Why I Love Monthly Dividends – And You Should, Too…

There’s nothing quite like the feeling of collecting a dividend. It’s almost like a paycheck — but without any of the work.

But what if you could get paid monthly? You may not be aware of this, but it is possible to collect monthly dividends.

Monthly dividend payers do exist… You just have to know where to look.

In just a second, I’ll even tell you about one of my favorites (and how you can get a list of more monthly payers).

But first, let’s cover why dividends are so appealing — and why (all else being equal) monthly dividend payers are even better.

The Power Of Dividends

You’ve probably seen some of the charts and graphs illustrating the long-term wealth-creating power of dividends. And if you have the option of reinvesting those proceeds into more shares, which in turn yield their own dividends, which then purchase more shares… even better.

Take for example this chart from Hartford Funds. It pretty much speaks for itself.

compound dividends chart

Or consider this… The S&P 500 has given investors a 10% average annual return since 1965. Nothing wrong with that. But Warren Buffett has famously chalked up 19.8% annualized gains at Berkshire Hathaway over the same period, for a market-crushing cumulative return of 3,787,000% — give or take.

In the process turning a modest $1,000 stake into $37+ million today.

Dividends have played a major role. It’s no coincidence that some of Buffett’s favorite long-term holdings are all dividend payers. I’m talking about anchor positions in timeless businesses like American Express (NYSE: AXP), Coca-Cola (NYSE: KO), Bank of America (NYSE: BAC), and more.

With growing income streams from these and other holdings, Berkshire Hathaway will pocket more billions in dividend payments this year.

The Appeal Of Monthly Dividends…

You’re probably aware that most U.S. stocks pay quarterly dividends. This schedule is related to the way public companies organize their financial reporting. Companies report their earnings quarterly, and they pay dividends on a similar schedule.

But all things equal, if one dividend check every quarter is great, then imagine if you receive one every 30 days…

For investors, receiving monthly income is simply more convenient than receiving it quarterly (or semiannually, which is how most foreign stocks pay their dividends). For one thing, monthly reinvestments minimize market risk — specifically, the risk of reinvesting at peak prices — and opportunities for second-guessing.

Another good reason to like monthly payers is the easier decision when it comes to selling. You don’t need to wonder if you should wait months for the next dividend to be paid. With 12 payments in a year (and each one is relatively less important than a quarterly payment), the decision to sell would be easier, should it come to that.

Also, monthly payers offer big benefits to income investors, especially those who count on this income to pay bills and cover regular expenses. A lot of my subscribers over at High-Yield Investing are in this exact situation. And I love hearing about how they put those nice cushy monthly dividends to use.

One Of My Favorite Monthly Dividend Stocks

Let me give you an example from our portfolio. Back in 2013, we added shares of Realty Income (NYSE: O) at just under $40 per share. This is a real estate investment trust (REIT) that owns a bunch of commercial properties around the country, with some of the biggest names in retail as tenants.

Since adding O to our portfolio, we have collected 126 monthly dividends totaling nearly $24 per share at last count. That’s a return of 60% just from dividend payments alone — to say nothing of any appreciation in the stock.

Meanwhile, the dividends have continued to grow as well, increasing from $0.17 to the current $0.26 per share. That works out to an annual distribution of $3.00 per share — for a hefty yield on cost of 7.6% on my initial outlay.

Monthly Dividends May Have A Place In Your Portfolio

Who wouldn’t rather collect 12 dividend checks per year than four, especially knowing the power of compound interest?

Of course, it’s never a good idea to invest based on yield alone. That’s is why I put every High-Yield Investing candidate (regardless of dividend frequency) through a gauntlet of background checks involving balance sheet health, cash flow projections, competitive analysis, valuation, and other critical factors.

And here’s the thing… monthly dividend payers aren’t as difficult to find as you might think. Sure, you may need to do some digging. In fact, Realty Income might be a great place to start. But thus far, about a dozen have made the final cut into my portfolio – one for every month of the year.

In fact, my team and I have prepared a full presentation on monthly dividend payers. You’ll learn everything you need to know, including how to get your hands on the names of my favorites.

If you’re looking to bolster your income in 2024, I can’t think of a better place to start your search. Go here now to learn more.