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Proprietary Data Insights Top Dividend-Paying Stock Searches This Month
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Easy Ways To Generate Monthly Income
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Or let’s call them relatively easy ways to generate monthly income. A goal of long-term investors far and wide. It’s the dream, really. To build a monthly income stream so freaking formidable that you can, at least in part, live off of it. In today’s and tomorrow’s Juice, we cover this conundrum from two different angles. Tomorrow, the angle is one that the ideas we present today simply can’t satisfy. How do you generate meaningful monthly income from high-growth tech stocks that don’t pay dividends, pay dividends that yield very little or you don’t own enough of to be able to write covered calls against them? Even if you can do all or some of the above, there are limitations and risks you might not want to take on. Anyway, that’s tomorrow. As for today … One thing you often see floated is to look at the quarterly payout schedules of dividend stocks, then buy stocks that use different schedules. For example, buy one stock on a January, April, July, October schedule, another on a February, May, August, November schedule and another on a March, June, September, December schedule. Rinse and repeat on different schedules and, suddenly, you have income coming in every single month to make your car payment. Or whatever. For example:
This isn’t a bad idea. Lots of people use it. However, especially if you’re a small investor who can only buy a limited number of stocks, you don’t want to buy one stock or the other because it pays on a schedule that will bring you monthly income. Timing payout schedules is almost, if not as bad as timing the market. This said, it’s simple to find a company’s payout schedule:
You can also search for other types of dividend stocks. In most cases, companies pay their dividends quarterly. When you pull up a stock quote, you might see a dividend of $1.00 listed. Generally, this is the annual dividend payment that goes out in quarterly payments of $0.25. You might also see a record date when researching dividends. This means that all shareholders on record as of that date are eligible to receive the next dividend payment. Because it typically takes around two days for stock transactions to clear in your account, you need to buy ahead of the record date to ensure you get the next quarterly dividend. From time to time, a company will pay a special, one-time dividend. You can’t predict these. But they can be super lucrative. Costco (COST) is known for special dividends. In addition to its regular quarterly dividend (which is currently a solid $1.16), the company paid a one-time dividend of $15 per share (you read that right) in December 2023. Costco also paid a special dividend in 2012, 2015, 2017 and 2020. A special dividend generally comes about when a company has excess cash it feels comfortable distributing to shareholders. Here again, chasing special dividends with Costco or another company you see pay them, is like chasing your tail. It’s unpredictable in 99.9% of cases and even tough to predict or anticipate with Costco. You have to like the business and the stock long-term. Consider a special dividend icing on the cake. Some stocks, quite often real estate investment trusts (REITs), pay monthly dividends. Realty Income (O) actually calls itself “The Monthly Dividend Company.” It’s a REIT that invests in commercial properties in the U.S., Spain, and the U.K. As for other monthly dividend stocks, many are in real estate. Many are REITs. Sure Dividend offers access to a regularly updated list here. One thing you’ll notice on that list is a lot of high dividend yields. As we noted in a February 2023 Juice (we’ve been with you for a while now!), this can be a red flag. This doesn’t mean stocks that pay monthly dividends aren’t good. It just means that, as with any other investment, you’re best advised to research the company and assess the quality of the dividend no matter the frequency of the payout.
The Bottom Line: All of this said, there comes a time to look for high yields (we love high yields at The Juice!) and consistent income (we love this just as much). If you can find these two things alongside a stock that’s poised to appreciate amid strong growth at the company, you have found the holy grail of investing. Dividend growth or otherwise. However, there are times when you’re looking to (continue to) seize hyper growth in a stock that doesn’t pay a dividend or offer easy-to-execute income opportunities. In tomorrow’s Juice, we have an ETF idea (or six) to help you strike a balance between growth and income. So, be on the lookout for tomorrow’s installment of The Juice in your inbox and feel free to invite a friend to subscribe for free. |
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