The objective of the “Check A Month” strategy is to create a diversified portfolio of dividend paying stocks in the S&P 500 and evaluating them using a technical scoring system. The monthly income check strategy involves buying a group of quarterly-dividend-paying stocks with payment dates spread across the calendar, so a client typically receives a dividend check(s) each month. Our analysis uses “relative strength” to compare one stock against each other, permitting the technically strongest candidates to rise to the top of the selection list.
Depending on your financial situation, dividends may be taxed at a lower rate than the capital gains rate and may provide a tax efficient way to acquire income. Dividends are particularly useful for people who need to supplement their retirement income.
However, you will need to pay taxes on any dividends you receive. Your dividend tax rate will depend on what type of dividends you have, how much you made from those dividends and how much other income you have. Please consult with a tax professional to learn more about dividends and dividend taxes.
Incoming monthly dividend checks can either be scheduled as a monthly Automated Clearing House (ACH) deposit to your bank checking account, or the client can receive a check in the mail. The stocks are categorized into four groups based on their usual dividend payment date.
- Early Quarter Dividend Payout (January, April, July, October)
- Mid Quarter Dividend Payout (February, May, August, November)
- Late Quarter Dividend Payout (March, June, September, December)
The purpose of this strategy is to provide the client with a steady stream of dividend income throughout the year, ideally with the client receiving at least one dividend check or deposit every month. This universe of stocks is updated quarterly and may be re-balanced semi-annually or annually.
The strategy may invest in as many as 30 attractive yielding stocks that meet specific technical criteria. Positions may be removed based on deterioration in technical attributes, dividend reduction or as placement in the matrix changes.
Stock brokerage commissions expenses are required to purchase the initial allocation, and then as needed. During times of market volatility, the need to replace and rebalance the candidates may occur more frequently. The advisor currently uses a third party custodian and will never take custody of client assets.
Call 847-686-4800 for more information, our regulatory brochure, and to determine if this strategy meets your objectives.