17 Monthly Dividends To Buy And Hold Forever (2024)

Mortgage payments. Car payments. Cell-phone bills. Power bills. Water bills. Credit card bills.

What do they all have in common?

Nobody likes them, of course. But more importantly, they all arrive relentlessly month after month.

That’s fine when you have a normal job that pays you every couple of weeks or every month. But that regular bill routine becomes considerably more daunting once you hit retirement, when much of your regular income is coming from your portfolio of dividend paying stocks … which pay out every quarter, not every month.

Investors in turn often build complicated dividend calendars that get knocked out of whack whenever they ever have to cut back on certain stocks. May’s dividend check might be enough, for instance but June won’t be, forcing the investor to withdraw from his retirement fund, shaving away future income-generating potential.

But those in the know have it so much simpler thanks to the rare but revered breed of monthly dividend stocks.

Today, I’ll show you how to make the most convenient dividend payers on the planet send you more than $2,600 each and every month.

Why Monthly Dividends Just Make More Sense

Monthly dividend payers that truly have their finger on our pulse as income investors. These companies know that many of their investors require these passive payments. They also know that the electric company doesn’t start sending you bills every three months when you hit age 65.

It’s not difficult. Traditional quarterly dividend stocks will, every three months, announce a future payment with amount and dividend dates. Some monthly dividend stocks will do the same thing, just every month. Some, like Main Street Capital (MAIN), will “pre-plan” in three-month increments so that it dishes these monthly dividends:

There’s nothing stopping companies like Coca-Cola (KO) and Johnson & Johnson (JNJ) from doing the same thing. They just don’t.

By the way: Even if you’re decades away from retirement, monthly dividend stocks have a little something for you. They compound faster:

If all else is equal, you’ll come out slightly better with a stock that pays you more frequently. So why not favor the monthly payers?

Who Pays Monthly Dividends?

While just about any company that wanted to could distribute income to shareholders each and every month, it typically boils down to a few specialty assets:

• Real Estate Investment Trusts (REITs): REITs are among the most income-friendly assets out there just by virtue of waking up in the morning. But several of them are monthly dividend payers – including “the Monthly Dividend Company” itself, Realty Income (O).

• Business Development Companies (BDCs): BDCs are extremely similar to REITs in that they were created by Congress and are required to pay out at least 90% of their taxable income as dividends. The business is obviously different – BDCs help provide financing to small and sometime midsize companies, which often will have difficulty obtaining liquidity from larger financiers. They also tend to sport massive yields, often in the high single digits and low double digits.

• Master Limited Partnerships (MLPs): Most people immediately think “pipelines” when they think about MLPs, which is fair considering most of them are indeed energy transportation companies. But the structure extends to companies of all sorts, from private equity and asset management firm Blackstone Group LP (BX) to Carl Icahn’s diversified holding company Icahn Enterprises LP (IEP) to even roller-coaster specialist Cedar Fair LP (FUN). Yes, MLPs can be an enormous tax headache, but they often sport stellar yields, and from time to time, they pay their dividend-esque “distributions” monthly.

• Royalty Trusts: Royalty trusts are as niche as they come. These companies simply exist to own the mineral rights to things such as oil fields and iron mines. They collect royalties from the operations, which they then distribute to shareholders, typically until the trust itself expires or a certain amount of proceeds are distributed. There’s only a handful of these companies, and they exist primarily in the U.S. and Canada.

• Preferred Stocks: These stock-bond “hybrids” are an income-happy asset that represent ownership in a company. They pay out dividends like a stock, but they’re fixed, more like a bond’s coupon payments. They also trade around a par value like a bond, so most of their returns come from their massive payouts, often between 6% and 7%. You can invest in individual preferreds, but investors typically opt to own them through …

• Exchange-Traded Funds (ETFs) and Closed-End Funds (CEFs): Hundreds of ETFs and CEFs distribute income every month. But while a handful of these funds are simple baskets of stocks, the lion’s share of monthly dividend-paying ETFs and CEFs hold either bonds or preferred stocks.

None of these include mega-cap blue chips, but that’s OK. These still are ample hunting grounds for high-quality high yields.

How to Start Collecting $2,629 Every Month

Let me quickly introduce you to 17 “first-level” stocks and funds to give you an idea of just how powerful monthly dividend payers can be.

Each of these stocks yields more than the benchmark – occasionally by a little, but typically by more than double and up to four times as much. In all but a couple cases, their returns have handily beat basic benchmarks … and a few of them have outright walloped them.

And look at what this group of dividend dynamos is delivering. The average portfolio yield is 6.31%, which is well more than 3x the S&P 500 right now. That translates to $2,629.17 every month on a mere $500,000 portfolio.

Not to mention you’re getting outstanding diversification. You’ve got bonds. You’ve got preferreds. You’re exposed to BDCs that act like mini-private equity firms invested in dozens of industries. You’re even tapping the income potential of 7-Eleven and driving ranges.

Brett Owens is chief investment strategist for Contrarian Outlook. For more great income ideas, click here for his latest report How To Live Off $500,000 Forever: 9 Diversified Plays For 7%+ Income.

Disclosure: none

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