Dividend carpet bombing and how to use it
Dividend carpet bombing is a concept I have met in the blogosphere especially on Norwegian blogs (don’t ask me why).
I have actually striven towards dividend carpet bombing without calling it by it’s name. But when I first heard the term, I fell in love. And here is why…
It is an odd term and it is appropriate to ask: What is dividend carpet bombing? In short dividend carpet bombing is a strategy where you buy certain dividend paying stocks that supplements each other in a way that you receive dividends every month. What’s not to like?
DISCLAIMER: I don’t say this should be the overall strategy for anybody. A certain dividend date is not a quality in itself!
In Denmark, companies often pay dividend once a year and due to the financial calendar the dividend often pays out in February, March or April.
With these danish stocks it is harder to make the dividend work for you in a compounding way and it is actually boring only to receive dividends in a small part of the year.
My take on dividend carpet bombing
The picture above is my actual spreadsheet where I track my progress towards a full year of dividend carpet bombing.
I’m sorry that the text is in danish, but I think you get the picture. To the left I have the 12 months of the year. In each row I have the companies paying a dividend that month. Green is a ‘once-a-year’ paying stock and blue is a quarterly paying company.
When a month is highlighted in green it means, that the month has either a green company in it or four blue ones.
My first goal is to be able to highlight all 12 months with a green color. That paves the way to my next goal:
I wan’t to have enough dividend coming in every month to buy new stocks with that dividend. Given my new broker and new terms that means I have to receive at least 135€ after tax. (135€ is the minimum buying amount at my new broker)
When I reach this goal, I can really gain benefit of the compound interest from dividend stocks. With the dividend I receive in January, I buy stocks that pays in February or March. In February I buy stocks that pay in March or April and so on..
Even though this will be very small amounts it is a snowball effect and over the years I really believe in great results. It also keeps up the motivation to stay on track and sticking to a strategy seeing those dividends coming in every month every year.
It also helps the dream of total FIRE where my monthly expenses will be covered by dividends.
I will make an update when I reach these goals. Until then: Bombs away!