By Home & Pocket

April 29, 2024

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When It comes to dividends, I’m obviously a huge fan!

To date, I have amassed a Dividend Portfolio of over 65 (70) Individual dividend-paying stocks in my “Freedom Fund.”

You may have noticed something when reading my monthly reports.

When going through the Freedom Fund stock, you can see some stocks pay dividends quarterly. Others distribute dividends monthly.

This is not an accident, but rather the way some companies operate within their respective industries.

I generally like having a mix of monthly and quarterly dividend-paying stocks to maintain a steady cash flow every month.

Monthly dividend paying stocks are not as widely available. This makes selecting them for your portfolio all the more crucial.

When looking for monthly dividend stocks, you’re generally seeking companies that offer reliable monthly payouts.

These payouts are consistent. They are often appealing to those looking for regular income.

While it’s essential to do your research, here are some of the best-known monthly dividend-paying stocks across different sectors:

Before I discuss the three monthly dividend stocks, I want to ensure we all know the key differences between monthly and quarterly stocks. Also why it’s important to diversify with both types.

The primary difference between monthly and quarterly dividend stocks is the frequency with which they pay out dividends:

1. Monthly Dividend Stocks:
   • These stocks pay dividends to shareholders every month.
   • Investors receive a dividend payment 12 times a year.
   • Monthly dividends can provide a consistent and predictable income stream, which may appeal to those who rely on their investments for regular cash flow.

2. Quarterly Dividend Stocks:
   • These stocks pay dividends four times a year, typically every three months.
   • Dividend payments are often made at regular intervals, such as in January, April, July, and October.
   • Quarterly dividends are more common than monthly dividends and can still provide a reliable income stream, though less frequent.

Key Considerations:

• Cash Flow: Monthly dividends offer more frequent cash flow, which may be advantageous for those needing regular income. Quarterly dividends, while less frequent, are still a common and reliable source of income for long-term investors.
• Stock Selection: Companies paying monthly dividends are often in sectors like real estate investment trusts (REITs) or certain income-generating funds, while most established companies paying dividends typically do so on a quarterly basis.

In summary, the main difference lies in the timing of dividend payouts.

Dividends are paid monthly, which is 12 times a year. Alternatively, they can be paid quarterly, which is 4 times a year.

1. Realty Income Corporation (O)

• Sector: Real Estate (REIT)
• Dividend Yield: ~4.5% (can vary)
• Description: Realty Income is known as “The Monthly Dividend Company.” It’s a real estate investment trust (REIT). It invests in commercial properties with long-term leases. These leases are primarily with companies like Walgreens, 7-Eleven, and CVS. They have a strong history of paying monthly dividends and are known for their reliability.
• Current Portfolio: I own 30 Shares and earn about $93 a year from dividends

2. Stag Industrial, Inc. (STAG)

• Sector: Real Estate (REIT)
• Dividend Yield: ~5.2%
• Description: STAG Industrial is another REIT focused on industrial properties. It targets warehouses, distribution centers, and manufacturing buildings. The company has a solid history of paying monthly dividends and is considered relatively stable in terms of dividend payouts.
• Current Portfolio: I have STAG in my watch list for purchase this year.

3. Main Street Capital (MAIN)

• Sector: Business Development Company (BDC)
• Dividend Yield: ~6.8%
• Description: Main Street Capital is a BDC that invests in middle-market companies. It focuses on providing debt and equity capital to these companies and generates income through interest payments and capital gains. Main Street Capital has a reputation for providing consistent monthly dividends.
• Current Portfolio: I have 1 Share and will earn $4.20 in Dividends this year.

Key Factors to Consider:

1. Dividend Yield: A higher yield might seem attractive, but it often comes with higher risk. Balance yield with the company’s stability and track record of dividend payments.
2. Payout Consistency: Look for companies with a history of regular monthly payments and a strong financial foundation.
3. Diversification: Don’t put all your investments in one stock or sector. Consider diversifying across industries (e.g., real estate, energy, telecom) to reduce risk.
4. Company Financials: Make sure the company is financially stable and can afford its dividend payments.

Final Thoughts:

Dividend Stocks are some of the best and efficient means of building passive income.

Monthly dividend stocks are a great way to balance a portfolio of mostly quarterly dividend stocks.

Keep in mind, these companies are mostly REITS and not your traditional company.

Always be weary of Dividend Traps and continue to conduct your own research.

You can also consider using a platform or advisor to help you select the right mix of investments based on your goals, risk tolerance, and income needs.