With the market looking wobbly this December, the need to get paid in cold, hard cash has never been more apparent. If you are already in retirement, selling portfolio positions in a declining market to meet your living expenses is, for lack of better word, scary. Living off of dividend and interest income makes for a far less stressful retirement.
But while I am a major believer in dividend investing, there has always been one major disconnect with it: most of us pay our bills on a monthly cycle, yet our dividend checks arrive only once per quarter or, in the case of some international stocks, once or twice per year. And with bonds, the story is much the same. Most bonds pay interest semiannually. This can make budgeting a headache and adds an extra level of planning.
Paying a dividend is an established sign of shareholder friendliness. But companies that pay their dividend monthly really take shareholder friendliness to the next level. There are actually quite a few companies trading today that pay their dividends monthly, and we’re going to take a look at some of my favorites today.
Before we get started, I want to make one important clarification. We should never buy a stock simply because it pays its dividend monthly. That would be phenomenally bad investing. When buying a dividend stock, dividend safety is your biggest priority followed by the possibility for dividend growth. A monthly payout—while convenient—is only a consideration once the first two conditions are met.
With that said, let’s jump into it.
Realty Income
I’ll start with a REIT that bills itself as the “Monthly Dividend Company,â€Â Realty Income (O).
Realty Income paid its first dividend in 1970, before it was publically traded, and hasn’t slowed down since. It’s paid 532 consecutive monthly dividends and raised its dividend 77 times—and in 68 consecutive quarters.
Since 1994, when Realty Income started trading on the NYSE, the REIT’s annualized dividend has risen from $0.90 per share to $2.197 per share. At its current price, that amounts to a dividend yield of 4.8%.
