Why I Prefer Monthly Dividend Stocks?

Stock dividends are paid on a regular basis. The vast majority are paid quarterly, a few of them monthly, semi-annual, and annually.

Investing in dividend income also depends on your time horizon as an investor. If you are young and just started investing and your goal is long term, it doesn’t matter how often the frequency dividends are paid. 

What is important is to able to start small and keep a habit of paying yourself first. If your income is still low and can only spare a certain percentage of your salary for investing, put away any amount you can afford no matter how small it is. The most important habit is being consistent. 

How much should I invest?

As a good rule of thumb, 10% percent of your take home salary is a good start.  The more you can save and invest, the better. Frugal and minimalist individuals invest as much as they can, whatever excess money they have over 50% with a few exceptions doing it close to 80%.

The problem of 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.  Less frequent dividend income will be a problem for most of them.

With less frequent dividend income, it is more difficult for retirees as monthly expenses such as rent, utilities, groceries, insurance etc. still come out regularly when one stops working.

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.

Finally, nowadays with technology this job seems to be a little easier as you can set up reminders on your computer, tablets, and smartphones.

Advantages of monthly dividend income

For older investors who are close to retirement or one who is already retired, it makes a lot of sense to focus on dividend income that pays regularly.

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 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 on the 15th (most Canadian REITS such as Granite REIT (GRT.UN.TO), Canadian Apartment REIT (CAR.UN.TO) and at the end of the month such as (Shaw Communications INC. (SJR.B.TO), TransAlta Renewables (RNW.TO) to mimic my working years of receiving income bi-weekly or twice a month. 

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.

No DRIP on my dividend income

As I’ve mentioned in my previous post, I don’t participate in DRIP with my companies as I prefer available cash on my dividends to buy undervalued stocks with any of my holdings. With dripping you don’t have an option.

Essentially, you buy at market price of a stock which could be expensive or cheaper during that time. I re-invest all my dividends on a monthly basis picking undervalued equities with any of holdings.

Partnering monthly dividend paying companies I can grow my positions quickly and compound interest has also given better returns on my monthly dividend portfolio.

I personally owned mostly monthly dividend stocks with a few quarterly paying ones. In the near future, I am planning to add companies that are monthly dividend growth payers or increase the holdings of my existing ones.

These companies are a “buy and hold strategy” as the ultimate goal is to live off its dividends without harvesting the capital. Unless its fundamentals dramatically change then trigger a sell action and acquire another undervalued dividend growth company.

Monthly dividend income companies

Among the sectors that pays monthly dividends are few ENERGY sector such as Pembina Pipeline (PPL.TO), Keyera Corporation (KEY.TO) UTILITIES TransAlta Renewables (RNW.TO), Northland Power (NPI.TO) INDUSTRIAL e.g., Exchange Income Corporation (EIF.TO) , and a good number of REITs e.g. Choice Properties (CHP.UN.TO), SmartCentres Real Investment Trust  (SRU.UN.TO).

These companies I’ve mentioned are the core of my monthly dividend income portfolio. I am not limiting myself on these companies and would add any undervalued monthly dividend paying companies in my watchlists in the months ahead for diversification.

According to this article there are plenty of Canadian companies that pay monthly dividends. You have to exercise due diligence in partnering with any of these companies.


My Final Thoughts


Monthly dividend income gives an investor regular income streams for easy budgeting which are very beneficial for retirees.

In contrast, for investors who are not yet close to retirement it is also a great opportunity to increase their positions quicker by purchasing equities and reinvesting the dividends on a monthly basis.


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