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How To Earn Reliable Income With Monthly Dividend Stocks

Investors AlleyHow To Earn Reliable Income With Monthly Dividend Stocks
Wouldn’t it be nice to pay bills with income from monthly dividend stocks? We’ll explore the benefits and where to find these monthly payers.
How To Earn Reliable Income With…

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How To Earn Reliable Income With Monthly Dividend Stocks

monthly dividend stocks: Elderly couple dancing at the beach

Income investors look for stocks that pay dividends. The steady and reliable income from quarterly dividend payments is attractive — especially when it’s not tied to movement in the stock market. But cash flow from a monthly dividend payment is even more attractive.

Maybe you already know how lucrative dividend investing can be. But let’s recap briefly. 

Dividend income — whether quarterly or monthly — can provide an additional income stream to supplement your current cash flow or help make retirement all the more luxurious. When dividend income is reinvested, growth begins to compound. And when that happens, words like “intergenerational wealth” can enter the conversation. 

Sounds great, doesn’t it?

The idea of earning reliable income is appealing for sure. But getting started can be tough. 

It’s the getting started part of the process that can prevent investors from unleashing the massive potential of monthly dividend payouts. Even if you know what to look for in a dividend stock, pulling the trigger on your own can be daunting.

In this article, we will demystify the process of selecting the right monthly dividend stocks for your investment portfolio. Then, we’ll walk through the most common types of monthly dividend stocks so you know where to look for them.

Getting Started With Monthly Dividend Stocks

monthly dividend stocks: Shoes on a concrete floor with an arrow pointing up

While most companies pay out their dividends on a quarterly basis, that type of income stream is less predictable and kind of, well … awkward. You don’t budget on a quarterly basis, do you? So quarterly dividends mean that you’ve got to spend time rearranging the quarterly payouts to fit into your monthly budget.

Monthly dividend stocks, however, have monthly payouts. This can be appealing for a variety of reasons. For one, dividend stocks that pay out monthly make budgeting easier, especially in retirement. 

Another attractive feature of monthly dividend stocks is that your dividend income will compound that much faster. When dividend payments are reinvested, shares of monthly dividend stocks accumulate more rapidly. Plus, when you reinvest monthly dividends, your investment has more time to generate even more dividend income.

Testing Monthly Dividends for Sustainability

Investors often buy a dividend stock because the dividend payout is attractive, but if the stock price falls by more than you’ve earned in dividend income, that’s not a great feeling. 

When buying stocks primarily for the dividend income, it’s always a good idea to run a few tests to determine whether the dividend will be sustainable.

Those tests might include taking a looking at:

  • The company: Understanding the industry, the company itself, and current events is important when assessing sustainability. Can the company realistically maintain its current profitability levels? 
  • Market volatility: Look at the competitive landscape as well as the supply chain. Are any disruptions on the horizon?
  • The payout ratio: You can calculate the payout ratio by dividing total dividends paid to shareholders by the net income of the company. A healthy and sustainable payout ratio is typically between 30% and 55%. 
  • The dividend yield: Dividend yield is the ratio of dividends per share to stock price per share. Yields between 2% and 6% are generally considered healthy.

And after you’ve performed your own due diligence, you can, of course, consult the experts. Do some digging to see which monthly dividend stocks are being recommended and why.

Where Monthly Dividend Stocks Are Commonly Found

Woman working using a laptop and a calculator

A long list of companies and funds are monthly dividend payers. But most companies will fall into just a few categories. 

Monthly dividend payers are most commonly found in business development companies and real estate investment trusts. 

Why?

Because the assets can be actively managed by portfolio managers and are structured in such a way that dividend payments are built in. 

By taking a look at these categories a bit closer, you can get a feel for which characteristics to consider as you build your own portfolio. 

Business Development Companies (BDCs)

The business model of a BDC resembles that of a private equity firm in the sense that profits from investments and loans are funneled to shareholders via reliable and significant dividends. 

Using debt and equity, BDCs invest in other companies and then hope to share in the success of those firms. BDCs have become appealing investment opportunities because they have a track record of sharing profits with investors in the form of monthly dividend payments. 

During 2020, many stocks significantly decreased or altogether discontinued dividend payouts. But many BDCs were able to fight against that trend. 

How?

2020 recorded some historically low interest rates. Those rates enabled BDCs to easily and cost-effectively access capital during a time when many U.S. businesses were seeking to acquire debt or equity instruments to help them rebound after the many disruptions caused by the COVID-19 pandemic.

Gladstone Investment Corporation (NYSE:GAIN) and Prospect Capital (NASDAQ:PSEC), which both invest in middle-market companies, are examples of BDCs that were able to maintain monthly dividend payments in 2020.

Real Estate Investment Trusts (REITs)

REITs are legally required to payout 90% of their taxable income to shareholders as dividends. So as you can imagine, REITs typically pay above average dividends

When evaluating a REIT, look for good management teams that build strong balance sheets with adequate cash reserves. These reserves will enable the REIT to take advantage of opportunities as they arise and, in turn, will create value for shareholders.

You also want to consider in which sector the REIT primarily invests. Are there any macroeconomic trends that would serve as a tailwind for the sector?

For example, the U.S. Census Bureau estimates that the number of Americans aged 65 and older will double by the year 2050. This could serve as a tailwind for BDCs like LTC Properties (NYSE:LTC) that invest in properties that serve retirees, such as senior housing.

Another example may be the increase in e-commerce in the United States. This trend may influence a dividend investor to look for opportunities in industrial real estate. REITs like Stag Industrial, Inc. (NYSE:STAG) operate single-tenant properties for Amazon and other e-commerce companies that need warehouses or distribution centers.

Ready To Get Started?

Monthly income from dividend stocks could be contributing to your bottom line right now. That’s pretty exciting. With a strategic approach and a bit of due diligence, you can build a solid foundation that should allow you to feel confident about getting started.

When looking for monthly dividend payers to add to your portfolio, BDCs and REITs are good places to start. Just remember to seek out high-quality companies and consider the trends that may influence their performance.

It’s always a good time to generate extra cash to pay the bills, weather a financial crisis, or add a little luxury to your retirement plans.

We can help by showing you three stocks you can buy and hold forever as the backbone to your retirement. To learn about these three stocks and receive other dividend investing recommendations, subscribe to Investors Alley’s “Dividend Hunter” newsletter.

How To Earn Reliable Income With Monthly Dividend Stocks
Investors Alley Staff

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Government

Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

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Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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Government

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

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The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

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