I think we would all agree that a consistent steady income is more convenient to live off and manage expenditures than receiving a couple of large lump sums per year.
Luckily, the ASX has a solution – owning the following handful of quality ASX dividend shares can provide you with a steady stream of income from your portfolio across the whole year.
Income for January, April, July and October
Bonds are typically safer than stocks as they have a priority claim on a company's capital before common shareholders and they offer a great diversification in a share portfolio. However, this usually means that they will pay a lower yield. One fund I like, however, is the VanEck AU Corporate Bond ETF (ASX: PLUS). This bond ETF trades on the ASX like a stock and invests in a diversified portfolio of AUD denominated bonds. It consists of the highest yielding investment grade bonds with large holdings in well know companies such as Qantas Airways Limited (ASX: QAN) and Westpac Banking Corp (ASX: WBC).
Despite being a bond fund, it pays a healthy dividend 4 times a year with a trailing yield of 3.8%.
Income for March and September
Income for March and September can be provided by Australia's largest provider of annuities Challenger Ltd (ASX: CGF). Challenger looks set to benefit from Australia's ageing population as more people retire. Challenger also recently entered a partnership in Japan, which increases the regions where it can sell its products.
Challenger currently pays a fully franked yield of 4.40%, which grossed-up is 6.29%.
Income for February, May, August and November
For these months' income I have chosen the agricultural REIT (Real Estate Investment Trust) Rural Funds Group (ASX: RFF). Rural Funds owns a diversified portfolio of high quality Australian agricultural assets which are leased out to operators.
Ok, so I'm cheating a tiny bit here, as the historical payment dates have come on the last day of the previous month to those mentioned above, however, I believe this still works for smoothing your income stream. Most of its leases are CPI linked or have a fixed indexation, which aids its goal of increasing its dividend by 4% each year.
Due to the recent share price drop, Rural Funds offers a yield of 5.96%.
Income for June and December
For the remaining 2 months, I would choose Westpac Banking Corp (ASX: WBC). Australia's oldest bank needs no introduction and even though it recently reduced its dividend by 15%, the payout ratio is now far more sustainable.
Combine this with the recent share price drop and the dividend yield is the largest on this list with a grossed-up yield of 9.4% – just in time for Christmas!
Foolish takeaway
Combining the above 4 ASX dividend shares in a portfolio would help smooth out income throughout the year, providing a payment virtually each month.
I believe monthly payments allow you to better manage your expenditures and mean you're never too far away from another payment.
DISCLOSURE: Motley Fool contributor Michael Tonon owns shares in PLUS, RFF and CGF
