Investors in the U.S. are lucky to a certain extent — most U.S. companies that pay dividends make quarterly payouts. If you go abroad, a lot of companies pay semiannually or annually.
But despite the fact that American companies pay quarterly, this doesn’t fit well with many people’s expenses. If you’re like me, you have a lot of monthly bills, and it therefore makes sense that companies should make dividend payouts monthly. In the end, you get the same amount of money, but insofar as you use dividend payments in order to pay for your living expenses you should own a couple of monthly dividend paying stocks and funds in your portfolio.
1. Realty Income Corp. (NYSE:O)
Realty Income is probably the best known monthly dividend payer, and it is also somewhat controversial. The company is a real estate investment trust (REIT), meaning that shareholders get special tax treatment if the company agrees to pay out the bulk of its cash-flow in the form of dividends. In particular, Realty Income is involved in commercial real estate in the United States. It owns strip malls and leases properties to retailers all over the country. These retailers make monthly payments to Realty Income, and after the company pays its expenses, it distributes this income to shareholders.
Right now, the company pays a 5.2 percent dividend yield — $0.18/month on a $42/share stock. The shares have weakened recently as investors are concerned about the company’s leverage. Investors are also more generally concerned about REITs as it loses value if bond yields rise. But so far this year, bond yields have been rising, and so have shares of Realty Income, which are up 12 percent year-to-date.
2. Franco-Nevada Corporation (NYSE:FNV)
Investors looking to add gold to their portfolios and who want monthly income have a few options, but Franco Nevada is probably the safest bet. The company is a royalty company, which means that it buys the right to receive a certain percentage of the gold produced at a given mine. The mining company is incentivized to make the deal because it needs the capital in order to build the mine, and the deal benefits Franco Nevada in that it gets exposure to the gold price, and if the mining company finds more gold that it initially thought it had then Franco Nevada still gets a percentage of this gold without contributing any more capital. While many gold companies were cutting their dividends over the past year Franco Nevada actually raised its dividend. It is still somewhat low at 1.6 percent, but of the monthly dividend payers featured here it is growing the fastest. So far, the stock is up over 11 percent this year, but it has pulled back somewhat, and it is starting to look appealing again.
3. The SPDR Dow Jones Industrial Average ETF (DIA)
The companies in the Dow Jones Industrial Average pay quarterly dividends — except for Disney (NYSE:DIS), which pays an annual dividend — but this fund will pay you monthly if you own the entire index. This fund features some of the world’s largest and most established companies such as Wal-Mart (NYSE:WMT), Visa (NYSE:V), and Chevron (NYSE:CVX). There are some riskier stocks in the Dow Jones, but generally this is a good way to get low risk exposure to the stock market.
The DIA is near an all time high, and investors might want to wait for a pull-back before buying the shares. But they pay a decent 2.1 percent yield that is growing — virtually every company in the Dow is growing its dividend annually.
4. The Global X Super Dividend ETF (SDIV)
If you’re looking for a fund that seeks out high dividend stocks and pays you a monthly dividend, then consider the Global X Super Dividend ETF. The stocks in this fund are a selection of high dividend paying stocks from around the world. This means that it gives you exposure to some of the cheapest large cap stocks out there such as Latin American utilities and high yielding Canadian oil companies. The fund’s dividend tops 6 percent, which makes it the highest payer of the options that I list here. Furthermore, this year the strategy has worked — investors have bid up the shares by over 6 percent this year iin addition to the dividend.
Investors who want to focus on just the United States can buy the Global X Super Dividend U.S. ETF (DIV), which owns just U. S. companies. Its dividend is slightly lower at 5.9 percent but it will own shares in companies that you are more familiar with.