Dividend Investing 104: Building a Dividend Payment Schedule

Few things in life are more satisfying than receiving dividends. Although we invest our money to earn dividends, they are still gifts from heaven.

As we continue our dividend investing journey, we begin to fine-tune when we receive our dividends. I have been dividend investing for four years and am still tweaking my dividend schedule.

Welcome back to the Dividend Investing 101 series (101, 102, 103), where we earn income throughout the entire month.

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The timing of dividend payments. Dividends come in all shapes, sizes, times, and yields. We need to search for various products across the investing landscape to optimize our dividend schedule.

Start with monthly payers. As income investors, the best place to start is with monthly payers. One day, we will retire on dividend income, so we will pay our bills with dividends.

Therefore, creating consistent monthly paychecks to help us throughout the month makes sense. Let’s look at some of my favorite monthly payers.

1. First of the month: PDI, PDO, PTY, NVG, ARTFX, LAND
2. First week: BLV, JNK, PFF
3. Around the 10th: AGNC, DIA
4. Around the 15th: DIV, SDIV, O
5. Between 16-25th: KBWD, DHS
6. Last Day: PFFA, ECC, OXLC, UTG, UTF

As you can see, we have tons of different options across bond funds, preferred funds, mortgage REITs, and closed-end funds.

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I love receiving my dividends on the first and last day of the month. I actually enjoy it more than my work paycheck because I don’t earmark this money for anything. It’s literally “free money.”

Adding quarterly payer. Most of your blue-chip dividend-paying stocks pay quarterly. As a dividend growth investor, you may not take these payments in cash during the accumulation phase.

However, you want to prepare for the time when you will take these dividends for retirement. The article “My 24 Favorite Blue-Chip Stocks” covers all the payment months. But let’s do a quick guide.

1. January, April, July, October: PM, MO, MPW, CINF, NLY, IRM
2. February, May, August, November: T, VZ, PG, MA, ABBV, AM, BTI, BX, OHI
3. March, June, September, December: PFE, VTI, PRU, VNQ, ARCC, WFC, SPG

Once you get the hang of adding quarterly stocks, you’ll see the true power of dividends. Combining quarterly and monthly stocks gives you robust levels of control for your schedule.

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Timing your quarterly payments. Inside of your quarterly payments, some stocks pay on a rock-solid basis.

For example, AT&T (T) and Verizon (VZ) always pay on the first of their payment months. Ares Capital (ARCC) always delivers on the last day of its payment months.

Once you get a feel for these schedules, you can incorporate them into your payment windows more quickly. I love receiving my T and VZ stocks every three months—it makes me very happy.

A weekly paying dividend stock? I just discovered a weekly paying dividend stock. It’s called SoFi Weekly Dividend ETF (WKLY).

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I have bought one share and haven’t received one payment yet; however, I will keep you posted. SoFi composed the ETF as a Dividend ETF akin to Schwab Dividend ETF (SCHD). As you know, SCHD is one of my favorite securities of all time.

The only issue I see with WKLY is the dividend yield is only 3%. This means we should see capital appreciation over the years but will need lots of money to get a high dividend payment.

To earn $100 per week, you need to invest $17,333 into WKLY. This is possible over a few years. Thankfully, it should have a great dividend growth rate over time. We shall see; it’s only two years old.

Combining high and low yields. Another consideration is how much each security yields. Income-investing securities are outstanding because they give you immediate income.

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However, you’ll also want to have long-term growth. Let’s compare three different monthly-paying securities. 

The Dow Jones Industrial ETF (DIA) is a monthly paying index fund that yields 2%. WisdomTree Dividend ETF (DHS) is a monthly-paying Dividend ETF that yields 4.5%, and PIMCO Dynamic Income (PDI) is a monthly-paying Bond Closed-End Fund that pays 12%.

Putting $10,000 into each security will net you the following monthly income: DIA ($17), DHS ($37.5), and PDI ($100).

Although we all want to run towards PDI because of the high income, that may not be in our best long-term interest.

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While DIA pays the least, it usually experiences 8-9% growth. Over the long term, we can leverage this capital appreciation in other ways, like taking margin loans against this to start a business.

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I like to interact with my dividends. I take some in cash, others reinvest back into the same securities, and some I reinvest into what is good at the moment.

I opened my sixth brokerage account yesterday with SoFi (SOFI). I am a huge believer in SoFi as a long-term investor, so I decided to check out their offerings.

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My plan for my SoFi account is only to add monthly payers (along with WKLY). I want to earn at least 2-4 dividend paychecks every week. This is an exciting time to be a dividend investor.

I love tinkering with my dividend schedule. I just added $6,000 towards Eagle Credit (ECC), a CLO-closed-end fund. This will give me $90/month of dividend income to my Wells Fargo brokerage account.

Conclusion. We discussed weekly, monthly, and quarterly paying dividend stocks. Putting them to proper use will take some time and planning, but that’s the fun of dividend investing.

We also discussed yields and how they can factor into your selection process. Balancing growth and dividends is tough sometimes. We all want a high-income today, but we must also think long-term.

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As much as I love receiving huge dividends from AGNC, I am happy to receive my puny dividends from DIA. DIA is growing at a good clip, and it will keep the light on if I need to leverage capital appreciation.

Don’t let all this talk about schedules scare you away from dividend investing. I have been doing this for four years, and I’m still learning.

Take it slow and build out a simple schedule. My article “You First Five Dividend Stocks” will give you a sample of your first five stocks. Good Luck!

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