Building Passive Income from Monthly Dividend Stocks

Many passive income seekers like myself love dividend stocks. What’s not to appreciate when you get paid on a regular basis. Most commonly dividend stocks pay quarterly or even monthly in Canada and US. However, it is infrequent in many other countries either semi-annual or once a year only.

Key issues with quarterly dividends or other less frequent payments

Firstly, for retirees who rely on dividend income to supplement their pensions it takes a lot of organizing to make sure that bills and other obligations are paid on time. 

In effect, with less frequent dividend income, it is more difficult for retirees to budget as monthly expenses such as rent, utilities, groceries, insurance etc. still come out regularly when one stops working. Less frequent dividend income will be a problem for most of them.

Secondly, the quarterly paying companies may not also pay dividends on the same month or date of the month, which means that you will have inconsistent income each month. You really need to be highly organized with your budgeting by writing it down on your calendar. 

In the same way, with technology these tasks however seem to be a little easier as you can set up reminders on your computer, tablets, and smartphones.

Finally, when someone who doesn’t have enough pension and savings at the time of retirement one may to sell his/her investments in an untimely manner.

Advantages of monthly dividend income

For someone who has regular monthly bills to pay,  investors who are close to retirement or one who is already retired, it makes a lot of sense to focus on dividend stocks that pay regular monthly dividends.

Furthermore, It is a lot easier to budget if you have stocks that pay a dividend on a monthly basis. Most of these companies also pay dividends on a specific date such as every 15th or at the end of the month. It’s practically simpler to budget for monthly expenses when you have income that comes out on a specific date.

One of my strategies is holding equities that pay dividends midway of the month around the 15th and at the end of the month such as to mimic my working years of receiving income bi-weekly or twice a month. 

Additionally, partnering with monthly dividend paying companies can accelerate my positions quickly by reinvesting those dividends either in same company or picking undervalued ones. As a result, The magic of compound interest works quicker when reinvesting the dividends on a more frequent basis.

These monthly dividend paying companies are a buy and hold. Unless its fundamentals dramatically change such as earnings deteriorate 3 quarters in a row, suspending and cutting dividend then it triggers a sell action. Our ultimate goal is to live off its dividends without harvesting the capital. You may check our TFSA dividend income which I update monthly.

Above all, the huge benefit of monthly paying dividends is taking advantage of opportunities to buy undervalued stocks that are available. Unlike quarterly paying ones that you have to wait and perhaps miss out on those opportunities as you don’t have available funds.

Here’s the complete list of our monthly dividend stocks:

NOTE: Dividend yields are reflected at the time of writing. (Updated: 31/01/2022)

In summary, if you like to build your monthly passive income through dividends, you can now start investing and open a NO commission trading brokerage. You can start a small amount and add slowly once you become more comfortable.

Lastly, If you sign up using this link and add money to a non-registered personal account, you will earn a cash equivalent of two random stocks and I will earn a cash equivalent of one stock. See more details with this link .

My Final Thoughts

In summary, monthly dividend stocks offer investors passive income streams for easy budgeting which are very beneficial for income-seeking investors and retirees.

Furthermore, It is also a great opportunity for young investors seeking to build their passive income by increasing their positions quicker by purchasing equities and reinvesting the dividends on a more frequent basis.

More Reading:

One of my recent blog posts highlighted our mistakes in buying our first home in Canada. With those lessons learned we felt we were equipped with much-needed information this time around buying our recent home using leverage instead of selling our investments to use as a down deposit. In doing so, we improved our total current net worth without dipping into our long term investments.

Earlier this week we renewed our home insurance. We made a massive savings by switching our home insurance to Square One up to 30%. If you are looking to renew your home insurance or for a new property, why not check them out and see for yourself if you can also get a huge discount on your home insurance.

Moreover, we also made dramatic changes in our lifestyle and embraced minimalism hence we perceived that living less is more. A few simple money saving tips we have done are reducing our cell phone bills and switching to NO fee bank accounts.  Similarly, I find dividend investing easy and more fun and you can choose a no fee trading account either as a new or seasoned investor.

Finally, when we are employed, we receive a regular income and a feeling of financial security. However, jobs are not guaranteed and can be also lost and taken away beyond our control as many have experienced during this pandemic due to an abrupt closure of businesses. Therefore, it is very important to generate multiple sources of income to protect ourselves from these unfortunate events.

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