What arrives, and when.
An annual yield describes a total. It does not tell you that four months carry most of it and eight carry very little — which is the only thing that matters if you are spending the income.
| Month | Income | Share of the year |
|---|
Why the months are uneven
Canadian REITs mostly pay monthly, the banks pay quarterly, and quarterly payers do not share a cycle — some pay January, April, July, October; others February, May, August, November. A portfolio weighted to one cycle produces a year with three fat months and nine thin ones.
What this does not do
It does not apply tax, does not account for withholding, and assumes distributions are level and paid on schedule. Many are neither. Why a payment changes.
If you are spending it
Hold a buffer of a few months' distributions in cash so a light month is not a cash-flow problem. That is the whole mitigation, and it works. Living off dividends.