Psychological important of an income portfolio

Ninety nine percent working class prefer to having stable income, the paychecks release bi-weekly, or monthly. Here is an interesting experiment: let a group of people to decide how they would choose to obtain $3000 in a month: daily, weekly, bi-weekly, and monthly. The group of people is selected such that they could have similar financial conditions or varied financial conditions. The results would have more weekly and bi-weekly requests than the other two. If further the length to a year of $36000, the percentage of preferring to one-time annual payout of $36000 drops to 1%.

This is an important psychological observation: we, human being, mostly prefer stabilizability over instant changes. It is just the way we operate so that we feel we are insured by the income flow. For the 1% who prefer volatility, they should be more accurately called entrepreneurs. To be financial sound entrepreneur, be prepared such challenges in addition to business factors.

So don't undervalue the need of having an income portfolio. Here are something need to consider while doing so:

Select companies with capital appreciation that choose to increase dividends over time. That is translated to good cash flows, net income and asset values. Then move on to yields. If companies maintain payout ratio --- dividend as a percentage of net income --- above 30% to 60%, that is good. Finally, look at the potential of having dividends boosted in the future.