Dividends make up a major chunk of the overall stock market returns over the long term. For investors who require consistent income, dividend-paying stocks are one of the best investment opportunities. You will earn cash every single month when you buy stocks of companies that pay dividends monthly.
However, not many companies distribute dividends monthly. Most of the companies pay dividends on a quarterly basis. In this article, we'll discuss the companies that pay dividends monthly.
What are the dividends?
A dividend is a distribution of earnings by a company to its shareholders. Dividends are a way for corporations to distribute earnings back to investors and one of the ways that investors earn a return on stock investments. A dividend is paid on a per-share basis. For example, if you own 50 shares in a company and the company pays $1 in quarterly dividends, you will receive $50 per quarter.
When are dividends paid?
In the U.S., companies generally pay dividends quarterly, although some pay dividends semi-annually or monthly. A dividend must be approved by the company’s board of directors. The company will announce the ex-dividend date, the amount of the dividend, and when the dividend will be paid. For dividend investors, an ex-dividend date is extremely important. In order to receive a stock’s upcoming dividend, an investor must buy shares of that stock before the ex-dividend date.
What are the top companies that pay dividends monthly?
Stocks that pay monthly dividends can provide a stable and growing income stream. Here’s the list of companies that pay dividends monthly.
- Realty Income stock has a dividend yield of 4.5 percent. It's a real estate investment trust company that owns nearly 5,000 properties across the U.S.
- Main Street Capital stock has a dividend yield of 8 percent. It's an investment management firm that deals with equity and debt financing.
- Shaw Communications stock has a dividend yield of 4.7 percent. It's one of the biggest cable companies in Canada. Shaw Communications provides television, Internet, and phone services.
- Stag Industrial stock has a dividend yield of 4.4 percent. It's a real estate investment trust company. Stag Industrial focuses on distribution and warehouse buildings.
- Gladstone Land stock has a dividend yield of 3.5 percent. It's a real estate investment trust company that owns and leases farmland. As of March 2020, Gladstone Land owned 113 farms consisting of 87,860 total acres.
Why do dividends fluctuate?
When a company earns a profit, it's able to distribute part of the profit as dividends to shareholders. Dividends fluctuate since they depend on the company’s earnings. If the business is performing well and cash flows are improving, a company can distribute higher dividends to shareholders.
Reinvest dividends or take cash
You can reinvest the dividends to buy additional shares of the company to maximize your income in the long run. If you reinvest dividends, you can build wealth because of the power of compounding. Investors can also take dividends as cash.