It can take a while to build up an emergency fund.  Besides, you’ll probably need more than one.  You need a “big” emergencies fund for things such as accidents, deaths, or job loss.  But you also need a general “unexpected contingencies” fund for expenditures that aren’t family or life and death emergencies, but are nevertheless expenses you can’t avoid and come with a larger price tag.  If you’re trying to build the former, wisdom is to keep at least 3-6 months worth of your salary aside.  That’s a lot of money.  What do you do until you have that in place?

One option is to keep aside a credit card (with zero balance) that you can use if something of that nature happens.  A last minute flight or paying for funeral costs, for example (you can use your own judgment as to what would qualify for a fundamental emergency for you).

Another, more sustainable option is to maintain a healthy monthly dividend payout fund. If you invest in limited partnerships or income trusts and royalty funds, for example, you can have distributions deposited to your account on a monthly basis.  In normal times you’ll use these for reinvestment and you’ll buy more dividend-paying stocks.  But during times when you have an unexpected expense, you can count on receiving the dividend payout and just use that instead, not making an investment that month.

To be sure, it’s going to take a bit of money to come up with a significant amount of dividend payout, but the good thing about dividend stocks is that many of them increase over time, which helps.

And you’ll be killing two birds with one stone, because you’ll also be contributing to your own investment plan. It can’t be a registered account, because you want easy access to it.  If you can keep it in your bank or linked to your bank account, all the better for easier access.

This is one of my plans currently.  Rather than focus on “investing for retirement,” I’m investing in order to improve day-to-day living right now.  If I know I can receive an extra $100/month through dividends (or distributions), I can invest that without having to tap into my usual income source.  It also provides me with more flexibility in case I’m stuck over a credit card payment, late fee, fine (you never know!), or other unexpected expense.  I know $100 isn’t much, but it’s $100 of extra flexibility and freedom, and it’s only going to increase from there.

You can do it too!  Are you investing just for a rainy day or some “retirement” utopia years off into the future?  You should think about investing for today.  Invest for current cashflow.  With the right investments, you can set yourself up so that one of your bills pays itself, or so that you don’t have to scramble to pay off your student loan each month.  It can contribute to a car payment or a child’s education fund.  And, of course, you can use it to slowly put in place your eventual emergency fund.

What do you think, do you have something similar in place?  I’d love to hear about how you’ve done it and what the alternatives are.

Well, this is unfortunate. I have a habit of buying stocks right before they make major changes. I should have known how to see this coming. I think I might not have bought the stock.

Today Whole Foods released its results for Q3. It has decided to suspend their dividend for the time being, and they are also slowing the rate at which they open new stores in 2009. I don’t mind this latter part. It’s good for the company. I also don’t mind any swing in the share price (which has gone up on this report, funny enough). Turns out their quarter’s profits fell 31% or came in 31% less than the estimates (this from BNN today; I’m not sure which is which).

I’ll be hanging on to this amazing retailer, however. Yes, it’s emotional:)! Hopefully the future will see the dividends back. In the meantime, I won’t be increasing my position, but I won’t sell it, either. This means I’ll need to find a replacement paycheck for the Jan-April-July-Dec quarters. No problem, I love hunting for new stocks. Anyone else holding WFMI out there? What are you doing?

So, you’e a cashflow investor. And you want to be a part of the commodities boom. The problem is that a lot of agriculture and resource stocks don’t pay dividends. Many of them can’t, I imagine, because they’re capital-heavy and need to reinvest all funds into their future projects because the products that make them profits take years to come to market. Also, there are a lot of start-up companies in this resource boom that are trying to take advantage of opportunities with China’s growing economy — companies like Spur Ventures. Such outfits won’t be paying a dividend, if at all, for a long time.

So you might be surprised, once you’re disgruntled enough with low distributions from your metals ETFs, that certain mining stocks do pay dividends - even if the yields can be quite small. Rather than making pennies from the ETF - and paying small management fees to do it - you might be better off just buying the gold and silver companies you like. And the dividends could be higher, too. I’ve done some of the legwork for you. Here’s my list of the

top eleven gold mining stocks that pay dividends:*

Gold Fields Limited (GFI:NYSE) - Price: 11.15 - Yield - 1.5%
Freeport McMoRan Copper & Gold Inc. (FCX: NYSE) - Price: 117.03 - Yield - 1.5%
Rio Tinto PLC (RTP: NYSE) - Price: 479.00 - Yield: 1.4%**
BHP Billiton Ltd (BHP: NYSE) - Price: 83.62 - Yield: 1.39%**
Newmont Mining Corp (NEM: NYSE) - Price: 48.95 - Yield: 0.82%
Yamana Gold Inc. (YRI: TSX) - Price: 14.89 - Yield: 0.80%
Barrick Gold Corporation (ABX: TSX) - Price: 40.96 - Yield: 0.70%
Goldcorp Inc. (G: TSX) - Price: 41.37 - Yield: 0.40%
AngloGold Ashanti Ltd. (AU: NYSE) - Price: 29.96 - Yield: 0.44%
Agnico-Eagle Mines Limited (AEM: TSX) - Price: 66.02 - Yield: 0.30%***
Kinross Gold Corporation (K: TSX) - Price: 19.87 - Yield: 0.20%

*All share prices are approximate, taken as of last Friday’s (June 20th, 2008) close. For simplicity’s sake, I’ve just quickly “ranked” these by their dividend yields. You’ll have your own criteria, of course.
**Runs its own DRIP but has high fees, though, for reinvests and OCPs.
***Agnico-Eagle Mines Ltd. also runs their own DRIP. No fees, but it is, however, less convenient than most DRIPs - they only allow optional cash purchases once a year and they only reinvest their dividends once a year (because they only pay dividends once a year, usually in March. If you don’t mind keeping up with the timing, though, and you can invest a good chunk at a time, the DRIP could still suit you just fine).

There are other large gold companies of course, like Harmony Gold, but they do not pay dividends. You should note that if you’re looking to buy gold and silver stocks directly, now might be a good time - many of them are down considerably from their 52-week highs (even Rio Tinto is currently only trading around 80% of its yearly high!).

What do you think?  Are you invested in gold stocks?  Think they’re not worth it?  I’d love to hear from you in the comments section below.  You also might be interested in reading my posts on silver stocks.  If you liked this article, subscribe to my RSS feed for updates and more articles like it when I cover gold stocks in the future.  Just go to the little orange square tab that you see in the floating sidetab, or beneath my site’s logo.