What Are Stocks That Pay Monthly Dividends?

Just as individual investors have varied goals, individual stocks provide different levels of risk and reward. For those who want to earn with some protections and safeguards in place, stocks that pay monthly dividends are a great place to start. Learn what these stocks are and the importance of investing in them.

What Is a Monthly Dividend?

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A monthly dividend is a payout from a company to its stockholders. These investments are also known as “income stocks” since they provide regular income to stockholders in the form of consistent payouts. Most income stocks provide quarterly dividends, but some give stockholders monthly dividends, which is appealing to those who want regular cash flow to grow wealth or replace the income from a job in retirement.

While any industry can offer stocks that payout monthly dividends, they’re most common in:

  • Finance.
  • Real estate.
  • Natural resources.
  • Energy.
  • Utilities.

The Importance of Investing in Monthly Dividend Stocks

A diversified portfolio is an excellent way to ensure your wealth is protected no matter what happens in one sector. Income stocks are one choice for both expanding your investments and introducing reliable income. Monthly dividend stocks offer investors a host of benefits, including:

  • 12 dividend payouts a year rather than the standard four offered by most dividend stocks.
  • Flexibility to use the money for further investment or to manage bills.
  • Less volatility generally than bonds.
  • Protection from inflation.

Most Popular Stocks That Pay Monthly Dividends

When you’re ready to make your first investment in a monthly dividend stock, consider one of the most popular stocks for income stock investment due to their excellent track records of payouts, growth, and consistency:

  • Realty Income: Realty Income is a real estate company with an impressive long-term history of providing monthly dividends to stockholders.
  • Apple Hospitality REIT: Apple Hospitality is a real estate investment trust, or REIT, that pulls in regular revenue through real estate endeavors that it then pays out in dividends.
  • Main Street Capital: Main Street Capital is a business development company with impressive monthly yields.

Tips for Identifying Solid Monthly Dividend Stock Investments

When selecting stocks with monthly dividends for investing, it’s important to consider factors like company history and growth potential.

  • Look for profit: Generally, aim for companies that demonstrate long-term, consistent profitability.
  • Invest where there’s potential growth: Experts recommend investing in companies that show annual growth of between 5% and 15%. Below 5%, and you won’t receive much of a payout, and above 15% is hard to maintain, which means you might receive less than you expected long term.
  • Research a company’s payout: Ensure you invest in a company that has a strong record for paying out steady dividends. Look for a company that’s had excellent dividend payouts for at least five years and demonstrates good cash inflow, which is critical to having the money on hand to make dividend payouts to investors.

Do your research before selecting stocks with monthly dividends to ensure you’ll receive a satisfactory payout. Diversifying your portfolio with income stocks, when well-chosen, can substantially boost your long-term wealth.

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