Category: Income

Why Buy Stocks that Pay Dividends Quarterly or Monthly when You Can Get Dividends Weekly

by Fred Fuld III

Would you rather have a stock that pays quarterly, monthly or weekly? Do you know what the advantages are of receiving your dividends at a faster frequency?

Reinvestment Opportunities: With weekly dividends, investors have the opportunity to reinvest their earnings more frequently. By reinvesting dividends promptly, investors can take advantage of compounding returns and potentially accelerate the growth of their investment portfolio. This can be especially beneficial for long-term investors aiming to maximize their returns over time.

Dollar-Cost Averaging: weekly dividends can facilitate a strategy called dollar-cost averaging. This strategy involves investing a fixed amount of money at regular intervals, regardless of the investment’s price. With weekly dividends, investors can consistently reinvest funds, buying more shares when prices are lower and fewer shares when prices are higher. This approach can help smooth out the impact of market fluctuations and potentially lead to better average purchase prices.

Flexibility and Liquidity: weekly dividends provide investors with greater flexibility and liquidity. With more frequent dividend payments, investors have more control over their cash flow and can react to changing financial needs more effectively. It allows for easier adjustments to spending, reinvestment, or capital allocation strategies as circumstances evolve.

Reduced Dependency on Other Income Sources: For retirees or individuals relying heavily on investment income, receiving dividends weekly can help reduce reliance on other income sources such as Social Security or pensions, which are paid monthly. This diversification of income streams can enhance financial security and independence.

Psychological Benefits: Receiving dividends every month can provide a sense of accomplishment and satisfaction. It reinforces the tangible benefits of investing and can help investors stay motivated and engaged with their investment strategy.

There are actually numerous investment options available for individuals seeking regular dividend payments, ranging from stocks and ETFs to CEFs, REITs, and trusts. While many of these instruments pay dividends on a quarterly or monthly basis, there is also an alternative for those who prefer weekly payouts. One such option is the SoFi Weekly Dividend ETF (WKLY), a convenient investment vehicle designed to handle weekly dividend payments on behalf of investors.

The SoFi Weekly Dividend ETF comprises a well-diversified portfolio consisting primarily of large-cap and medium-cap dividend-paying stocks, with a focus on U.S.-based companies. Additionally, it includes select international companies to further enhance the fund’s diversification. The primary objective of this ETF is to ensure consistent weekly dividend distributions to its shareholders.

At present, the ETF offers a respectable yield of 3.16%, providing investors with an attractive income stream. It boasts total net assets of $9.44 million. Furthermore, the expense ratio for this fund is 0.49%, which is relatively reasonable when compared to similar investment vehicles.

Interestingly, the SoFi Weekly Dividend ETF is not the sole weekly dividend ETF available to investors. The same fund manager also offers the SoFi Weekly Income ETF (TGIF), which also provides weekly dividend payments. However, unlike the WKLY ETF, the TGIF ETF primarily invests in a mix of investment-grade and junk bonds.

The SoFi Weekly Income ETF, with a higher yield of 4.58%, may appeal to individuals seeking higher income potential. It currently holds total net assets amounting to $16.59 million and has an expense ratio of 0.59%. This ETF was established in 2020, offering investors a relatively new but potentially lucrative investment opportunity.

Both the WKLY and TGIF ETFs may serve as valuable additions to an income-oriented investment portfolio. However, it’s essential to be aware of the associated risks when investing in these funds. As with any investment, there is always the possibility of market volatility, potential losses, and fluctuations in dividend payments. It is crucial to thoroughly research and understand the underlying holdings, as well as carefully evaluate the fund’s performance and track record.

In conclusion, for individuals seeking regular weekly dividend payments, the SoFi Weekly Dividend ETF (WKLY) and the SoFi Weekly Income ETF (TGIF) provide convenient investment options. These ETFs offer diversified portfolios with different underlying assets, enabling investors to select an option that aligns with their income objectives and risk tolerance. However, it’s important to consider the potential risks associated with these investments and conduct thorough due diligence before making any investment decisions.

Disclosure: Author didn’t own any of the above at the time the article was written. These ETFs are extremely low cap, and should be considered extremely speculative.

Get Income on Penny Stocks that Don’t Pay Dividends

by Fred Fuld III

Yes, you read that heading correctly. You can own penny stocks that don’t pay dividends or even regular stocks that don’t pay dividends, and still get income from them.

And for stocks that do pay dividends, you can increase your income from them.

I’m not talking about writing options. I’m not talking about selling off some of your shares.

What I am talking about is something called the Fully Paid Lending Income program which most major brokerage firms offer. It is a way of making money off traders who  sold shares of a stock short .

Fully Paid Lending Income (FPLI) is a type of income that investors can earn by lending their fully paid securities to other market participants, such as hedge funds or other traders, who want to short sell the securities.

When investors lend their fully paid securities, they earn interest on the loan, which is referred to as FPLI. The interest rate is determined by market forces and may vary based on factors such as the demand for the security, the supply of available securities to lend, and the length of the loan period.

The process of FPLI works as follows: An investor with fully paid securities can lend them to a borrower through a lending agent, such as a broker-dealer or a custodian bank. The borrower then sells the securities on the market with the hope of buying them back later at a lower price. If successful, the borrower returns the securities to the lender, who earns interest on the loan.In summary, FPLI is a way for investors to earn additional income on their fully paid securities by lending them to other market participants who want to short sell the securities.

So you are probably wondering, can you really make any money from Fully Paid Lending? The answer is yes, and I’m talking from personal experience.

I recently called my broker about another issue relating to dividends, and as we were going through the income on my account, I noticed income of $164 listed as Miscellaneous. I asked the customer rep what that was and he told me that’s the fully paid lending income.

So I started to look back at previous months.

The following is an example from last month from my Roth IRA at TD Ameritrade. (Confidential information has been redacted.)

The dollar value of this stock during this time was around $8,000 and you will notice that the collateral at month-end was zero, which means that my shares were not borrowed for the entire month.

In spite of that, my stock generated over $164 for the month. That works out to 2% for just one month. Not too shabby for a stock that sells for around $4 and doesn’t pay a dividend. And if you annualize it…..

Now you are probably wondering, is this a one shot deal that you might get for only one month out of the year? The answer is no. Since December of last year, I have received over $100 every month.

Here is another example from January.

You can see that the same stock that generated $164 last month brought me $336 in January.

Let’s assume conservatively that this stock generates $150 per month. That’s $1800 per year, and for $8000 worth of stock, that’s a 22.5% return!

Considering that I originally bought the stock for just capital gains, this additional income is a nice bonus.

Now for the downside. You will notice that I had a second stock in January, which only generated six cents in lending fees. That can happen.

Sometimes you don’t make much and sometimes you don’t make anything on your stockholdings, but when you do, the income can be fairly high depending on if the stock is hard to borrow.

Be aware that you are not automatically enrolled in this program. You need to contact your broker, fill out some forms (which might need to be physical forms instead of electronic), and then wait a couple days for it to be activated.

I could not find any disadvantage to the program, although there are some basic requirements. I can sell my stock at any time. You can enroll both a regular account and an IRA account.

The way I look at it, I have nothing to lose and the possibility of a lot to gain. Especially with the low priced stocks.

Here’s to getting additional income on your stock portfolio.