Maximize Dividends: Rock the Boat

Rock The Boat

Don’t Find Comfort In Routine, Shuffle The Dividend Payers

The team members of The Wealth Artisan invest on a monthly basis, and some almost on a daily basis. We all invest towards our main goal, and that is passive income. Most of us love dividends, and that is our choice for passive income, but did you know that you can maximize your dividends by invest in a more strategic way?  Yield on cost is an important subject to master, but rocking the boat is easy and you get instant results (almost).

What we’re referring to, we call “dynamic” investing.  It’s easy to choose 6 stocks you want and buy automatically on a monthly basis, but by being just a little more diligent, you can increase your dividends significantly.  How does this “dynamic” idea work?  Companies pay out dividends at different times.  Let’s say you have $400.00 you want to invest in across 4 companies evenly.  The companies are called A, B, C, and D.  Companies A, and B paid their dividends last month, and companies C and D are paying at the end of this month.  Does it make sense to put $100.00 into companies A and B when the money is just doing to sit there for 3 months?

The answer is a big, fat, NO!  Put more money into companies C and D and get dividends on that money this month! Will this require a bit of extra effort on your part?  Absolutely, but in the end it is quite worth it.  We did some rough math and graphing to demonstrate this idea.  The below graph assumes $150.00 across 6 companies paying out about 3% a year in yields.  With dynamic investing you outpace your flat investment by about $2,000.00 over the course of 10 years.  Not bad for just moving the same amount of money a little differently!

Notice how "dynamic" investing, shown in orange, outpaces the lazier "flat" investing.
Dynamic investing requires a little more effort, but it pays off.

It requires a little more effort and a little more diligence to do this but as you can see, the results really add up.  By rocking the boat a little, you took a comfy monthly investment, and turned it into a real winning plan.

Start Maximizing Your Dividend Payers

Here are some things to consider in order to do this properly:

  • Figure out when each company will be issuing their dividends
  • Find out what the Ex-Dividend date is
  • Write these dates on a white board
  • Allocate your monthly money in a way that will put more money into the stocks paying dividends soonest
  • Update your board as needed so that you are continuously putting money into the dividend payers

We stress the white board approach because it makes visualizing your plan of attack a lot more friendly, and it helps to keep you on track.  The ex-dividend date is important because it tells you when you must invest in the stock in order to get the dividend.  A great resource to find these dates quickly is Dividend.com.  If they don’t have the date listed, or the date is slightly passed then it is probably because the next date hasn’t been announced.  In this instance you can use Google.com/finance and look at last year and the year before to get a ballpark of when the next dividend will be issued.

Rock the boat and enjoy the results.