Dividend Funds for Income question...

[Pilot2013]

Sorry if not that sophisticated, but I am trying to make some decisions on investing some cash.

Is determining the income from a dividend fund as simple as determining the value of fund holdings at the Dividend distribution date, and multiplying by the percentage? For example:

If you hold $50,000 of VUIAX at the distribution date, and the yield is 2.1%, your income (before taxes of course) would be $1,050 from that fund?

TIA

 

[GrayHare]

yup

 

[ERD50]

Pretty much, but just in case you might be missing a few details:

The actual yield of a fund can vary a bit from period to period, usually a pretty small range though.

The dividend is usually expressed as an annual number, but a fund may pay out a portion of that each quarter, or each month. There may also be a cap gains distribution near the end of the year (which you could also take as income).

Here's the dividend history on VUIAX, per yahoo:

VUIAX Historical Prices | Vanguard Utilities Index Fund A Stock - Yahoo! Finance

-ERD50

 

[Pilot2013]

Pretty much, but just in case you might be missing a few details:

The actual yield of a fund can vary a bit from period to period, usually a pretty small range though.

The dividend is usually expressed as an annual number, but a fund may pay out a portion of that each quarter, or each month. There may also be a cap gains distribution near the end of the year (which you could also take as income).

Here's the dividend history on VUIAX, per yahoo:

VUIAX Historical Prices | Vanguard Utilities Index Fund A Stock - Yahoo! Finance



-ERD50

Thanks! So I assume that VUIAX pays out quarterly, and that dividend history is in $0.xx/share... So, could either re-invest, or have deposited into MM account for example if with Fidelity...

Seems like a reasonable thing. Maybe $15k to $20k in various dividend funds like VUIAX. Time to do some research.

Also interesting that the Dividend changed by almost $0.10/share from Dec '15 to Mar "16. a change in holdings I assume?

 

[Pilot2013]

Wow. Looking at some of the funds, there is a significant difference Qtr to Qtr. For example:

FEIKX - $3.075 Dec '15, but $0.632 Mar '16

 

[Whisper66]

Wow. Looking at some of the funds, there is a significant difference Qtr to Qtr.....

Can be significant difference from quarter to quarter. Also, not all funds pay out each quarter. For example Vanguard's VAIPX used to pay out only in March and December when I owned some last year. Read the prospectus to know what you are getting. Also be sure to consider when dividends are actually collected and paid out before any buy/sell.

 

[braumeister]

I would recommend going to a site like Morningstar where you can see the actual distributions any fund has made for the last year. Be aware that distributions can include both dividends and capital gains, but in either case it's still money in your pocket (the taxes might be different, though). You can see whether the distributions have been monthly, quarterly, semiannually, or random.

 

[nwsteve]

This recent article on Morningstar should give you some good ideas regarding performance and reliability. A Portfolio of High-Quality Dividend-Paying Stocks at a Rock-Bottom Price
nwsteve

 

[Senator]

If you hold $50,000 of VUIAX at the distribution date, and the yield is 2.1%, your income (before taxes of course) would be $1,050 from that fund?

Yes, assuming the dividends hold up. Many stocks increase their dividends. The TTY will give you the previous 12 months of dividends.

I invest in DVY. At Fidelity, no cost to buy or sell. I can buy one share, or 1000 shares. A solid group of companies, no capital gains unless I sell. I do not need to watch and move money out of a stock if it gets weak and then suffer a tax hit.

I like to sleep at night and not worry about my investments...

 

[SoReady]

To tag on a question to this thread....

The OP used yield times the value of the holdings($50k) to determine a dividend amount ($1050). Is multiplying the yield times the value giving a yearly total of the dividends? Or if the dividends are distributed semi-yearly, quarterly or monthly do you need to multiply the results by this period.

For example if VUIAX pays quarterly is it appropriate to multiply the $1050 by 4?

Thanks,

Bob

 

[Spudd]

To tag on a question to this thread....

The OP used yield times the value of the holdings($50k) to determine a dividend amount ($1050). Is multiplying the yield times the value giving a yearly total of the dividends? Or if the dividends are distributed semi-yearly, quarterly or monthly do you need to multiply the results by this period.

For example if VUIAX pays quarterly is it appropriate to multiply the $1050 by 4?

The yield is always quoted as an annual rate, it doesn't matter how often it pays.

 

[LOL!]

Since this is a Vanguard fund, one can go to the Vanguard.com web site and see all the quarterly distributions.

For instance, the last distributions was in late March for $0.358 per share and re-invested share price $52.85.

Also note the initial minimum to purchase this fund at Vanguard is $100,000. That's about 1892 shares on the distro date that would have given one about $677.

 

[rbmrtn]

Wow. Looking at some of the funds, there is a significant difference Qtr to Qtr. For example:

FEIKX - $3.075 Dec '15, but $0.632 Mar '16

A funds distribution is made up of more than dividends. It includes short and long term capital gains which are usually paid in Dec. That is why in it is much larger. On morningstar you can see a breakdown of the distribution

FEIKX Fidelity® Equity-Income K Fund FEIKX Quote Price News

 

[target2019]

The spreadsheets at this site are useful if you are interested in building a portfolio of individual dividend payers.

The DRiP Investing Resource Center - DRiP Information, Tools, And Forms

 

[Pilot2013]

Lots of good info from all. Thanks! I'm enjoying the learning...

 

[tmm99]

Like Senator, I have DVY and that is my largest holding of dividend generating stocks to date. I bought them a few times around 2010 and haven't bought any since but I probably should have continued to while prices were good. I have been buying more and more dividend generating stocks in general the last several years though. Now that I am in the drawdown phase, generating income via investment is definitely appealing. I am no longer DRIP'ing (is there such a word?)


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