Investing in monthly dividends comes with several advantages. Understanding what monthly dividends are and the stocks that provide this distribution frequency can help you make a more informed decision regarding this financial investment. Read on to learn more about monthly dividends and what they entail.
What Are Monthly Dividends?
Monthly dividends are profit distributions made by a corporation that are paid out to shareholders each month via shares in the company. As opposed to dividends that companies distribute semi-annually or annually, you get these dividends monthly. Because of their nature, they provide a reliable source of income for investors due to the greater payment frequency compared to other dividend distributions.
Type of Stocks That Most Often Pay Out Monthly Dividends
If you’re interested in monthly dividends, it’s important to look for specific types of stocks that offer this distribution frequency. Here are some examples of stocks that often pay out monthly dividends:
- Common stocks.
- American depositary receipts (ADRs).
- Real estate investment trusts (REITs).
- Royalty trusts.
- Master limited partnerships (MLPs).
Benefits of Investing in Stocks That Pay Monthly Dividends
There are many advantages to investing in stocks that distribute monthly dividends to shareholders. Here are some of the benefits you can reap from this type of investment:
- Reliable payout: When you invest in monthly dividends, you can expect more frequent payments. This allows you to rely on companies to make more timely distributions than if they made quarterly, semi-annual, or annual payments.
- Higher yields: Monthly payments mean higher returns for investors. Essentially, it means you can count on a good source of income. This is particularly beneficial for income investors.
- Easier to afford monthly expenses: When you have monthly dividend payments to rely on, it’s easier to afford your recurring expenses such as rent, mortgage, and utilities. This is because these costs tend to come once a month, just like monthly dividends.
Stocks That Pay Out Monthly Dividends
Now that you know what monthly dividends are and the benefits they can provide you, you need to start thinking about the stocks you might want to invest in. Here are some stocks that pay monthly dividends:
- Realty Income Corporation: This real estate investment trust is commonly known for distributing monthly dividend stocks to shareholders.
- Vanguard Short-Term Corporate Bond ETF: This is a low-cost Vanguard index fund. It’s a good option in terms of safety since the U.S. government issues it, which minimizes the chances for default payments.
- Main Street Capital Corporation: This stock offers debt and equity capital through a conservative dividend policy. It’s specifically for middle-market corporations that don’t have the capacity to gain access to capital markets alone.
- Shaw Communications: This Canadian telecom operator provides a variety of services, like broadband internet, wireless phone, and television.
- Stag Industrial: This is an industrial REIT with low tenant concentration risk and low debt. Overall, it’s a good option for payout safety.
Consider whether the benefits that come with monthly dividends are worthwhile. If they are, think about which stocks you want to invest in and start the investment process today.