A crucial piece for dividend investors that are more focused on a regular income stream is a preference for a more frequent monthly dividend payment schedule.
For most of the companies listed on the ASX dividends are paid after the interim or annual results and companies rarely pay quarterly dividends due to the administrative burden of issuing thouthands of payments regularly.
ETF Dividend Payment Schedule
It is common for exchange traded funds listed on the ASX to pay dividends to pay dividends on a quarterly distribution schedule. This applies to index funds to factor investing strategies which are more income driven like dividend ETFs or fixed income funds.
ASX Monthly Dividend Stocks
There is a subset of the stocks on the ASX which pays dividends monthly. These are mostly debt investment funds which invests in mortgages or loans directly originated by the sponsor. Since the underlying loans pays interest on a regular basis, these funds are able to provide monthly distributions.
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A common thread of the above stocks is that these are not equity interest in companies but managed investment funds which follows a specific strategy.
Why Don’t Shares Pay Monthly Dividends?
Companies don’t pay monthly dividends because it is simply not efficient from a cost / benefit analysis. A shift to monthly distribution would incur additional cost for all shareholders but not all shareholders would value a more frequent payment schedule.
Hopefully more investment fund follow the trend of shifting from quarterly to monthly dividend schedule but it is difficult for equity funds to change their ways as the underlying investments still pay dividends on an interim and final year basis.
Monthly Dividend ETFs
This means that in order for equity ETFs to issue monthly distributions they would have to either withhold a portion of the dividend received and payout over the next 6 months or issue distributions based on forecast dividend which is extremely aggressive.