marko
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Mar 16, 2011
- Messages
- 8,456
Thought I'd run this by the collective wisdom.
Dividend investor here. Earlier this year I moved about 2% of the portfolio to a split purchase of TBills Fund (paying 5.x%) and a Floating Bank Rate Fund (paying 8.x%) with the idea of moving that cash back to the fund I "borrowed" it from when year end distributions are expected. That fund typically pays about 12% at year-end in dividends and MF cap gains.
Just received my preliminary year end distribution report from T. Rowe Price and learned that the year end dividend and cap gains will only total 6%. Disappointing. The dividends remained solid but the cap gains were pitiful.
So: I'm thinking of adding a more aggressive amount (10%? total) to the TBill fund and Bank Rate fund in January after the payouts. Then, review again at next year's year end report as the funds only pay once a year. In short, instead of being happy with the 6% at year end, move a bit more to the TBills et al and reap another 6% +/- in interest throughout the following 10 months.
My main concern is that I'd miss a market growth spurt, and while reaping better interest income, would lose on the growth end. Having said that, rumblings of a recession make me wonder how likely that would be. All the above are inside my IRA so taxes are not a big issue.
Yes, I realize that I'm chasing yield and no, we're not desperate for additional income to make up the shortfall and yes I understand how a dividend payment lowers the share price, but wondering what's wrong with this strategy.
Dividend investor here. Earlier this year I moved about 2% of the portfolio to a split purchase of TBills Fund (paying 5.x%) and a Floating Bank Rate Fund (paying 8.x%) with the idea of moving that cash back to the fund I "borrowed" it from when year end distributions are expected. That fund typically pays about 12% at year-end in dividends and MF cap gains.
Just received my preliminary year end distribution report from T. Rowe Price and learned that the year end dividend and cap gains will only total 6%. Disappointing. The dividends remained solid but the cap gains were pitiful.
So: I'm thinking of adding a more aggressive amount (10%? total) to the TBill fund and Bank Rate fund in January after the payouts. Then, review again at next year's year end report as the funds only pay once a year. In short, instead of being happy with the 6% at year end, move a bit more to the TBills et al and reap another 6% +/- in interest throughout the following 10 months.
My main concern is that I'd miss a market growth spurt, and while reaping better interest income, would lose on the growth end. Having said that, rumblings of a recession make me wonder how likely that would be. All the above are inside my IRA so taxes are not a big issue.
Yes, I realize that I'm chasing yield and no, we're not desperate for additional income to make up the shortfall and yes I understand how a dividend payment lowers the share price, but wondering what's wrong with this strategy.
