A couple years ago, my accountant told me a story about one of his clients. He didn’t tell me his name of course, but he told me this older guy, retired for several years now, walks to the Post Office every day to pick up his dividend checks. That’s his hobby and his income. He keeps records with pen and paper and insists on checks being mailed to him rather than deposited into his account automatically. I thought that was cool and wondered if it was possible to structure a portfolio in such a way that you could get paid every single day. So, this is my attempt to find out what it takes.
Approximately once a week, starting the last week of December 2018, I will buy the stocks needed to make sure each day of the next week we have one stock in ex-dividend. That means, if we own the stock on that day, then we get paid the dividend. The goal is to get paid every day. So, if that means I have to sell a perfectly good stock and replace it with a different one just to get paid that day, then I’ll do it.
There are 252 trading days in 2019. Most dividend paying stocks pay quarterly, but some are monthly and even fewer are annually. My estimate is that I’ll need to own about 63 different stocks, and plan to allocate an approximate equal amount to each stock, but it will vary depending on ex-dividend dates. If I own a good stock that pays on the same day every quarter, I will prioritize it over other stocks. To minimize transactions, keeping a stock already in the portfolio will usually beat out a better paying stock on the same day unless recent performance has been poor. If there are multiple choices on a day that I don’t already own a stock, I will prioritize yield unless the portfolio is already heavy with stocks in that industry or sector. However, yield is not the only consideration. Liquidity (volume), Price to Earnings ratios, Earnings Per Share, and the proprietary Dividend.com DARS™ ranking will also be considered. I will be using Interactive Brokers which has amazingly cheap commissions – most trades will cost $1.
I will not be sharing the actual dollar amounts that I am investing in this portfolio as it doesn’t really matter. If you want to try something similar, the portfolio can be scaled quite easily without any effect on percentage gains (assuming, of course, that you use a broker with really cheap commissions).