Why Choose Monthly Dividend Stocks?
- • Regular Income: Receive dividend payments every month instead of quarterly
- • Better Cash Flow: Monthly payments align better with monthly expenses
- • Faster Compounding: More frequent reinvestment opportunities
- • Income Smoothing: Steady monthly income stream for retirees
Types of Monthly Dividend Payers
REITs (Real Estate Investment Trusts)
Most monthly dividend stocks are REITs that own income-producing real estate. They're required to distribute 90% of taxable income as dividends.
BDCs (Business Development Companies)
BDCs like MAIN provide financing to small and mid-sized businesses. They also must distribute 90% of income to maintain tax advantages.
Investment Considerations
Key Metrics to Watch
- • Dividend Yield: Monthly payers often have higher yields but assess sustainability
- • Payout Ratio: Look for ratios below 90% for REITs, lower for regular corporations
- • Funds from Operations (FFO): Key metric for REIT performance
- • Dividend Growth: Check if dividends are growing or just maintaining
Risks to Consider
- • Interest rate sensitivity (especially for REITs)
- • Sector concentration risk
- • Tax implications (REIT dividends often taxed as ordinary income)
- • Economic cycle sensitivity
Disclaimer: This information is for educational purposes only. Monthly dividend stocks can be volatile and may cut or suspend dividends. Always conduct thorough research and consider consulting with a financial advisor before making investment decisions.