Monthly dividends for income

[Deleted]

I saw this question from another message board. I am curious how all you wise ones would answer it. "At age 65 I would like to buy 3 stocks for income purposes.  I want one that pays dividends in Jan,Apr,Jul,Oct.  I want one that pays dividends in Feb,May,Aug,Nov.  I want one that pays dividends in Mar,Jun,Sep,Dec.  I know there is nothing unique about this method but I would like to receive a check in the mail on a monthly basis for dividend income.

Please share with me your suggestions.  I would like for the dividend rate to be at least 3.5% or higher.

Thanks for any ideas you care to give me.

[Deleted]

WXYZ, thanks for the welcome! I have been an on and off lurker for awhile. We have been sitting in mostly cash for awhile and know we need to put it to work since retirement is only a few years away. I am still uncomfortable about the markets but dividend paying stocks seem to be an easy way to inch back in. I will keep abreast of your thread and probably ask a few stupid questions here and there

[Deleted]

M2W - Firstly, allow me to extend you a Hearty welcome to the community. We look forward to hearing your thoughts and views.

Now to comment on the Monthly Income question. There are several Ways to capture Monthly Dividends (or if you prefer Residuals).
The Most common are to Establish a Bond Ladder (I don't favor this at present) - Seek out and Establish a a Portfolio that is C.E.F (Closed End Funds) centric (this has a whole set of issues that complicate this) - Set up a Staggered Dividend Portfolio comprised of Quality Individual Equities -Or- Set up a Staggered Dividend Portfolio Of Mutual Funds.
(Or A Staggered combination Portfolio Of Quality Individual Equities and Mutual Funds)

Bonds have the issue right now of High Premiums to face and Low return (Price and Yield are Inverse {opposite of each other} and the Bond Market is IMHO far to overheated.

Closed End Funds are very, very hard to Properly Value and most of these are rather illiquid - which can pose a whole range of issues, all of which can be very bad.

Individual Equities are subject to "mood" swings, Global Events, Gov. Policy, and other issues.

Mutual Funds are subject to the same as Individual Equities AND the Actions (or inaction's) of the Fund Manager, The Fees associated with the fund, the fund Structure and other issues.

So what to Do? That really comes down to what you think and feel.
My personal Opinion is that Individual Quality Equities that Pay Decent dividends are the way to go for the Long Term, I am Not Personally Hot on Funds (fund fees & Structures mess with the return and the choices of the Manager).

As for Closed End funds I like the Idea - But not Direct exposure To C.E.F's .
To gain Exposure to C.E.F.'s I use an ETF (one of Very few I actually own, or mention as something one might look at) - PCEF.
PCEF Pays a Monthly Dividend, and is Price wise not all that expensive.

Just my Thoughts.

[bimetalaupt]

Feb 4, 2012 15:56:15 GMT -5 @di said:

M2W - Firstly, allow me to extend you a Hearty welcome to the community. We look forward to hearing your thoughts and views.

Now to comment on the Monthly Income question. There are several Ways to capture Monthly Dividends (or if you prefer Residuals).
The Most common are to Establish a Bond Ladder (I don't favor this at present) - Seek out and Establish a a Portfolio that is C.E.F (Closed End Funds) centric (this has a whole set of issues that complicate this) - Set up a Staggered Dividend Portfolio comprised of Quality Individual Equities -Or- Set up a Staggered Dividend Portfolio Of Mutual Funds.
(Or A Staggered combination Portfolio Of Quality Individual Equities and Mutual Funds)

Bonds have the issue right now of High Premiums to face and Low return (Price and Yield are Inverse {opposite of each other} and the Bond Market is IMHO far to overheated.

Closed End Funds are very, very hard to Properly Value and most of these are rather illiquid - which can pose a whole range of issues, all of which can be very bad.

Individual Equities are subject to "mood" swings, Global Events, Gov. Policy, and other issues.

Mutual Funds are subject to the same as Individual Equities AND the Actions (or inaction's) of the Fund Manager, The Fees associated with the fund, the fund Structure and other issues.

So what to Do? That really comes down to what you think and feel.
My personal Opinion is that Individual Quality Equities that Pay Decent dividends are the way to go for the Long Term, I am Not Personally Hot on Funds (fund fees & Structures mess with the return and the choices of the Manager).

As for Closed End funds I like the Idea - But not Direct exposure To C.E.F's .
To gain Exposure to C.E.F.'s I use an ETF (one of Very few I actually own, or mention as something one might look at) - PCEF.
PCEF Pays a Monthly Dividend, and is Price wise not all that expensive.

Just my Thoughts.

FIRST OF ALL!!! WELCOME M2W!! IT IS GREAT TO HAVE NEW BLOOD IN THE IBB AND SFW........ YOU HAVE TO FORGIVE DI AND ME IF WE USE TERMS THAT ARE PURE STREET LIKE "BOND LADDER" AND "STAGGER DIVIDENDS" OR "STRUCTURED INCOME ".. IT IS NICE TO HAVE INCOME EVERY MONTH!!! AND NOT ALL AT THE END OF THE YEAR..

IF YOU EVERY HAVE A QUESTION..PLEASE ASK!!!

DI.
Great to see you Back..I prey everything is now ok!!!! THE LAST RUN I DID FOR TOTAL INCOME WAS CORRECTED TO INCLUDE SHARE BUY BACKS.. This is a real eye opener.. most Dividend stocks like DUK or SE are overpriced!!!! Little if any Intrinsic value from the DCF Model.... Ouch.. esp with two of my top 4 stocks have almost zero Intrinsic value .. remember dividends are reduced by your marginal tax rate!!... This is interesting when you look at he bankruptcy recovery of ElPaso Electric from 7 to 38.. in 8 years. They do not pay a dividend!! and are now less over-leveraged then in 1999..

Just a thought.. again Welcome M2W,
BiMetalAuPt
D.I.

[bimetalaupt]

Feb 4, 2012 10:02:56 GMT -5 @m2w said:

I saw this question from another message board. I am curious how all you wise ones would answer it. "At age 65 I would like to buy 3 stocks for income purposes.  I want one that pays dividends in Jan,Apr,Jul,Oct.  I want one that pays dividends in Feb,May,Aug,Nov.  I want one that pays dividends in Mar,Jun,Sep,Dec.  I know there is nothing unique about this method but I would like to receive a check in the mail on a monthly basis for dividend income.

Please share with me your suggestions.  I would like for the dividend rate to be at least 3.5% or higher.

Thanks for any ideas you care to give me.

M2W,
Your equation for investing is far too important for me to just write the first thing that cam into my mind so I thought it over ....I called it an equation as it is a bit simple for model..

First of all 33.3% in one stock is far too concentrated.. I know My top 4 are 80% and yes they pay dividends but all are cash paid out stocks I have held for over 25 years, It was three but SE was stock DUK gave to me as a tax free spin-off.. I had held Cinergy and Duke but they merged then made a spin off SE. What you are doing is trying to chase the market. I did see several stock that do have an ( Intrinsic Stock Value) [/b]ISV of more then 150% on Valuepro.

An example would be KO or K.

KO ISV= $140 or a nice profit for the long holder.. dividend of 2.8%.. at 68.08
K ISV = $94 with a dividend of 3.5% at 50.84
xom ISV=$172 with a dividend of 2.3% at 84.92 buy in the summer after Aug,,ie Sept or Oct
JNJ ISV = $112.3 with a dividend of 3.5% at 65.64
MRK ISV = $67 WITH A 4.4% DIVIDEND AT 38.37 ...
T ISV = $54 WITH A 5.9% DIVIDEND AT 29.95
Now if my memory serves me correctly KO pays DEC 15 BUT THEN GOES TO APRIL 1..XOM ON MARCH 9 AND JNJ MARCH 23.. K PAYS ON MARCH 15TH
MRK ON JAN 9TH
AND BRING UP THE FEB DIVIDEND IS T AT FEB 1.. I CAN STILL RECALL THE RECORD OF PAYING $9.00 A YEAR DIVIDENDS ALL 10 YEARS OF THE 1930'S..
NOT A RECOMMENDATION BUT A THOUGHT.. ONLY A THOUGHT.. NOW I AM LOOKING FOR NUMBER 10!!! WILL IT BE a return to MRK??? or T???

Just a thought,
Bruce
PS:check out value pro and do your own Due Diligence.. Forget the cold calls cold.

[Driftr]

Feb 4, 2012 10:02:56 GMT -5 @m2w said:

I saw this question from another message board. I am curious how all you wise ones would answer it. "At age 65 I would like to buy 3 stocks for income purposes.  I want one that pays dividends in Jan,Apr,Jul,Oct.  I want one that pays dividends in Feb,May,Aug,Nov.  I want one that pays dividends in Mar,Jun,Sep,Dec.  I know there is nothing unique about this method but I would like to receive a check in the mail on a monthly basis for dividend income.

Please share with me your suggestions.  I would like for the dividend rate to be at least 3.5% or higher.

Thanks for any ideas you care to give me.

I was originally trying to set up my retirement to pay equally in each month. I have since decided to focus on a quarterly income number so I did not need to limit which of the stocks I bought. If you're going to do the monthly thing though these are the ones I like listed from favorite to least left to right. I think they are all yielding >3.5%. I have others that aren't that I like 'better' but they are not listed.

Month 1: PM / KFT / KO
Month 2: VZ / PG / NMM (wild swings)
Month 3: DUK / BP / DD

[bimetalaupt]

drift,
KO is good at 2.8% income but it does not Pay a January dividend.. Pays a Dec 15 dividend for the Jan dividend.. Christmas early.. Could leave you low on cash like the rest of us.
ValuePro give KO an ISV of $140 so long term it could be a real winner..

For January dividend I think MRK will also work.. Pays 4.4%.. A lot more then when I started to buy MRK in the 1960.. Sold out in 1999 at the high of around $70 to pay for my MBA!!!


Just a thought,
Bruce

[Deleted]

Wow, thanks for such thorough replies. A little background... We got out of the market just before it dropped... the Dow was around 13,400 at the time. We were lucky we could sleep at night while our friends were very anxious. We knew we should have gotten back in awhile back but my husband was laid off and we couldn't take the chance of a double dip. Gratefully he is now employed and putting money into his 401K. Since he is a few years away from retirement we thought this would be a good time to start buying dividend stocks with a portion of the money sitting in cash. :

I know my husband will be impressed with all the knowledge and opinions from this board. I know I am! Thanks for all the great imput.

[Driftr]

Feb 6, 2012 15:30:54 GMT -5 bimetalaupt said:

drift,
KO is good at 2.8% income but it does not Pay a January dividend.. Pays a Dec 15 dividend for the Jan dividend.. Christmas early.. Could leave you low on cash like the rest of us.
ValuePro give KO an ISV of $140 so long term it could be a real winner..

For January dividend I think MRK will also work.. Pays 4.4%.. A lot more then when I started to buy MRK in the 1960.. Sold out in 1999 at the high of around $70 to pay for my MBA!!!


Just a thought,
Bruce

Yeah. Thought about mentioning the KO 'early pay' for their Q1, but hoped m2w would get into PM. Didn't realize the yield on KO was down to 2.8%. Stcok has done some nice running this year. I suppose I should expect a bump in their dividend this year if that keeps up. Cool.

[Deleted]

"2. Have the dividends go into my account the first year and not draw them out.

3. Starting the second year draw out all the dividends from the account that accrued the first year

6. If you want the money monthly, just draw out 1/12 of the prior year dividends each month"

This is pretty much our plan for 2013 when DH retires.

We'll keep about $70k in cash as our "next year's income". It's what we estimate our investment income will be from all sources. Then we can decide whether we want to draw out any money from my 457 or start tapping my pension.

We still need to model if it makes more sense to just receive dividends and bond mutual fund interest in cash or keep re-investing and sell.

[Deleted]

keep re-investing and sell.

There in will lie a few "rubs".

1) You will have to become versed in SPECIFIC LOT ASSIGNMENT Sales.

2) You Will Have to Decide each time if you want to Make the assignments against Lots you have held LONG Term or if you want to make assignments against Lots That Have Been Held SHORT Term.
The Choice will affect how the Capital Gain is Reported and thus taxed.
Also, Making Assignments From LONG term Gains (Oldest Lots) or FIFO (First In, First out) will Ultimately Remove lower cost Lots and thus Raise your Cost Basis.

3) This decision Should be made (IMHO) ONLY after talking it over with your DH - AND your Tax Preparer and Estate Planner, as well as any other Financial advisers you may have.

Given the Age range You sound as though you are talking from, I am of the Opinion that you and Your DH have worked Far too hard for a very long time and have already been screwed way too hard form the fallout from the last 5 years - To Risk any of the several thousand potential pitfalls attempting to Try and Figure out the Benefits or drawbacks from Either Choice Alone.

I know you probably don't want to hear some one say "go talk to the Pro's" - Especially given the crap the "Pro's" have done over the last 5 years ( and it probably sounds weird coming from a guy who Repeatedly says the Pro's are IHO idiots)... Yet it is the most Prudent thing you could do.

You are talking about your Retirement, Your Estate, the Fruits of A Lifetime of Hard Work and careful planning..
You and Your DH have worked too hard, to drop the ball now..

[Deleted]

"You will have to become versed in SPECIFIC LOT ASSIGNMENT Sales.

2) You Will Have to Decide each time if you want to Make the assignments against Lots you have held LONG Term or if you want to make assignments against Lots That Have Been Held SHORT Term.
The Choice will affect how the Capital Gain is Reported and thus taxed.
Also, Making Assignments From LONG term Gains (Oldest Lots) or FIFO (First In, First out) will Ultimately Remove lower cost Lots and thus Raise your Cost Basis"

Oh yes, there's a lot of math to consider. Fortunately DH is an IT guy who likes writing little software programs. And based on 2011 investment earnings on dividends and 9 months of bond interest, we're only talking about 22k to 25k of income that we can play around with. It may be cheaper and easier to just take it as ordinary income when we are retired.

We also need to pay attention to what happens with the tax rates the end of this year. I don't think we are going to pay much in taxes for ordinary income starting in 2013 because our income is going to drop significantly. We will finally be under the income threshold which phases out the deductions of our real estate write offs for depreciation.

And we will be contacting our former CPA once we move back to the SF Bay Area. During our overseas assignment we were obligated to use the company provided tax team but unfortunately because the client is DH's employer and not us they cannot do any tax planning work for us even if we were to pay them.

[Deleted]

[gobermitcheese]

I think schwab has the option of selling using a tax lot optimizer. It sells ST losses first then LT losses then LT gains then ST gains. I think thats how it works. I don't really see why this is as hard as some people imagine. Am I missing something?

[The Virginian]

Some people are probably not familiar with this. I know I wasn't and I use Schwab.

[gobermitcheese]

They sent out a ton of info in the last year since the IRS changed tax basis reporting. You might not have had the option before 2012.

[beenherebefore]

Take a look at Pepsi, (PEP) pays dividend in November, 3.3%.

Be careful about putting all your eggs in one sector, spread them out.

Good luck.