3 Years of Continuous Outperformance in 20% Dividend Payout Projection from Jan 2020 to Feb 2023 during time of financial crisis from Covid Pandemic to Russian-Ukraine War.
Outperformance of Dividend Payout above 20% has been a common sight for many of the investor deploying Scheduled Dividend Capture Strategy – 3S DCS.
Scheduled Dividend Capture Strategy – 3S DCS
3S DCS basically are strategy that scheduled switches to capture approximately 3 dividend payouts a month. The switching activities are pre-scheduled. Selection of funds varies from one investor to another based on different criteria.
- Funds with highest dividend payout
- Funds with monthly dividend payout
- Funds with lowest fluctuations
- Funds with lower risk
- Funds investing in a particular sectors/ countries/ regions and etc.
Below are one of the portfolios based on Scheduled Dividend Capture Strategy – 3S DCS
In the chart, the red line represent the actual accumulated dividend collected by this investor and the green line represent the 20% accumulated dividend projection. This particular portfolio started in Nov 2019 and increases over the years. As you can see the 20% projected accumulated dividend ending Feb 2023 is clearly outperformed by the actual accumulated dividend collected by the investor. The projection of 20% of the accumulated dividend was $743,333 but the actual dividend collected was $1,077,766.49 which is 44.99% above projection.
((1,077,766.49 – 743,333)/ 743,333) x 100% = 44.99%
This particular investor is very concern about the “Self-Funding of his Investment Plan in 3 years” His plan is to invest regularly for 10years, generating a dividend of 20% or above to self-fund his regular investment plan.
Let’s take a look at what he meant by “Self-Funding of his Investment Plan”.
For easy understanding, we used a round figure of $100,000 per annum to narrate this particular client’s definition of Self-Funding of his Investment Plan.
He is planning to invest an amount of $100,000 (Premium) per annum for a period of 10 years. Market goes up and down. Therefore, price fluctuations of the underlying investment funds are inevitable over the period of 10 years. However, for the ease of illustration and planning purposes, this client decided to level the fund price fluctuation by assuming the fund price staying flat throughout the 10years.
For Year 1, client will invest fresh fund of $100,000 (premium) at the beginning of the the Year 1. Based on $100,000 portfolio, 20% dividend rate, client will expect to receive $20,000 at the end of Year 1. Therefore, the balance will be $20,000 at the end of Year 1.
For Year 2, client will invest fresh fund of another $100,000 (premium) at the beginning of the the Year 2. Based on $200,000 portfolio, 20% dividend rate, client will expect to receive $40,000 at the end of Year 2. Therefore, the balance will be $60,000 at the end of Year 2.
For Year 3, client will invest fresh fund of another $100,000 (premium) at the beginning of the the Year 3. Based on $300,000 portfolio, 20% dividend rate, client will expect to receive $60,000 at the end of Year 3. Therefore, the balance will be $120,000 at the end of Year 3.
For Year 4, client will invest another $100,000 (premium) at the beginning of the the Year 4 with the accumulated dividend collected (Balance of $120,000) over the last 3 years. Based on $400,000 portfolio, 20% dividend rate, client will expect to receive $80,000 at the end of Year 4. Therefore, the balance will be $100,000 at the end of Year 4.
For Year 5, client will invest another $100,000 (premium) at the beginning of the the Year 5 with the accumulated dividend collected (Balance of $100,000) over the last 4 years. Based on $500,000 portfolio, 20% dividend rate, client will expect to receive $100,000 at the end of Year 5. Therefore, the balance will be $100,000 at the end of Year 5.
For Year 6, client will invest another $100,000 (premium) at the beginning of the the Year 6 with the accumulated dividend collected (Balance of $100,000) over the last 5 years. Based on $600,000 portfolio, 20% dividend rate, client will expect to receive $120,000 at the end of Year 6. Therefore, the balance will be $120,000 at the end of Year 6.
For Year 7, client will invest another $100,000 (premium) at the beginning of the the Year 7 with the accumulated dividend collected (Balance of $120,000) over the last 6 years. Based on $700,000 portfolio, 20% dividend rate, client will expect to receive $140,000 at the end of Year 7. Therefore, the balance will be $160,000 at the end of Year 7.
For Year 8, client will invest another $100,000 (premium) at the beginning of the the Year 8 with the accumulated dividend collected (Balance of $160,000) over the last 7 years. Based on $800,000 portfolio, 20% dividend rate, client will expect to receive $160,000 at the end of Year 8. Therefore, the balance will be $220,000 at the end of Year 8.
For Year 9, client will invest another $100,000 (premium) at the beginning of the the Year 9 with the accumulated dividend collected (Balance of $220,000) over the last 8 years. Based on $900,000 portfolio, 20% dividend rate, client will expect to receive $180,000 at the end of Year 9. Therefore, the balance will be $300,000 at the end of Year 9.
For Year 10, client will invest another $100,000 (premium) at the beginning of the the Year 10 with the accumulated dividend collected (Balance of $220,000) over the last 9 years. Based on $1,000,000 portfolio, 20% dividend rate, client will expect to receive $200,000 at the end of Year 10. Therefore, the balance will be $500,000 at the end of Year 10.
The above describe and clearly illustrate client’s concept of “self-funding his investment plan” in 3 years for a 10 years regular investment plan.
Fund Prices fluctuate with the financial market
Due the financial turbulences (Covid Pandemic and Russian-Ukraine War)from Year 2019 till Year 2023, fund prices fluctuated down like any other investments across the globe. Look at the Chart 2 below.
For the same period of time, the investment cash value fall from $2,600,000.00 to $2,166,010.56. A decline of $433,989.44 in cash value; a drop of 16.69%.
(433,989.44/ 2,600,000) x 100% = 16.69%
However, out of $2,600,000 of invested capital, $1,077,766.49 is dividend re-invested. Therefore, the actual fresh fund capital is only $1,522,233.51. Based on the above figures and the cash value of $2,166,010.56 as of 15 Feb 2023, the gain from Year 2019 to Year 2023 is $643,777.05 and percent gain of 42.29%
(($2,166,010.56 – $1,522,233.51)/ $1,522,233.51) x 100% = 42.29%
In Conclusion… …
Despite the decline in investment cash value, the dividend collected by this client continues to outperform the 20% dividend payout projection based on the Chart 1.
Based on the Chart 1, it’s a clear indication of achievable and sustainable 20% dividend payout based on 3S DCS. Thus, self-funding investment plan after 3 years of premium payment is as well highly viable with the diverging Actual-Projected Accumulated Dividend lines based on the data collected from the above client’s investment based on Dividend Capture Strategy – 3S DCS.
Lastly… …
Despite challenging market situations from Year 2019 to Year 2023, the above mentioned client still gain $643,777.05 and make percentage gain of 42.29%
Disclaimer: Do take note that past results do not equal to future performances. The above information is solely for educational and research study purposes only. It’s neither meant to be an investment nor financial advice. For investment or financial advice, please seek help from your professional financial advisors.