communication, car, guitar strings of course plus three years supply of Four Pillars.:D
     
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  4. Nodrog

    Nodrog Well-Known Member

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    No. In fact the less the better as I don’t have as many transactions to record. Although it the case of our ETFs I do enjoy the quarterly distributions but only having to provide the accountant with a “single” annual statement.

    If irregular annual dividends are a problem it would suggest the investor is perhaps not holding a sensible level of cash. A much greater problem rather than lumpy dividends is a significant cut in dividends / distributions when bad times hit the market. This is when not holding a sensible level of cash could be dangerous. It’s also when investors in quality LICs are thankful of these being able to maintain or minimise cuts to dividends in such troubled times.

    So the point being never underestimate the importance of a decent cash buffer! The size of the cash holding will Vary for each person depending on lifestyle, especially mandatory expenses, and SANF.
     
    Last edited: 24th Nov, 2018
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  5. balwoges

    balwoges Well-Known Member

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    I have chosen stocks that pay dividends spread over 12 months, July & December provide me with good dividends, other dividends March/April and October/November not as much.
    Am cautious and keep 3 years living expenses tucked away.
    PS Am retired and have sold income producing property ...
     
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  6. SatayKing

    SatayKing Well-Known Member

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    Essentially, what most are alluding to is.......... Budgeting. :eek:

    May not realise it but that's what's happening one way or another.
     
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  7. kierank

    kierank Well-Known Member

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    Nah, I just let the dividends, whenever they come in, top up our 3 year cash reserve in our SMSF.

    Over the last 16 years, our dividends averaged 6.17%pa in our SMSF (according to Sharesight).

    So taking out the mandatory 4% means our cash reserves are continually increasing. We pay our pension in the first week of July every year as a lump sum and place the funds in one of our Offsets. This is more than enough for our lifestyle and travel needs.

    As long as we only take out the minimum mandatory rate, this increasing cash balance will continue to occur until we get to 80 (in 18 years time :eek:) when the mandatory minimum rate reaches 7%.

    Who cares which month the dividends are paid? To me, it is way more important that are paid and their amounts do not reduce!!!
     
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  8. Nodrog

    Nodrog Well-Known Member

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    Lets hope Bill Short-of-a-Brain doesn’t get his franking credit policy legislated else those cash reserves will be increasing a lot less than in the past. Over 65’s (min 5% withdrawal) will potentially be drawing on capital a lot sooner under that legislation as currently proposed unless they’ve invested mostly in high dividend bank shares and the like which comes with its own risks.

    Doesn’t matter that much to us as we’ll simply reinvest forced withdrawal of equities currently held by SMSF in own names.

    I’ve been keeping tabs on strategies to negate / minimise the impacts of this if it occurs. But that’s another topic and I’ve got a bad habit of drifting off topic.
     
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  9. Snowball

    Snowball Well-Known Member

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    Well for us, right now we have a relatively high amount of cash (for us) but that’s to pay for ongoing property expenses until those are sold off. But we’re certainly nowhere near running out of banks to use like @Nodrog ;)

    And we’re also earning some income now making it even less necessary. But if we didn’t, I’d be satisfied with 1-2 years of full expenses covered. Everything included. But our spending is only $45k pa so that’s not a huge amount.

    Personally I’d prefer to keep as little cash as possible to stay fully invested and just be more flexible with spending and living arrangements, but not everyone is keen on that idea.

    The less flexible ones spending, and the less ability or willingness to work they have, the more cash they need in case something goes wrong.

    I think 2 years of full living expenses is a decent place to start. And then adjust up or down to suit depending on the other stuff.
     
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  10. Redwing

    Redwing Well-Known Member

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    @Snowball Hanging onto the WA properties until the market improves, or selling off gradually regardless?
     
  11. tc8

    tc8 Well-Known Member

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    I invest in US stocks...every time the company pays a dividend, my bank charges a handling fee.

    So I’d rather have 1 payment rather than 4 payments over the year.
     
  12. Nodrog

    Nodrog Well-Known Member

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    In that case maybe no dividend is best:D.
     
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  13. Snowball

    Snowball Well-Known Member

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    They’ll be the last to go, holding for at least another 5 years, but plan is all gone within 10 years regardless.

    Am expecting at least a bit of growth over that time (outlook is improving) and we’re now paying P&I to get the much lower rate so should still be bit of equity extracted from each sale.
     
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  14. willair

    willair Well-Known Member Premium Member

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    I had a quick look at the way it spans out over the year--most come in feb -march ----then from October onwards and there are only 4 that pay-out within those time periods all the rest are within ""DRP"" just reinvested within those listed ASX companies and in a ever changing investment environment I intend to keep the entire set-up that way and let the economic life cycle just tick by day by day..
    The largest holding is CBA and in 122 days the cheques will just like magic turn up in the po-box and depending on who you listen too is selling at significant discount to it's value ..
    I did have a large cash buffer just in case 6 months ago maybe 4-5 years but that buffer is maybe in the 1-2 year range now as I did after the GFC MACH 1 buy back in and the same over the past six months …Then the rents just turn up each month to balance everything out..
    Insurance Rates Water bills 4 times a year are a large cost ,but that's the cost of investing ---and as the great Kerry Packer said ..""If you don't complain ---You don't have to explain..

    My only advice as it's not advice as once one reads within this post as everyone is different in some many ways is..
    ""Never ever let yourself become paralyzed by too much media fools game information"" just set your own pace and let compounding on compounding do what it does ,just do the best you can..top day outside in the free world..
     
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  15. Nodrog

    Nodrog Well-Known Member

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    What’s a cheque:confused:?
     
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  16. willair

    willair Well-Known Member Premium Member

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    I'm just too lazy to change it all Mate ,plus it makes my day when those yellow cheques are just sitting there waiting,problem is I should have just left it all in the "DRP" as all I do is just re--invest it all again ,and after 23 years of compounding and watching the banking RC and the board of the CBA at the recent CBA AGM in Brisbane I thought stuff them ...At least with BOQ they have the AGM at the Brisbane Hilton this week and the food will be a lot better before and after the board tells everyone how good they are while I talk too the few old investors that dress simple and once they open the mouth I just listen and help them fill up the tuper-ware in the brief-cases with cakes for their lifetime partners that can no longer walk and need 24/7 home based live in care..

     
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