# Is it worth waiting for dividends with regular investments?
**URL:** https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013
**Category:** Investing / Portfolios
**Created:** [February 24, 2024, 12:31pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013 "2024-02-24T12:31:51Z")
**Posts on this page:** 13
**Page:** 1
### Author:  [@nugget](https://forum.mustachianpost.com/u/nugget)
#### Post date: [February 24, 2024, 12:31pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/1 "2024-02-24T12:31:51Z")
> [@How do you determine and invest new contributions?](https://forum.mustachianpost.com/t/how-do-you-determine-and-invest-new-contributions/12002/5):
>
> I buy VT 4 times a year. End of March, June, September and December, after the dividends and salary.
I was intrigued by the title question. So I ran a small backtest.
Result: no, it is not worth timing the dividends vs. naive monthly investing it by a tiny amount.
Assumptions:
- $1000 monthly budget
- only invest in VT
- time horizon: 2013+, where VT starts distributing quarterly
- $0.33 transaction fees (IB-style)
- 30% income tax applies to dividend distributions
- buy shares at End of Month. in case of the wait-for-dividends, only in case of a distribution within the month
_\_m_ is the naive monthly, _\_d_ the waiting for dividends
| A | Date | Close | feed | EoM\_m | EoM\_d | diff |
| --- | --- | --- | --- | --- | --- | --- |
| 2410 | 2022-07-29 00:00:00-04:00 | 88.238220 | 1000 | 188138.655674 | 187085.197117 | -1053.458557 |
| 2433 | 2022-08-31 00:00:00-04:00 | 84.662292 | 1000 | 181514.447745 | 180547.141453 | -967.306291 |
| 2454 | 2022-09-30 00:00:00-04:00 | 76.594856 | 1000 | 165830.142229 | 165135.322705 | -694.819524 |
| 2475 | 2022-10-31 00:00:00-04:00 | 81.479149 | 1000 | 177404.305714 | 176660.973264 | -743.332450 |
| 2496 | 2022-11-30 00:00:00-05:00 | 88.227806 | 1000 | 193095.802496 | 192204.329587 | -891.472909 |
| 2517 | 2022-12-30 00:00:00-05:00 | 84.312820 | 1000 | 186506.644679 | 185729.628497 | -777.016182 |
| 2537 | 2023-01-31 00:00:00-05:00 | 90.759285 | 1000 | 201765.894238 | 200924.743411 | -841.150828 |
| 2556 | 2023-02-28 00:00:00-05:00 | 87.873535 | 1000 | 196350.542395 | 195570.322314 | -780.220081 |
| 2579 | 2023-03-31 00:00:00-04:00 | 90.378075 | 1000 | 203391.036615 | 202524.287270 | -866.749345 |
| 2598 | 2023-04-28 00:00:00-04:00 | 91.663734 | 1000 | 207283.441143 | 206404.165200 | -879.275943 |
| 2620 | 2023-05-31 00:00:00-04:00 | 90.554733 | 1000 | 205775.659521 | 204920.002602 | -855.656919 |
| 2641 | 2023-06-30 00:00:00-04:00 | 95.814117 | 1000 | 219758.410322 | 218719.893110 | -1038.517212 |
| 2661 | 2023-07-31 00:00:00-04:00 | 99.380714 | 1000 | 228936.287208 | 227858.867430 | -1077.419778 |
| 2684 | 2023-08-31 00:00:00-04:00 | 96.555099 | 1000 | 223428.566026 | 222410.814161 | -1017.751865 |
| 2704 | 2023-09-29 00:00:00-04:00 | 92.446899 | 1000 | 215579.499857 | 214684.115994 | -895.383863 |
| 2726 | 2023-10-31 00:00:00-04:00 | 89.748299 | 1000 | 210288.731464 | 209417.965008 | -870.766456 |
| 2747 | 2023-11-30 00:00:00-05:00 | 97.834183 | 1000 | 230233.627897 | 229193.387875 | -1040.240022 |
| 2767 | 2023-12-29 00:00:00-05:00 | 102.879997 | 1000 | 244425.426549 | 243211.384577 | -1214.041972 |
| 2788 | 2024-01-31 00:00:00-05:00 | 102.879997 | 1000 | 245425.096549 | 244211.384577 | -1213.711972 |
| 2804 | 2024-02-23 00:00:00-05:00 | 107.519997 | 1000 | 257491.165093 | 256180.343134 | -1310.821959 |
here the working example:
```auto
import yfinance as yf
import pandas as pd
import matplotlib.pyplot as plt
import seaborn as sns
import datetime
import numpy as np
pd.set_option('display.max_columns', None)
# Fetch historical data
vt = yf.Ticker('VT')
end_date = pd.Timestamp.now()
start_date = datetime.date(2013,1,1)
hist= vt.history(start=start_date.strftime('%Y-%m-%d'), end=end_date.strftime('%Y-%m-%d')).reset_index()
hist['yield'] = (hist["Dividends"]/hist["Open"])
# get End of Month data (will be used in purchasing & Net worth calculation)
df_EoM = hist.filter(hist['Date'].dt.to_period('M').drop_duplicates(keep='last').index, axis = 0)
# global parameters
div_tax = 0.3 # fraction of dividends you owe to the government. consider your marginal income tax rate
tansaction_fees = 0.33 # transaction fees. for IB, around 1/3rd of a $
# prepare the data. _m for the monthly staratedy, _d for waiting for dividends
df = hist.filter(hist['Date'].dt.to_period('M').drop_duplicates(keep='last').index, axis = 0)
df["cash_m"] = 0
df["distribution_m"] = 0
df["feed"] = 1000
df["shares_bought_m"]=0
df["shares_m"]=0
df["EoM_m"]=0
df["fees_m"]=0
shares_m = 0
cash_available_m = 0
df["cash_d"] = 0
df["distribution_d"] = 0
df["shares_bought_d"]=0
df["shares_d"]=0
df["EoM_d"]=0
df["fees_d"]=0
shares_d = 0
cash_available_d = 0
# let's go
for i, (idx, row) in enumerate(df.iterrows()):
year = row.Date.year
month = row.Date.month
price = df_EoM[(df_EoM.Date.dt.year == year) & (df_EoM.Date.dt.month == month)].Close.values[0] # close price at the end of the month
div_yield = hist[(hist.Date.dt.year == year) & (hist.Date.dt.month == month)].Dividends.sum()*(1-div_tax) # dividend yield of a month, minus tax
# first monthly investing
# collect cash
distribution_m = shares_m * div_yield
cash_available_m = cash_available_m + row.feed + distribution_m # available cash for purchase
# buy shares
shares_bought_m, cash_available_m = divmod(cash_available_m,price)
shares_m += shares_bought_m
cash_available_m -= tansaction_fees
# Net Worth End of Month
EoM_m = shares_m * price + cash_available_m
df.at[idx,"distribution_m"] = distribution_m
df.at[idx,"shares_bought_m"] = shares_bought_m
df.at[idx,"cash_m"] = cash_available_m
df.at[idx,"shares_m"] = shares_m
df.at[idx,"EoM_m"] = EoM_m
df.at[idx,"fees_m"] = tansaction_fees
# second the dividend cycle invest
# collect cash
distribution_d = shares_d * div_yield
cash_available_d = cash_available_d + row.feed + distribution_d # available cash for purchase
# buy shares
if div_yield > 0:
shares_bought_d, cash_available_d = divmod(cash_available_d,price)
shares_d += shares_bought_d
cash_available_d -= tansaction_fees
df.at[idx,"fees_d"] = tansaction_fees
else:
shares_bought_d = 0
# Net Worth End of Month
EoM_d = shares_d * price + cash_available_d
df.at[idx,"distribution_d"] = distribution_d
df.at[idx,"shares_bought_d"] = shares_bought_d
df.at[idx,"cash_d"] = cash_available_d
df.at[idx,"shares_d"] = shares_d
df.at[idx,"EoM_d"] = EoM_d
df["diff"] = (df.EoM_d-df.EoM_m)
df.plot(x="Date",y=["EoM_m","EoM_d"],title="Net worth")
df.plot(x="Date",y=["diff"],title='Difference')
keepcols = ['Date', 'Close',
'cash_m', 'distribution_m',
'feed', 'shares_bought_m', "fees_m", 'shares_m', 'EoM_m', 'cash_d',
'distribution_d', 'shares_bought_d', "fees_d", 'shares_d', 'EoM_d', 'diff']
df[keepcols].tail(20)
```
follow-up question:
- 2013-2024 is one of the strongest bull markets in history. would we have the same results in a sidways-or bear market?
---
### Author:  [@Mirager](https://forum.mustachianpost.com/u/Mirager)
#### Post date: [February 24, 2024, 1:21pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/2 "2024-02-24T13:21:29Z")
Great question and test, which sideways market will you pick? That could be trickier because VT itself is not that old. You could pick something like VTSAX or SPDR for simplicity but these are US-only as you know.
---
### Author:  [@Brndete](https://forum.mustachianpost.com/u/Brndete)
#### Post date: [February 24, 2024, 1:51pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/3 "2024-02-24T13:51:11Z")
Nice exercise.
> [@nugget](#):
>
> would we have the same results in a sidways-or bear market?
In a long bear market, the best result would be to not invest at all or go short.
On average, even an expected return of 5% per year for time in the market will beat tax savings of 40% for a 0.5% quarterly dividend. Of course, the time period is too short to make reasonable assumptions of average returns.
Quarterly investment seem valid for convenience or when facing high fees for smaller purchases, though.
---
### Author:  [@Dr.PI](https://forum.mustachianpost.com/u/Dr.PI)
#### Post date: [February 24, 2024, 2:14pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/4 "2024-02-24T14:14:45Z")
> [@nugget](#):
>
> $0.33 transaction fees (IB-style)
Nice exercise and you can throw results away š. I think the only reason to wait for dividends before investing is because the transaction fees are significant.
---
### Author:  [@fittim](https://forum.mustachianpost.com/u/fittim)
#### Post date: [February 24, 2024, 5:22pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/5 "2024-02-24T17:22:02Z")
Nice, thanks. Very interesting.
There is another reason for buying only 4 times a year: peace of mind. You have to send money to IB, go change the currency, wait for 2 days to settle, log in again and place the order. And in March the next year you have to fill out a lot of transactions in the tax declaration. So basically, Iām just lazy. But I was thinking about investing more often, as salary and saving rate is increasing.
---
### Author:  [@Brndete](https://forum.mustachianpost.com/u/Brndete)
#### Post date: [February 24, 2024, 5:57pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/6 "2024-02-24T17:57:43Z")
Fair enough, thatās what I meant with convenience.
Hopefully, it wonāt change your life whether you end with 257k or 256k in Nuggets example.
---
### Author:  [@ma0](https://forum.mustachianpost.com/u/ma0)
#### Post date: [February 24, 2024, 6:02pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/7 "2024-02-24T18:02:43Z")
> [@fittim](#):
>
> wait for 2 days to settle
Thatās not true. I change and buy immediately.
---
### Author:  [@fittim](https://forum.mustachianpost.com/u/fittim)
#### Post date: [February 24, 2024, 6:14pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/8 "2024-02-24T18:14:18Z")
Itās true for me. Not always, but more than 50% of the time. Not sure, why, though.
---
### Author:  [@yetanothername](https://forum.mustachianpost.com/u/yetanothername)
#### Post date: [February 25, 2024, 11:54am UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/9 "2024-02-25T11:54:24Z")
> [@fittim](#):
>
> There is another reason for buying only 4 times a year: peace of mind. You have to send money to IB, go change the currency, wait for 2 days to settle, log in again and place the order.
If you set up a recurring investment and automatic reinvestment of dividends, you have to log in about twice a year to manually invest the leftovers from improvise currency exchange.
You can invest monthly without exchange fees.
---
### Author:  [@Dr.PI](https://forum.mustachianpost.com/u/Dr.PI)
#### Post date: [February 25, 2024, 10:12pm UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/10 "2024-02-25T22:12:37Z")
2 posts were merged into an existing topic: [IBKR: Recurring Investments available!](https://forum.mustachianpost.com/t/ibkr-recurring-investments-available/9664/99)
---
### Author:  [@prodent](https://forum.mustachianpost.com/u/prodent)
#### Post date: [February 26, 2024, 9:25am UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/11 "2024-02-26T09:25:04Z")
A side note, but my lazy-ish / peace of mind / āI like round numbersā approach is
1. check how much USD I need for a nice round number of VT
2. log in to bank account to transfer (roughly) equivalent CHF amount to IB
3. log in to IB in the afternoon, execute market order, close negative USD balance
1 login to the bank, 1 login to IB, doesnāt take more than a few minutes overall.
Iāve had recurring transfers and investments set up, but still ended up canceling them and performing this āritualā as soon as the next salary arrived š
---
### Author:  [@xmj](https://forum.mustachianpost.com/u/xmj)
#### Post date: [February 26, 2024, 9:32am UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/12 "2024-02-26T09:32:05Z")
Margin vs cash account
---
### Author:  [@fittim](https://forum.mustachianpost.com/u/fittim)
#### Post date: [February 26, 2024, 9:42am UTC](https://forum.mustachianpost.com/t/is-it-worth-waiting-for-dividends-with-regular-investments/12013/13 "2024-02-26T09:42:37Z")
Thanks, yes, I thought that.