Dividend checks every month

By choosing stocks from different payment periods, you can collect dividends every month.

By TheStockAdvisors Mar 8, 2013 1:01PM
By Chuck Carlson, DRIP Investor

While you may not realize it, spreading your investments across time is a form of diversification. In a nutshell, dollar-cost averaging says that you should make regular investments over time, regardless of whether the market is “high” or “low.”

Making regular investments assures that you will not invest all of your funds at market peaks, as well as guaranteeing you will buy during market low points.

This latter point can’t be overstated. Perhaps the biggest strength of dollar-cost averaging is that you will buy stocks when they offer their greatest value, but when you are the most likely to avoid them.

Long-term investment returns depend on taking advantage of buying opportunities. Yet buying low may be the hardest thing there is to do in an investment program. Dollar-cost averaging or some form of time diversification forces you to take advantage of those buying opportunities.

The easiest way to implement time diversification is to do what every DRIP investor should be doing — reinvesting dividends. Indeed, I believe dividend reinvestment is one of the most powerful investment forces available to individual investors.

Reinvesting dividends allows you to maximize the power of compounding. Reinvestment of dividends also allows you to automatically and, perhaps most importantly, unemotionally diversify across time by making regular investments in the market, especially during market declines.

Since most companies pay dividends every three months, DRIP investors who reinvest dividends are putting money into the market at a minimum on a quarterly basis.

But the power of time diversification is enhanced the more often you make investments. Thus, an even more powerful approach would be to have dividends reinvesting on a monthly basis.

The good news is that you can achieve monthly reinvestment by owning the right basket of stocks. We have divvied up recommended stocks by their dividend-payment dates.

By owning stocks from each group, investors would be reinvesting dividends every month of the year. What is also important to know is that by owning stocks from each group, you also have the ability to receive cash dividends every month.

This feature may come in handy as you enter a period of your life when you need monthly cash dividends to supplement your other forms of income. This portfolio would allow you to make that transition to monthly dividend income.

The stocks listed below are my favorites within each dividend-paying time period. Each is a quality holdings for any portfolio.

All of the stocks offer direct-purchase plans whereby investors may buy the first share and every share directly from the company, so it is easy to get started in building your “dividends (reinvested) every month” portfolio.

January, April, July October

CBS (CBS) -- yield 1.1%
Cisco Systems (CSCO) - yield 2.7%
FedEx (FDX) - yield 0.5%
J.P. Morgan Chase (JPM)
Macy's (M) - yield 2%
Medtronic (MDT) - yield 2.3%
Motorola Solutions (MSI) - yield 1.7%
PPL (PPL) - yield 4.8%
Valmont Industries (VMI) - yield 0.6%
Viacom (VIA) - yield 1.9%

February, May, August, November

American Express (AXP) - yield 1.3%
Bristol-Myers Squibb (BMY) - yield 3.8%
CVS Caremark (CVS) - yield 1.8%
IdaCorp (IDA) - yield 3.3%
Paychex (PAYX) - yield 4%
Procter & Gamble (PG) - yield 2.9%

March, June, September, December

Aflac (AFL) - yield 2.8%
America States Water (WTR) - yield 2.7%
Equifax (EFX) - yield 1.6%
Exxon Mobil (XOM) - yield 2.6%
NexEra (NEE) - yield 3.6%
PepsiCo (PEP) - yield 2.8%
Qualcomm (QCOM) - 1.5%
Walgreen (WAG) - yield 3.4%

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70Comments
Mar 8, 2013 2:18PM
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Come on man, sub 1% yields?  Not worth the risk.  

Mar 8, 2013 6:58PM
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The best way I know is to quit work and be sorry.  Then, you can get EBT cards (Food Stamps) and that is FREE!  Plus, as an added bonus, you don't pay taxes on your purchases!!!!  Now, how is that for dividends!!!! Free money and no taxes to pay on it!  And, this is while the old, the feeble, the infirm who have worked all their lives and are now able to draw a little SS check, still have to pay taxes on the check amount, even though their salary was taxed all their working lives, and now they are taxed again.  Plus, if they use that SS check for food, they will then pay yet again!! I hope China or some country comes over and takes these crappy Congressmen  home with them!!!  Maybe they would put them to work!!!
Mar 8, 2013 5:27PM
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This message stinks   Thank God  he is not my Financial advisor  I would be poor   You need
to go after solid company's that pay a good dividend   such as  ITW, AT&T, VERIZON, PEPISCO
COKE, EXELON,SOUTHERN and so on. This is not that hard to do. But when you listen to these
idiots you will go broke believe me.
Mar 8, 2013 5:31PM
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Sometimes I wonder if the people who write this stuff have any money invested. We are in I shares and corporate bonds only and have two annuities that were renewed again at four percent. The corporate bonds are from 5.125 to 7.25 percent.The corporate bonds are laddered and as they mature we purchase more.  If you think your return is too small, speak to a financial advisor about changing your investment strategy. Being retired we take the interest and dividends and along with our SS we make ends meet and do not touch the principal.
Mar 8, 2013 7:00PM
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Choose a stock by the date it pays its dividend?  Surely you jest.   A person who owns any stock should certainly be able to  manage their money well enough to handle dividend payments at irregular intervals.  
Mar 8, 2013 5:51PM
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I have finally started to get some of my dividends in the form of cash. Have enough in our 401K, finally, to be able to do that after 28 years of putting in. It is nice to finally be able to take some out.
Mar 8, 2013 4:44PM
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I invest quarterly and DRIP, so, although not 12 months a year, I dollar cost average 8 months a year.  This is my 'already taxed fund' portion of retirement which will be used in tandem with tax favored retirement - to allow for times when tax rates on the 401(k) go too high. Compounded growth advantage (really is taking hold nicely) and tax planning advantage/flexibility are just two huge benefits.
Mar 8, 2013 8:33PM
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It seems to me that many "investors" that have commented negatively on the dividend returns listed in this article haven't taken into consideration that each and every one of these stocks have had growth in the last six years.  For most of them that would be an upward  range of 35% to 50% and if you were investing in a DRIP over that entire period of time your would have compounded that return AND your initial investment dollars would be earning TWICE the listed dividend because these dividend are based on todays price.  You also aren't paying a fund manager, broker, or any maintenance on your brokerage account.  No cost to purchase and no cost to sell either.  The point is to make continual purchases in your chosen stocks, purchasing in the ups and the downs - historically, you will do very well.......but diversity is always the key. 

I don't disagree with putting some money in PSEC , for example - I own it too, but it's only 1% of my portfolio.  You could have purchased WIN or FTR for the 12% dividend too and seen your value plummet 35% - you still get your dividend, for now, but you need it for 3 years just to break even...there is a reason that the dividend is high...the risk is also high and it's long term prospects, product value, or services, might be questionable.  Should the value actually be there, then why pay a dividend that is so much more than the solid blue chip companies??  Answer: Because it is questionable as to how long they can produce profits, therein lies the risk.  Think about it..."if it sounds to good to be true, it probably is"...heard that before??

Mar 9, 2013 12:12PM
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Although I agree with the premise, I have been doing this for many years with great success, I can't agree on the stock selection. Why waste your money on expensive low yielding stocks. The best dividend payers have always been REIT's, plus many of them pay monthly dividends so you can re-invest every month. Many of the REIT's I have pay well north of 8% and with the dividends re-invested every month my portfolio has done very well in the last five years. And now that the real estate market is coming back I expect my valuations to soar as everyone who has lost tons of many tries to get it back by jumping on the real estate band wagon. I also strongly suggest you by the Real Estate and homebuilder ETF's as they are ready to take off.  Good luck and Happy investing.
Mar 8, 2013 2:20PM
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Makes perfect sense to me as you can't time the market anyway. Well written Chuck,DRIP investor!    
Mar 8, 2013 4:03PM
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Why would you ever want dividend checks? Have the automatically reinvest, then you make earnings ontop of the dividends. 
Mar 13, 2013 1:41AM
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I've been dividend chasing since the dot com bust all those years ago. Never picked a stock because it was payable on a certain date or month. If you diversify enough you will have something coming in every month no matter what.
Mar 9, 2013 5:29PM
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A lot of interesting ideas and advice on here....Like it should be on a Financial Site or Blog.

If you could read stuff like this for about 5-10 years; You probably could do all your investing on your own.?

Stick/or use one of old Warren Buffet's rule...The "fear and greed thing"

Buy low sell high....Don't hang onto dogs forever, re-allocate and diversify..

Get advice from many places...And read until you understand.

 

And above all, try not to be afraid or break over new horizons...

Mar 8, 2013 4:12PM
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Correction, that is a Gabelli fund.........GGN
Mar 9, 2013 9:27AM
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Good advice.  I don't invest into drips, but I do use dividends to buy more shares of that stock or some other stock depending of what's working at the moment.    My portfolio didn't grow to $4 million by spending all the dividends.   I'm not retired, so I don't need to use the dividends anyway.
Mar 10, 2013 2:41PM
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The article is NOT ABOUT "high dividend" paying stocks...

 

It is about "Amortizing Dividend Payments" over a timeframe or period of time.(same)

So that an Investor may have a "free cash flow" for useful purposes or paying Monthly Bills.

 

"We all know" about higher paying dividend Stocks, Funds, REITs and MLPs, LPs..

It's not about that....Those Articles can be found elsewhere or previously..?

 

My point would be that not all Companies "pay on the same day in a Quarter" ie: 10th of Jan.

Or Quarters that are J-M, A-J, J-S and O-D.  some use different "timeframes for fiscal Quarters."

And YES, many of those Companies pay a higher rate of distribution.

Mar 16, 2013 7:59PM
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You want Income. Bet on energy MLP's!!!!!!!!
Mar 9, 2013 3:05AM
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I love DRIPs, but I would warn people that many DRIPs now have fees for reinvested dividends and/or new purchases.  For example, Bristol-Myers Squib listed above has a $3.50 for making new purchases, which makes adding less that $100 at a time fairly costly.  Qualcomm listed above has a $5 new purchase fee and a $1.50 automatic purchase fee.  I prefer the many others that have no fees except the typical $15 sale fee.  And some have automatic monthly purchase programs (taken from your checking account) for as little as $25 to $50 per month.  Most of these can be entirely set up online at places like computershare.com, amstock.com, and Wells Fargo's shareowneronline.com.   I currently automatically put $50/month with no fees (including reinvested dividends) in Exxon (XOM), General Mills (GIS), Cracker Barrel Old Country Stores (CBRL), and Duke Realty (DRE) - XOM being the only one mentioned in the list for some odd reason.  XOM, GIS, and CBRL are "stalwarts": long, consistent growth records in earnings, revenues, and dividends that satisfy Ch. 16 of Mary Buffett's "Buffettology": Nine Questions That Determine a Truly Great Company.  DRE is a very large REIT and it's how I'm playing the expected slow-but-sure return to normal for real estate.  Last year 86% of its dividend could be deferred from taxes and treated like capital gains.  Note that usually all dividends have to be reported as income the year they're awarded, not the year you get the money for them, but REITs are a partial exception.
Mar 9, 2013 5:32PM
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Qwerky, cute name...Thought it was QWERTY at first...Easy to type out.

 

Guess Pocket protector is rich...Don't really care.

 

Sounds like YOU are doing as good as any...

Mar 16, 2013 10:15PM
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I hope I'm not being greedy, but I only buy stocks that pay 4% or more. That excludes a few I have owned forever, like KO, for example which pays less but is SUCH a good stock. There are so many good ones that pay more, why settle for less?

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