ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Income & Making Money

7 Steps to Receiving Monthly Dividend Income Checks

Updated on February 22, 2012

Dividends are one of the best ways to earn passive income. It’s an excellent source of income for your now and in the future. It is essential to diversify your portfolio and put your money into dividend stocks for that income. Here, are the best ways for getting your dividend investment stream going to receive the best monthly dividend checks.

1. First we need to determine a goal. So, ask yourself, what is a realistic goal in determining how much income you want to generate on a monthly basis from dividend stocks? You can always adjust the amount of your goal as you go along but start with something small and achievable. Once you have determined an amount that amount you can work towards that first goal.

2. Mutual funds are one of the best ways to start earning a monthly dividend. These mutual funds that only supply monthly dividends are usually well managed have higher yields, also fit with your long term goal. It also helps you, because you are pooling your resources with other investors to achieve even higher dividends with each share of the mutual fund.

3. Counting the number of shares you are going to need to earn income each month towards your goal is a convenient way to get a number. The number of shares that you own in the mutual fund will determine how much you get paid. So, if you own 1000 shares of a mutual fund and the monthly dividend is 1 cent then you have a monthly income of 100 hundred dollars.

4. Invest only what you can afford. If, you are on a tight budget, new to investing or not familiar with a fund use the drip method to build shares. The “drip” is when you add a specific amount to the mutual fund every month. So, you start with a 500 dollar initial investment and then you are able to add to that fund in increments that you can afford. Say like 25 dollars a month and each month that added money will build the amount of shares you own. If, you happen to get extra money during the month then just invest a little bit more.

5. When you are first starting to invest in a dividend stock or mutual fund that pays dividends, why not reinvest the dividends. The idea is to reach your monthly goal of income per month so reinvesting those dividends can increase your shares each month. You are continuing to reinvest in your future, so you have enough shares at that time to have that continued income. Then if, something happens and you have to stop your own contributions the shares that are already in there will continue to accumulate.

6. To reach your goal, you need to buy enough shares in the mutual fund. Purchase enough shares help your deposits grow over time. You will start to feel more encouraged as you see the number of shares grow higher, each month with your increase in contributions.

7. Request payments of dividends. When the time is convenient for you to start collecting dividends then you can ask the company instead of reinvesting the dividends to make a payment directly to you. Then you can have the disbursements directly applied to your monthly income totals which you can use as you see fit.


Submit a Comment

  • Lenzy profile image

    Lenzy 5 years ago from Arlington, Texas

    It is an interesting article with some good, sound financial principles. I would correct this sentence.

    "Once you have determined an amount that amount you can work towards that first goal"