Sunday, January 5, 2020

Dividend Streams

Dividend Streams

Are you converting deal flow or sales or income from your profession into recurring cash flow? By selecting a basket of dividend-paying stocks which pay quarterly dividends you can stagger dividends into "paychecks" to help supplement your income or build an asset base for retirement.

Here's how it works: Screen for quality dividend-paying stocks you'd like to own. From that master list, which should include a couple dozen stocks, consider picking out handful from various non-correlated industries. For example, from the master list pick a couple from energy, some from consumer, some from tech, some from medical, some from aerospace, etc.

Your final list obviously can have as many stocks as you'd like, but having about a dozen stocks paying four times a year would result in 48 dividend payments per year. If you stagger them both by industry and payment date you could receive a dividend payment ("paycheck") every couple weeks from a diversified base of holdings.

What's nice about setting up a dividend stream is that you can tailor the stocks in the portfolio to the specific industries you enjoy investing in, offset the dividend payment dates to concentrate or separate the dividend stream as you'd like, and also mix-and-match the holdings to include either more value stocks or growth stocks or even form a hybrid of dividend stocks increase their dividends over time. 

Done successfully you should be able to establish a recurring dividend stream that gradually increases over in time in terms of both value of the underlying asset base and the value of the income stream.