One of the biggest benefits of owning shares is that they pay dividends. But how often do shares pay out dividends?
When we think about interest earned from a bank like Commonwealth Bank of Australia (ASX: CBA) we get interest every month. But dividends don't work like that.
Most Australian companies only pay a dividend every six months to align with their half-year reporting periods. For example, Australia's biggest miner BHP Group Ltd (ASX: BHP) reports its half-year report for the six months to 31 December and the full year to 30 June. BHP then pays its six-monthly dividend three months after the reporting period ends in March and September.
There are some other companies that report for the six month periods to June and December, but have different payment cycles. For example, Sydney Airport Holdings Pty Ltd (ASX: SYD) pays its dividends in February and August.
Different businesses have different 12-month reporting periods. Australia and New Zealand Banking Group (ASX: ANZ) reports its full year to 30 September, so it pays its dividend in December and July.
There are some companies and real estate investment trusts (REIT) that pay quarterly not half-yearly. For example, Rural Funds Group (ASX: RFF) pays in January, April, July and October. Arena REIT No 1 (ASX: ARF) pays in February, May, August and November. Dicker Data Ltd (ASX: DDR) pays in March, June, September and December.
If you wanted to, you could construct a portfolio of good shares that pay in different months so that you receive at least one payment in every month.
However, there are a small number of shares that actually aim to pay out a dividend every single month like BetaShares Australian Dividend Harvester Fund (ASX: HVST), although the total returns have been disappointing from this fund since inception, and Contrarian Value Fund Ltd (ASX: CVF).
Foolish takeaway
Over the course of a whole year it doesn't really matter when payments are made, but it can help with cashflow if the payments are spread out. I'm most interested in businesses that have reliable dividends and will generate growth.
