Stocks That Pay Monthly Dividends

| October 12, 2015 | 0 Comments

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Do you ever open up your electric bill and find yourself in a state of shock?

Not me… it’s pretty much the same every month.  The only real curve I was thrown came a few months ago.

That’s when a State of California windfall, the “California Climate Credit” drove my bill down to $12.66.

Not bad, huh?

(Not unless you do the math and rack up all the taxes you pay to pick up the tab for this handout.)

In any event, there’s no way I’ll ever see a $12.66 bill from San Diego Gas and Electric every month.

Especially not with the shellacking the company will be hit with when it shuts down and cleans up the doomed San Onofre Nuclear plant.

But if I want, here’s something I can see every month… a dividend check coming in.

Not all dividends are paid quarterly, even though that’s the norm.  And not all investors are reinvesting dividends… I know a lot of you like the income.

So here’s the lowdown on stocks that pay monthly dividends.

The Beautiful Thing About Stocks That Pay Monthly Dividends

The big benefit is simple.  Your investments set you up for dividend checks coming in that line up with your bills.

(Keep in mind that most bond investors are usually paid just twice a year.)

So you get a leg up with monthly dividend stocks right off the bat.

Your fixed expenses… the cable bill, the car insurance, even your mortgage.  Set up your portfolio so you have stocks paying dividends every month that cover these expenses.

Don’t get me wrong.  There’s nothing wrong with bonds and there’s nothing wrong with quarterly dividends.  You can do the same thing by planning to always have money in the bank for the next three months’ expenses.

But stocks that pay monthly dividends can give you a clean and precise way to do this.  It’s like locking in your own payday.

The only thing you want to keep in mind… don’t buy a stock just because it pays a monthly dividend.

You want to shake it down for safety.  Look for a decent yield, dividend growth, and all the things you would do with any other dividend stock.

Where To Find Stocks That Pay Monthly Dividends

A good place to look is in the real estate world, the Real Estate Investment Trusts (REITs).

You’ll find some good ones that pay monthly.

And when you know how to find the best stock for dividend income, take these rules and apply them to REITs.

There’s a good reason why a REIT makes sense for monthly dividends.  It’s got rent coming in every month.

All the real estate it owns, whether we’re talking office buildings or apartments, the REIT makes money with monthly rent.

Sure, you’ve got some exceptions… the REITs that specialize in a certain type of property like a hospital, a resort, or a hotel, but for the most part, because of leases, you’re looking at monthly income coming in.

Other places to find monthly dividends…

Companies that make loans, the so-called “Business Development” companies.  One of them is Prospect Capital $PSEC and another is Main Street Capital $MAIN.

Another place to look is the world of preferred stocks.

Preferred Stocks That Pay Monthly Dividends

Most of these pay a dividend on either the 15th of the month or on the last day of the month.

You can find a company like Evolution Petroleum Corporation $EPM that pays a monthly dividend.

It slices off 1/12th of the 8.5% annual yield and cuts shareholders a check.

(The stock isn’t the regular Evolution Petroleum stock, but the perpetual non-convertible 8.5% Series A Cumulative Preferred Stock.)

Sounds pretty complicated.  What’s all that?

When a company issues both preferred stock and ordinary stock, it makes sure dividends are paid first on the preferred stock.

When a preferred stock is cumulative, this means if the company misses a dividend in one quarter, it needs to make up for the missed dividend down the road, in a future quarter.

A non-cumulative stock means once the dividend is missed, tough luck.  It doesn’t have to be made up later.

A non-convertible stock is typically issued with common stock when a company raises money with a venture capital firm.

Kind of boring, but important.

That’s because when you invest in a stock that pays monthly dividends, you want to know what kind of a stock it is.

Another Good Thing About Stocks That Pay Monthly Dividends

There’s usually less of a price swing around the ex-dividend date.  You can see price swings fairly often when an ex-dividend date involves a stock that pays dividends quarterly.

You typically see the ex-dividend date fall two business days before the stock’s record date.

When you buy your dividend stock on or after the ex-dividend date, you’re not paid the current dividend… you’ll need to wait until next time.

The person who sells the stock pockets the dividend.

The Problem With Monthly Dividends

Just because you invest in stocks that pay monthly dividends doesn’t mean you’re any safer because a check comes in more often.

There’s an office on Camelback Road in Phoenix that used to send out monthly dividend checks like clockwork.

Shareholders were delighted.

Then, last fall, American Realty Capital Properties $ARCP admitted to “misstated financial results in the first two quarters of 2014.”

If you figure that sounds like cooking the books, I’m with you.

Basically, the company tried to make it look like $8.5 million it sunk into sprucing up the boss’s mansion in Newport, Rhode Island was actually a legitimate business expense.

Whatever you call it, investors called foul and ran for the exits.

Then, American Realty Capital Properties stopped paying monthly dividends… actually it stopped paying dividends period… in December 2014.

But the story’s far from over.

Six weeks ago, the REIT started calling itself Vereit and adopted the ticker $VER.

New name, new opportunities to lure in dividend investors who don’t do their due diligence and know what happened.

This chart tells you all you need to know…

Stocks That Pay Monthly Dividends Chart $VER

You might want to steer clear of this train wreck.

Vereit is a train that’s hauling some questionable baggage.

When you’re thinking about dividend stocks, ask yourself if you really need monthly dividends.

If you get a check every three months instead of every month, is it really that big of a deal?

You’re better off playing it safe and putting a premium on how solid the company is instead of how often it pays a dividend.

I don’t know about you, but I’m not terribly interested in picking up the tab for some joker’s mansion in Newport, Rhode Island.

Not unless he’s going to make a special one time payment and let me use the place for free next summer.

Fat chance.


Paul Duke

Note:  Paul Duke writes and edits  Sign up for our free dividend reports and dividend newsletter at  We’ll show you how to create regular income by investing in dividend stocks, easily, step-by-step.

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Category: Dividend Basics

About the Author ()

Paul “Dividend” Duke is a veteran investor with a longstanding interest in dividend stocks. He brings a balance of both technical and fundamental analysis to his work, and focuses on opportunities that provide safety, capital appreciation, and income.

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