2Q dividend payout down 23%

[soupcxan]

Sadly, I received my quarterly dividend payment from Vanguard's Equity Income fund and it has dropped 23% from 1Q. I am happy the price has recovered some from 1Q, but the yield is now 3.5% versus 4.9% in 1Q. Sigh.

 

[haha]

Sadly, I received my quarterly dividend payment from Vanguard's Equity Income fund and it has dropped 23% from 1Q. I am happy the price has recovered some from 1Q, but the yield is now 3.5% versus 4.9% in 1Q. Sigh.

I suppose it was or is heavily invested in financials?

Ha

 

[FUEGO]

SEC yield is down to 3.2% per VG's website.

Equity Income is 24% financials.

The KBE bank index ETF has a dividend decrease of 15% from Q1 to Q2. But year over year the div is down 71% (ouch).

Undoubtedly one big reason for the drop in div for Equity Income is the divs from financials dropping off a cliff.

Really makes you rethink the whole "safety of dividends" and ability to live off a stream of stable dividends that will keep up with inflation over the years. Guess we'll see where these divs are in a year or two. My guess is much higher than they are today once we see real economic recovery and return to higher corp profitability.

 

[FIREd]

Yes, dividends really took a hit this quarter.

From Q1 2009 to Q2 2009:
VG Total Stock Market Index: -20.6%
VG Wellesley: -6%

Others have seen their dividends rise or fall very slightly between Q1 2009 and Q2 2009 but it does not reflect larger YOY drops:
VG Wellington: -14.8%
VG REIT Index: -39.2%
VG TIPS: -100%

Let's not even talk about yields on money market funds and short term bond funds.

It looks like my plans to live off dividends in retirement have just taken a shot across the bow.

I am particularly disappointed with VG Equity Income.

 

[bbbamI]

Right now, I'm receiving the princely sum of $400 a year on my taxable account. Wonder what I'll do with all that money?

 

[Notmuchlonger]

Right now, I'm receiving the princely sum of $400 a year on my taxable account. Wonder what I'll do with all that money?

Vegas baby~!

 

[haha]

It looks like my plans to live off dividends in retirement have just taken a shot across the bow.

I'd day if we can't live off dividends from carefully chosen investments good luck living off capital gains!

My dividend stream is down, but not too badly. I think this is one area where home cooking may be best, or a fund with strict postion limits regarding concentration. The mutual fund manager has his own fish to fry; yours mnay come out raw or burned up.

Ha

 

[cashflo2u2]

This has been a kick in the pants to me too. I think I would be better protected going forward if I choose individual stocks and determine the reliability of the divvie.

 

[freebird5825]

Right now, I'm receiving the princely sum of $400 a year on my taxable account. Wonder what I'll do with all that money?

ROAD TRIP!!!!

 

[unclemick]

I'd day if we can't live off dividends from carefully chosen investments good luck living off capital gains!

My dividend stream is down, but not too badly. I think this is one area where home cooking may be best, or a fund with strict postion limits regarding concentration. The mutual fund manager has his own fish to fry; yours mnay come out raw or burned up.

Ha

I think you need to post some recipes - the Norwegian widow is down -17% year over year.

heh heh heh - and yes I got caught holding the usual suspects - BAC, C, JPM and few others DOW, EGLE. . Oil, Utes, Telephone, Drug, and Food held up.

 

[FIREd]

After some quick calculation, my passive income is down 16.5% year over year (excluding the purchase of new shares).

 

[W2R]

My dividends are down, too.

Retiring in 2009 with my eyes wide open, my expectations certainly will be lower than they would have been previously.

This must be at least a little unsettling for those already retired.

 

[Zathras]

Keep in mind that dividend yields from 1Q to 2Q are going to take a hit if the stocks/funds price increased.
My dividend income stream is flat year over year, but I bought at the bottom. Of course, I also bought at the peak and lots of places in between

 

[dessert]

Keep in mind that dividend yields from 1Q to 2Q are going to take a hit if the stocks/funds price increased.

Zathras I noticed that the dividend for Fidelity 2010 dropped 83% from its previous payment. I have been wondering why but was it because the fund has had a gain during that time?
Maybe I am learning something new here. I was hoping that it wasn't because "its different this time".
I'm not a financial expert but maybe you could back your statement up with some historical facts so I can learn more?
Thanks

 

[FUEGO]

Keep in mind that dividend yields from 1Q to 2Q are going to take a hit if the stocks/funds price increased.
My dividend income stream is flat year over year, but I bought at the bottom. Of course, I also bought at the peak and lots of places in between

True. But the funds discussed above had year over year (and quarter to quarter) drops in actual dividend payments, not just yields. Good job on maintaining flat dividend payments - hard to do in the current market.

 

[Zathras]

Zathras I noticed that the dividend for Fidelity 2010 dropped 83% from its previous payment. I have been wondering why but was it because the fund has had a gain during that time?
Maybe I am learning something new here. I was hoping that it wasn't because "its different this time".
I'm not a financial expert but maybe you could back your statement up with some historical facts so I can learn more?
Thanks

Don't get me wrong, many dividends have been taking a hit.
I don't know what is in the fund you are looking at, but my guess is a lot of financials.
All I am saying is that when the stock price goes up without a matching increase in the dividend, the dividend yield will go down. This in and of itself isn't that bad of a thing as your income flow doesn't take a hit.
For example, say you have a $10 stock which pays a 10 cent dividend. If the stock price doubles, your dividend yield is cut in half, but you still get your 10 cents.
As FUEGO mentioned, many of these funds have had year over year losses. Year over Year numbers tend to lessen the apparent hit in the yield as companies have generally made an increase to 'keep up' with their share price and you get more of a trend and less short term volatility.
This appearance of the yield moving around really is much less important than the payout amount per share. Watch how that moves and it will give you a better snapshot than watching the yield move.
Fuego, thanks I had little of my portfolio in financials last summer and have continued adding to many other dividend payers. Most of which had increases year over year. The financials I did have cut for the most part, one eliminated, one held steady.
I am keeping my fingers crossed that we are done with dividend cuts, but will stick with my bi-monthly additions and see how it goes

 

[M Paquette]

This sort of thing is part of why I decided to set up a balanced portfolio and not rely on dividend and interest income.

I've set things up so that all my dividends and interest go into a money market fund, from which the brokerage automatically makes a periodic withdrawal to go into my checking account. Once a year, at rebalancing time, I'll add to or withdraw from the money market fund as needed to maintain that one year of expenses I want to keep available.

If it's been a good year for dividends and interest, I'll have a surplus and will be buying additional shares in my mutual funds and ETFs. If it's been a poor year (dividends off, TIPS fund paying out zilch, kind of like this year), I may be selling a little of my better performing funds to top up the money market fund for the next year.

The money market fund acts as both my cash reserve, and a sort of surge tank to smooth out withdrawals from a fluctuating stream of dividends and interest from bond and equity funds.

During the course of the next year, I'll be making periodic withdrawals, while more dividends and interest go into the fund. The balance might drop, or it might rise. I'll take care of that at the next annual rebalance as needed.

As long as I keep the overall withdrawal rate reasonable, that is, at or below my safe withdrawal rate, this should cover my retirement income needs with minimal fiddling around.

 

[Zathras]

This sort of thing is part of why I decided to set up a balanced portfolio and not rely on dividend and interest income.

You can do both. I agree a good allocation is important in any portfolio. There is no reason a dividend portfolio can't be balanced. Just because many funds are/were overweight in financials is no reason to conclude all dividend portfolios can't be balanced.

 

[CCdaCE]

Bad timing for the mother-in-law to ask me what she should be investing her inheritance in.

Pssst Wellesley has taken a helluva ride in the last year or two. Wouldn't have guessed it'd be that volatile. Total Bond market looks more appealing.

-CC

 

[Lawrence of Suburbia]

As someone who's planning on living off dividends, I'm getting a cold slap here. But perhaps better now than when I'm actually retired.

I was thinking I could retire on about a million or so; perhaps I need to stash two million in the bank?

 

[W2R]

As someone who's planning on living off dividends, I'm getting a cold slap here. But perhaps better now than when I'm actually retired.

I was thinking I could retire on about a million or so; perhaps I need to stash two million in the bank?

Or, put aside every cent you can, and lower your standard of living as much as seems reasonable, and eventually the amount set aside and your expenditures will seem consistent.

 

[Zathras]

Depends upon how much you want to live on and how much risk you are willing to take.
Personally I have a mix of dividend stocks, CDs and bonds.
I plan to have all of my income comming from stocks and I research the companies I invest in. I won't use funds for dividends as I like to have control over the stocks (overweight in financials is a great example of why) although I use them for other classes I know less about.
A couple of years ago a 2-2.3% dividend yield was about par. Now, you can get 3-4% very easily. And you can diversify pretty nicely if you are willing to do the research.

 

[cashflo2u2]

I wonder if the Morningstar Dividend Investor at $159 a year is worth it and how their portfolio has fared in this situation. I assume one can do as well on their own if they are willing to do the research and know what to look for.