At the end of the year, I always try to do a mini personal financial statement to see what my cash flow looked like for the year. I’m sure other investors do something similar! In case of surplus funds remaining in savings, investors can apply them before 2025, obtaining a second income from dividend stocks. Here’s an idea to consider for a one-time amount, such as $3,000. pounds of savings.

Investing over time

Some people believe that the best way to invest savings in the stock market is to invest a lump sum. Truth be told, I don’t agree with this approach. I understand why some people think investing the whole $3,000. pounds in one go makes sense because the money can be used immediately.

However, another option to consider is dividing the 3k. pounds into six pieces of £500 and investing this amount every month. When it comes to dividend stocks, this can provide an investor with the opportunity to take advantage of emerging opportunities.

For example, a company’s stock may currently have a dividend yield of 5%. However, in a month’s time, a drop in the share price could augment the yield to 6%. At this point, this might be a great part to do. Another case might be a company paying a dividend of 10 pence per share. However, annual results published a few months later showed that high profits could mean management would declare a 15p dividend. This could be the catalyst that makes this an ideal stock to buy at this point in the future.

Increasing dividend payments

One example is this TBC Bank (LSE:TBCG). If we go back to the summer of 2022, the dividend yield was around 2.5%. At that point, it wasn’t as attractive to income investors. However, the dividend yield has been increasing since then, largely due to an augment in dividend payments per share. The current yield is 6.59%.

Over the past year, the company’s shares have increased by 11%. The bank operates in Georgia and Uzbekistan, where great progress has recently been made in the development of digital banking. Third quarter results showed that the number of lively digital users increased by 1.4 million more per month compared to the same period last year. The more engaged customers are, the easier it is for them to spend and make payments, which generates more revenue for the bank.

Another factor helping the bank is the economic performance of developing countries. For example, Georgian GDP increased by 11.1% year-on-year this quarter! Strong growth certainly has a positive impact on the banking sector.

The risk of fraud and money laundering in emerging countries is higher. TBC will likely need to invest more in compliance and other areas to prevent scandals as it continues to expand.

Risk diversification

If an investor invested £500 in TBC Bank and created six similar investments that returned over 6.5%, I think this would be a mighty second source of income. Dividends are not guaranteed in the future, but spreading the risk across different companies helps reduce the potential impact of a dividend cut on your portfolio.