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Monday, September 5, 2011

Create a Dividend Table

A really good way to better understand your portfolio, whether you manage it or an advisor manages it, is to create a dividend table showing when dividends will come in on a security level basis and then derive a weighted average yield for the portfolio.  This become crucial when an investor reaches the decumulation stage when investors need to draw down their nest egg.  Using the rule-of-thumb, that 4% of the nest egg can be drawn down, and a recommended approach to have at least 60% of your income satisfied by dividends and interest requires a yield of at least 2.4% (.04*.6).  Creating a dividend table enables an investor to see the overall yield and to even get ideas on how to bolster yield.

Finding the Dividend Payout For a Security

There are many sites you can go to find dividend payable dates.  Let's start with Yahoo! Finance and with the first security in the portfolio:

SCHX is the commission-free Schwab large cap exchange traded fund.  The portfolio shown on the left  holds 4,030 shares.

Step 1 is to go to the Yahoo! Finance link above and put in the symbol SCHX as shown:

Source: Schwab

Click "GET QUOTES."  This takes you to a page with a lot of basic information.  FYI:  It provides real time prices during the trading day. Many sites provide prices on a 15-minute delayed basis.  Also, note that it lists other stocks that viewers have looked at as well as the one you are getting a quote on.  This is a good page for the beginning investor to putter around on.

In getting a quick idea of the dividend payout record, we want to click "Historical Prices" on the left side of the page as shown:
Source Schwab

This takes us to :

Source: Schwab
Click "Dividends Only" and then "Get Prices" and we get the dividend payout record we are after:

Soutce: Schwab

You can quickly see that SCHX pays quarterly and that we can expect approximately .14 * 4,030 (number of shares) = $564 sometime around 9/20.  The actual date can be pinned down, but that is the subject of another post.  In fact, every investor should be aware of ex dates, payable dates, dates of record, etc.  But, as I say, that is a subject of a future post.

So step 1 in creating the table is to do the above for each security and, for each one, create a line item showing the security, # of shares, dividend expected, and date expected.  Eventually we want to get at the weighted yield of the portfolio.

As with many of these procedures, it takes longer to explain than it does to go through it.  It is a great exercise for the DIY investor.  I suggest that "newbies" try their hand at finding the amount of the dividend, etc. for the second issue in the portfolio above.

1 comment:

  1. I'm a sucker for good howto posts and this one is excellent! Great tip for the enlightened DIY investor!