What’s so hard about getting money?
Owning shares in dividend paying companies seems so easy. Just buy them, and then sit back and wait and collect, right? What could be so hard about that?
Well, not much. It is not difficult to do. They just keep on rolling in, quarter after quarter. And with dividend reinvestment, these dividend buy more shares.
Previously, we wrote about the hardest part is getting started. That is true. But once one has started, there is another “hard part.”
So, just what is so hard? The wait.
When we first buy some stocks for dividend investment, we happily wait for the next payment date. And wait. And wait.
So the waiting can be said to be the hardest part. For quarterly dividends, that payment date only comes (only) every three months. That’s a long time to wait when we want to grow our income and our net worth.
Two things happen as we wait. First we start to look for other opportunities to invest. We think: what other stocks can we purchase to increase our dividend income?
Secondly, we start looking at the payment dates. While payment dates for any one company are not fixed, they generally fall around the same time of the month each quarter. So it is possible to approximate when that dividend will be coming in.
One possible scheme some undertake is to look at payment dates for various companies, and start to buy shares in companies based on (perhaps among other factors) their payment dates. I do not do this, but I have heard some do in order to be sure that they receive dividends every month of the year.
On the other hand, there are a few companies that pay dividends monthly instead of quarterly. There then is the possibility of relatively consistent monthly income. I do not choose companies based on their dividend payment schedules or dates. Far more important, in my view, is a company’s financial strength and growth potential.
Then What?
Tracking dividend payment dates can get obsessive. I try to keep my expectations under control. While I have a calendar-like listing of expected dividend payment dates for the stocks I own, I do not plan any action based on these dates and I do not keep an expected dividend income accounting.
Motivation
What The Wait for the next dividend payment date gave me was the motivation to look for additional investment opportunities. While dividend investing can seem like a “set and forget” kind of activity, for me it has motivated me to add to my holdings. So my assets grow through several methods: My initial purchase, the dividends received that buy additional shares, my adding to my holdings by buying additional shares in that same company, and my adding to my holdings by buying shares in other companies, and so on.
And while dividend investing seems passive, it does take work to get there. And that is not a bad thing. Something for free is never as highly prized as something that took work and effort to accomplish.
The Other Side
While the wait for dividends may sometimes seem like torture, or watching paint dry, it also reminds me that I have a full life outside of dividend investing. One of the major benefits of dividend investing is that is not a full time attention-needing activity. So many other things in life need attention as a full time endeavor. Things like driving a car: I must pay attention the entire time I am driving. Dividend investing is different: I can relax and let it work its magic without my constant monitoring: that fact, to me, is a great relief.
What is your relationship to receiving dividends? Let me know here.
The illustration for Sultz’s Soaps was an 1890 advertisement poster.
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