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Dividend Funds for Income question...
04-17-2016, 09:57 AM
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#1
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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Dividend Funds for Income question...
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
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04-17-2016, 10:22 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,906
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yup
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04-17-2016, 10:41 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,896
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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
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04-17-2016, 01:04 PM
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#4
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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Quote:
Originally Posted by 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
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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?
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04-17-2016, 01:13 PM
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#5
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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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
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04-17-2016, 03:10 PM
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#6
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Full time employment: Posting here.
Join Date: Apr 2014
Location: Houston
Posts: 958
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Quote:
Originally Posted by Pilot2013
Wow. Looking at some of the funds, there is a significant difference Qtr to Qtr.....
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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.
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04-17-2016, 03:14 PM
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#7
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,362
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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.
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04-17-2016, 06:10 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Williston, FL
Posts: 3,925
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Quote:
Originally Posted by Pilot2013
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?
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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...
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
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04-17-2016, 06:57 PM
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#10
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Recycles dryer sheets
Join Date: Feb 2011
Location: Arlington Heights
Posts: 271
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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
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04-17-2016, 07:03 PM
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#11
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Recycles dryer sheets
Join Date: May 2013
Location: Toronto
Posts: 230
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Quote:
Originally Posted by 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?
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The yield is always quoted as an annual rate, it doesn't matter how often it pays.
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04-17-2016, 07:07 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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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.
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04-17-2016, 07:50 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Jul 2012
Location: Mississippi
Posts: 1,894
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Quote:
Originally Posted by 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
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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 FidelityŽ Equity-Income K Fund FEIKX Quote Price News
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04-18-2016, 06:22 AM
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#15
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gone traveling
Join Date: Mar 2015
Location: Greenville
Posts: 653
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Lots of good info from all. Thanks! I'm enjoying the learning...
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Dividend Funds for Income question...
04-19-2016, 11:53 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Posts: 5,214
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Dividend Funds for Income question...
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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