When we think of passive income; most commonly we will think of passive income coming from rental income from property and income from stock dividends.
For retail stock investors, such thinking of passive income coming from stock dividends may actually corner them into searching into REITs, Biz Trusts and other defensive counters that are known to pay consistent dividends. Since REITS and Biz Trusts are specially created for investors looking for stock dividends as passive income on regular basis e.g quarterly or semi-annually; probably it becomes the best place to look for high dividend yield. But, the best place may not be the most profitable place in the stock market in term of cash flow.
But, instead of thinking of regular passive income in our portfolio, we may want to change the idea of passive income into cash flow as income on yearly basis. In this case, it may open up more opportunities and not restricting yourself into REITs and Biz Trusts.
Try thinking of cash flow as income over yearly basis; the cash flow can come from realizing your gains from sales of stocks over a year. This cash flow may turn out to be as good as your regular passive income from stocks dividends.
At least, my experience is telling me so. To me, stock dividends is nothing more than just a safe net should I get it wrong. I don't purposely buy the stocks based its dividend yield.
Are you still in doubt? LOL
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56 minutes ago
Hi CW8888,
ReplyDeleteIf you bought REITS during the Bear Market, they can easily convert to cash-flow stocks when you are ready to sell them. Of course compare to other blue chips, others can give you more in terms of cash-flow when you are ready to sell them. But I think it's best to have both types in your portfolio because Reits usually continue to pay quite good dividends in a Bear market.