Print Friendly and PDF

Get Dividends Every Month

One way for income-hungry investors to keep cash flowing is to assemble a portfolio that shells out dividends every month. The idea is to assemble 12 stocks or funds with alternating distribution dates so that you never wait long for cash. This strategy can be a complement to a bond ladder, another time-tested tool for putting cash flow on autopilot, notes Jeffrey R. Kosnett, Kiplinger’s Personal Finance.

Because share prices are soaring, the current yields on some former dividend favorites have dipped well below 2%. However, many other dividend aces still yield at or above 3%. So, with the full S&P 500 index priced to yield about 1.5% (down from 2.4% a year ago), here’s a dividend-a-month portfolio whose 12 elements average 3% or better on new money. (Yields are as of early April.) Capital is spread over numerous sectors – a critical diversification advantage over an undisciplined chase for maximum yield. And you have growth opportunities.

Keep your cool. Do not get impatient over cyclical or short-term principal losses. A big dividend means these shares – oil stocks excepted – tend to trade in a tight price range. Realty Income (O), the choice for November, is an exemplar. Every time Realty Income dips a few bucks, it bounces up. The same holds for Verizon Communications (VZ). You can buy these sorts of securities on dips with confidence, presuming we don’t suffer another bear market. Even in the spring of 2020, not every company or industry got scared or scarred enough to hack or eliminate dividends.

The timing for the portfolio is based on when you truly get paid, not the earlier date of record for shareholders to qualify for the next distribution. AT&T and Verizon are a dual entry. Both pay together in early February, May, August and November. Pick one if you prefer, or hold some of each. But if you had scheduled them separately, the communications-services sector would account for too much of the whole portfolio.

January: Physicians Realty Trust (DOC)

February: Valero Energy (VLO)

March: American Electric Power (AEP)

April: Coca-Cola (KO)

May: AT&T (T)/Verizon (VZ)

June: Pfizer (PFE)

July: Cisco Systems (CSCO)

August: General Dynamics (GD)

September: Truist Financial (TFC)

October: Kimberly-Clark (KMB)

November: Realty Income (O)

December: Chevron (CVX)

These are familiar names, and you may already own a few. They may not be cheap, though none scream overvalued. Buy these stocks on dips or make phased purchases.

But that’s not to say there aren’t equally good alternatives. American Electric Power is not the only fine utility, but its straightforward business model is appreciated. Kimberly-Clark just declared a 5.5% dividend boost, and General Dynamics raised its payout by 8%; both are generous at this time. Truist trades at a moderate price-to-book-value ratio compared with its peer banks, and the Federal Reserve has taken the shackles off bank dividends. Valero is a refiner and marketer, which balances oil producer Chevron. The two REITs cater to entirely different groups of tenants. You get the idea. Enjoy your dividends.

Editor’s Note: Jeffrey R. Kosnett is a contributing editor at Kiplinger’s Personal Finance magazine,

The Bull & Bear Financial Report

Copyright 2021 - 23 || All Rights Reserved
Reproduction in whole or part is strictly prohibited
without prior written permission.

NOTE: The Bull & Bear Financial Report does not itself endorse or guarantee
the accuracy or reliability of information, statements or opinions
expressed by any individuals or organizations posted on this site

The Bull & Bear Financial Report is published by

Website Designed & Maintained by Gemini Communications