Are monthly dividends profitable compared to SWP for generating regular income?
If you are not liable to pay taxes and the dividends received on your investments will also not make your income fall under the minimum tax bracket, it doesn't matter. You can choose either way for your regular income needs.
Otherwise, SWP might be a better way because you can structure a withdrawal plan based on your needs. You can also customise it and change it over time, depending on your investment performance.
For instance, if you choose to withdraw 8 per cent of your capital and your investment has generated 12 per cent, you can increase your SWP or create a buffer for yourself. Similarly, suppose your investment returns turn out to be disappointing, wherein you expected to withdraw 8 per cent of your investments every year, and your investment returned only 6 per cent. In that case, you can revise your SWP and lower the withdrawal rate so that it does not erode your capital.
Thus, SWP provides investors greater flexibility in terms of both timing of income and the scale of income, whereas in dividends, it depends on the fund company as and when they choose to pay you.