Reality Income Corp is one of the most highly recommended monthly dividend stocks of its reliability over the past 559 months with consistent payments and raises in dividends. O is a stock that comes with a risk as with any stock investment.
Is the dream.It is said that and I personally believe.But passive income can be a little irregular.Irregular income isn't an issue if you know how to handle it, but why build a passive income system that relies on yet another system to smooth it out?Fortunately, if you are looking to build passive income through dividends, there's a way to structure it so you get a monthly payment.For this, you can employ two (or both) strategies:. Invest in dividend stocks that pay out monthly. Invest in three sets of companies that pay out quarterly. Table of Contents.Monthly Dividend PayersI'm not a huge fan of this approach because most monthly dividend payers represent the same asset class – they're often Real Estate Investment Trusts (REITs).I have nothing against REITs but putting your monthly income in one basket feels a little too concentrated for my tastes. If this is an approach you like, or you want to put a percentage of your holdings into REITs, by all means.It's hard to say which are the best REITs out there, and many websites claim to know so you can do some googling, but one company worth taking a closer look is Realty Income Corporation. They pay on a monthly basis and often invest in single tenant properties (much like )If you're thinking about going with a mutual fund REIT, like the Vanguard Real Estate Index Fund , just check the distribution schedule. Many REITs pay out monthly but many REIT funds pay out on a quarterly schedule.
Establish Your Baseline ScheduleBefore you start, you need to look at your holdings and understand what is happening already. You are already receiving dividends from your holdings, even if you aren't sure when they happen. If you own shares of any S&P500 or Total Market index fund, you're getting dividends.For example, if you owned shares of Vanguard Total Stock Market Index Fund Admiral Shares , you received dividends in March, June, September, and December of last year. And the year before. And the year before that.
The yield was OK, around 2%, but it's still something.If all your shares are in one place, you can just look at the activity for the last year and record who is paying dividends when and for how much.Just one quick look shows me that I have dividends coming in each month, completely by accident. When I built this dividend portfolio, I was aiming to build a.
I wasn't trying to get monthly checks. But happy accidents happen!The distributions are not evenly distributed though. I have more in the 2nd and 3rd months of a quarter compared to the first.
But I already have a good baseline to work with.If you look at your distributions, you probably have a similar situation.From here, you can start filling in the blanks (or filling up the lower months) with some more reliable dividend payers. What is the Payable Date?In this article, when I refer to the date that a dividend is “paid,” I mean the “payment date.” The payment date, or payable date, is when the dividend is paid out.
The ex-dividend date is what is used to determine which shareholders are entitled to the dividend, so you'll want to own the stock before the ex-dividend date to get the dividend.Since we're building a passive monthly paycheck, we use the payment date.Also, some companies pay at the start of the month. Some companies pay at the end. I treat all payments within a month as that month, whether it's closer to the start or the end of a month.Finally, we looked up the dividend history for each stock and put down what the company has done the last five or six years. Sometimes a company that pays out near the end of the month has the payment slip to the start of the next month. If they are on a quarterly schedule, we put it on that quarterly schedule even if a payment is made in another month.
List of Dividend Aristocrats by QuarterThis post isn't a recommendation for any particular stock. I want to list a few ideas for you to research in greater detail.Remember, you are still investing in individual companies, rather than an index or broader market, so you are sensitive to price changes.
The idea here is that you'll hold these stocks for a while and just collect dividend checks. As you analyze these investments, be sure to in mind.For this list, we'll go through all the Dividend Aristocrats and organize them based on when they pay their dividends. A Dividend Aristocrat is a company in the S&P 500 index that has paid increasing dividends for at least 25 years. So they have both a reliable history of paying a dividend (25 years uninterrupted!) dividends, but the amount has increased each year.Within this list is a subset of companies known as Dividend Kings. A dividend king is a company that has paid their dividend for 50+ years. To be labeled a King, you don't need to increase your payout each year.
In the end, if you can pay your dividend for 50 years straight, that's an accomplishment. I put a 👑 next to the companies who are also dividend kings. 1st Month of the QuarterThese are the companies that pay out in January, April, July, and October.The following Dividend Aristocrats pay dividends in the first month of a quarter:.
Automatic Data Processing Inc. Franklin Resources Inc. Brown Forman Inc Class B. Cardinal Health Inc. Cincinnati Financial Corporation 👑.
Ecolab Inc. Federal Realty Investment Trust 👑. Genuine Parts Company 👑.
Illinois Tool Works Inc. Kimberly-Clark Corporation. Leggett & Platt Incorporated.
Medtronic plc. McCormick & Company Incorporated. Roper Technologies Inc.
Sysco Corporation 2nd Month of the QuarterThese are the companies that pay out in February, May, August, and November.The following Dividend Aristocrats pay dividends in the second month of a quarter:. AbbVie Inc. Abbott Laboratories. Air Products and Chemicals Inc. Smith Corporation. Colgate-Palmolive Company 👑.
Clorox Company. General Dynamics Corporation. Hormel Foods Corporation 👑.
Lowe's Companies Inc. 👑.
Nucor Corporation. Procter & Gamble Company. Pentair plc. AT&T Inc.
3rd Month of the QuarterThese are the companies that pay out in March, June, September, and December.The following Dividend Aristocrats pay dividends in the third month of a quarter:. AFLAC Incorporated. Archer-Daniels-Midland Company. Becton Dickinson and Company. Chevron Corporation.
Dover Corporation 👑. Consolidated Edison Inc. Emerson Electric Company 👑. W.W. Grainger Inc. Johnson & Johnson 👑. McDonald's Corporation.
3M Company 👑. PPG Industries Inc. Sherwin-Williams Company. S&P Global Inc.
Stanley Black & Decker Inc. 👑. Target Corporation. T. Rowe Price Group Inc. Corporation. Walgreens Boots Alliance Inc.
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Exxon Mobil Corporation Non-Quarterly Dividend SchedulesThere are a few Dividend Aristocrats that pay out on slightly different schedules.PepsiCo Inc. pays out in January, March, June, and September. It's almost on the 3rd Month of a Quarter schedule except the December dividend is paid in January.Walmart Inc. pays out in January, April, June, and September.Coca-Cola Company 👑 pays out in December, April, July, and October. It's almost on the 1st Month of a Quarter schedule except the January dividend is paid in December.Cintas Corporation pays out an annual dividend in December and has done so since 2010.
Before 2010, they paid annually but in March. Dividend-focused FundsAlternatively, you can turn to a fund, mutual fund or exchange-traded fund, to execute this strategy (or fill in the gaps).The advantage to using a fund is you diversify your holdings. Rather than a handful of stocks, you get hundreds.
It's also often cheaper (one commission) or even free (mutual funds) on the transaction, though you do pay an expense ratio that you wouldn't on individual holdings.One downside is that you also get short term and long term capital gains. A fund adjusts its holdings in response to inflows and outflows of funds, which creates taxable events. With individual stocks, you're in full control but you lose the instant diversity. The capital gains can be mitigated, somewhat, if you go with an ETF instead of a mutual fund.If you were to invest in the Vanguard High Dividend Yield ETF , you would get dividend distributions in March, June, September, and December with an expense ratio of just 0.08%. VYM has a 30-day SEC yield of 3.58% as of this writing.The Vanguard S&P 500 ETF pays out on the same schedule, has a 0.04% expense ratio, and yielded 2.23% as of this writing.Here are the dividend distribution schedules of a few S&P 500 index funds:. Vanguard 500 Index Fund – March, June, September, December.
Fidelity 500 Index Fund – April, July, October, December. Schwab S&P 500 Index Fund (SWPPX) – December (they make it really hard to find information!). T. Rowe Price Equity Index 500 Fund – March, June, Sepetmber, DecemberWhich Broker Should You Use?For stocks, I use because it's inexpensive and connected to my bank, which is Ally Bank. This allows me to transfer funds back and forth quickly from one interface, which is convenient.Ally Bank charges just $4.95 for stock and ETF trades.
It's cheaper, just $3.95, if you have a $100,000+ average daily balance or make more than 30 trades a quarter, which I don't.And, most importantly, there are no maintenance fees. You should not have an account with a brokerage that charges you any kind of maintenance fee.For funds, pick the family of funds you like (Vanguard, Fidelity, etc.) and open an account with them. I have a Vanguard account because I prefer. They also have no maintenance fee. You can buy and sell shares of their mutual funds and ETFs for free.
They also offer many other ETFs for free too.Enjoy your monthly dividend paycheck! Jim Wang is a thirty-something father of three who has been featured in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.Jim has a B.S. In Computer Science and Economics from Carnegie Mellon University, an M.S. In Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University.One of his favorite tools is, which enables him to manage his finances in just 15-minutes each month.
They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a mix of properties through. Worth a look and he's already made investments that have performed according to plan. Well, the main benefit is the cash flow.
THe idea behind this approach is that you’re looking to build a monthly paycheck so you want the actual payment.Now, when you say reinvested, there are two different ways the money could be “reinvested.”1. The company, rather than pay out the dividend, reinvests that month back into the business.
If your goal is cash flow, you would prefer the dividend. If your goal is equity growth, it’s better if the company reinvests it if it can find projects that have a return greater than their metrics require, usually determined by their own models for a project’s internal rate of return. You want them to grow the value of the company, rather than pay out cash and reduce that payout by the long term capital gains rate.2.
You reinvest the dividends, perhaps automatically, back into the company through your broker. I feel as though I’m disciplined enough to invest on a regular basis, so I don’t need the benefits of automatic dividend reinvestment. But from a tax perspective, it’s the same (you do save a little money because automatic dividend reinvestment is often commission free).
You still pay taxes on the dividends, you just stick it back in the company after you get the payment. I like this strategy a lot. It’s not for everyone, but definitely works in certain situations.
I think it’s great for older families, close or in distribution stages, low to medium income, who are risk averse. It’s more about consistent cash flow (esp. With established REITs, Dividend kings/aristocrats and good ole Vanguard dividend funds) and less impacted for market downturns (as dividends will keep getting paid generally even if the stock value drops with the market). Obviously, would highly depend on which stocks/funds to invest in. With this strategy you get a pretty good return 4-6%, relatively low risk, and steady cash flow. Can you make more investing in growth stocks or indexing – probably.
But that’s a long term – buy/hold strategy. I am not a financial adviser. The content on this site is for informational and educational purposes only and should not be construed as professional financial advice. Please consult with a licensed financial or tax advisor before making any decisions based on the information you see here.Advertising disclosure: I may be compensated through 3rd party advertisers but our reviews, comparisons, and articles are based on objective measures and analysis.
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