One outcome of buying counters that pay dividends is that you get a constant stream of passive income every month. Despite current market conditions, it seems like my passive income will continue to maintain above the $10k/month mark this year. While it is nice to have this extra income to supplement what I am getting from my job, I have no plans to spend it on luxuries this year - due to the $100k COE, I think I'm going to postpone my car replacement till next year (hopefully no major breakdown before that). However, I might treat myself to a nice holiday at the end of the year.
$10k+/month is of course an average as my graph shows. Some months you get more than other months For example, I guess many companies don't pay dividends during tax filing season as their finance department is busy with the accounts.
One reflection over the past few months where I got large dividend payments and various "refunds" (Frasers 3.65% bond maturing, Aviva return of capital, Westpac delisting of ADR etc), is that it forces me to have the discipline to reinvest my free cash flow.. otherwise too much of my cash is being eaten up by inflation.
By regularly exercising my finger to press the "Buy" button, I avoid the paralysis that can sometimes accompany bearish or highly uncertain market convictions. Hopefully this will make me better prepared to deploy more cash once the bottom is established and the market recovers.
Having a steady free cash flow also makes it easy to rebalance without selling anything. As I mentioned earlier, I have been accumulating Astrea V and VI over the past few weeks as part of my bond component, and I can do this by redeploying my free cash flow instead of having to decide what shares to sell and when to sell them.
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