Dividends and the future

I have this plan in mind.  But I also know how Life tends to scoff at a mere human's plans.  And 10 years out is a looooooong time away.  Even so, I know that this plan to save and invest will come in handy because it is far better than just spending the money on *stuff*.

This past weekend I spent far too much time looking at Vanguard's ETFs.  And I still haven't finished!  It's all good because I am still finalizing my investing plan and determining where to put my money.  (More on that once my decision is made.)  One thing that I realized is how receiving a monthly dividend is important to me.

Dividends are basically like paychecks and it would be nice to get one every month.
(Currently all dividends received are set to reinvest (i.e. buy more of the same fund/stock).  This way I don't get the money and then have to decide how I want to reinvest it.  Because at least in the near-term, once I determine where I am going to invest, I don't want to deviate from that plan - well at least for some time.  I just can't go changing my mind every month.)

Going back to my first point about Life, if I'm not working (or have left my current industry to work in a more relaxed industry - and thus taken a pay cut!), getting a few hundred dollars a month would sure be helpful.  Even if that money just became my *fun* money. 

However, the most likely scenario would be that dividends are received quarterly since that is when most are paid.  This means that I would need to think about how far that quarterly dividend would stretch on a monthly basis.

I haven't set a dollar amount goal for receiving dividends.  Too much of that depends on how much I have to invest over a 10-year period.  So being somewhat vague and just saying that a few hundred a month is my starting point.  But it will be hard to get to a few hundred a month in dividends.  It will require discipline to not spend that investing money elsewhere and it will require a lot of luck!

As a simplified example if I have 1,000 shares of a stock that is priced at $50, my investment is valued at $50,000.  If those shares pay a 25 cents dividend every quarter, that works out to $250/quarter but only $83/month.  $83 is $83 and I'll take it but it isn't a whole lot of money in the grand scheme of living.

This also means that I need to look at how much I spend per share (stock or fund).  Because assuming I had invested $50,000 but the price of the stock was $100 (at the time of each purchase), then I'd only have 500 shares.  Again assuming a quarterly dividend equal to 25 cents per share, I would get $125/quarter or $42/month.  Big difference!

Since I am relatively new-ish to this, it will definitely be an interesting learning curve!  Hopefully I don't have too many lessons or make too many mistakes!

Pru