Dividend stocks make smart investments because they generate income for the stock owner. Some of the higher yielding stocks pay their dividends monthly. These monthly paying stocks can be a dependable source of supplemental income.
Monthly payers also give you more insight into the strength of the dividend. You’ll find out faster if the dividend is going to be cut or raised and you can evaluate a dividend on a monthly basis instead of quarterly.
We’ve pulled out 5 of the highest monthly paying dividend stocks that make smart investments.
GIM: Templeton Global Income Fund Yield: 9.2%
Templeton Global Income Fund is all about investing in income generating securities. They have a big yield of 9.3% which is below its 5 year dividend average of 10.7% indicating that this stock may be undervalued. Their dividend has been growing at 17% for the last 5 years. They have been paying dividends since 1990.
FLC: Flaherty & Crumrine/Claymore Yield: 8.6%
The objective of the Flaherty & Crumrine fund is to create income for it’s investors. And that is exactly what it does. The 8.6% yield is well below its dividend yield average. There could be a lot of upside for this stock. It’s dividend growth has been slim but did make an increase this year.
GOOD: Gladstone Yield: 8.2%
Gladstone is a REIT that works with industrial and commercial properties. It’s 8.2% yield is below the 5 year average of 10.3% showing this to be a value investment. The 5 year dividend growth is 7.5%. The payout ratio is high, but don’t be mislead, it is a REIT after all and the dividends have been steady since 2007.
PFO: Flaherty & Crumrine Preferred Yield: 8.2%
Flaherty and Crumrine preferred invests in preferred securities. The three year dividend growth rate is almost 5% and the current 8% yield is less than it’s 5 year average.
ERH: Evergreen Utilities Yield: 7.9%
Utilities are smart investments that often pay dividends. Evergreen has a great yield of almost 8%. Even though the dividend has been on the decline in the last year, this stock has been paying dividends every month since 2004.
When investors go looking for dividend stocks, they are often attracted to the stocks that have the highest yield. Who doesn’t like an 8% yield? I know I do.
Some stocks with high dividends are not quality investments. Here are 5 high yield stocks that we like and why.
1. Ambev – ABV – Yield: 4.30%
Ambev is a Brazilian beverage company that distributes it’s beverages to 14 different countries in North and South America. Their dividend yield is much lower than their 5 year dividend average of 14% indicating that it is currently undervalued. This monthly paying dividend stock is a great way to generate monthly income. They have a modest 5 year dividend growth rate of almost 8%.
2. Century Link – CTL – Yield: 6.90%
Centruylink is a communications company with a big dividend yield. The dividend payout ratio is a little high at 90% but this stock has been increasing it’s dividend for more than 35 years making me think the dividend is safe. The five year dividend growth rate is 60%.
3. Senior Housing – SNH – Yield: 6.30%
Senior Housing properties trust is a REIT that owns around 300 properties most of which are senior living properties. With baby boomers about to move into retirement I’m very interested in senior living investments. SNH is slightly undervalued compared to its 6.8% 5 year dividend average. The growth rate is only about 2% but they have been increasing their dividend for the last 9 years. They are on their way to establishing a solid dividend track record.
4. MFA Financial – MFA – Yield: 11%
There has been a lot of news this week about banks being able to raise their dividends. Trust is starting to come back to the banks as they increase their cash positions. MFA financial is a REIT that invests in different mortgage backed securities. Their yield is huge at 11% and they have been increasing their dividend at 31% over the last 5 years. Their quarterly dividend payouts can be a little choppy but this year they stepped it up to .2350 per share.
5. Dynex Capital – DX – Yield: 9.40%
Dynex capital also invests in mortgage backed securities but theirs come from Fannie Mae and Freddie Mac. They have increased their dividend over the last 2 years and currently have a huge 9.4% yield.
A Real Estate Investment Trusts (REIT) is a special type of fund consisting of a pool of real estate assets (commercial properties, mortgages, etc.). REITs are bought and sold on the Stock Exchange, along with equities; and, as with equities, the purchase of an REIT can yield significant rewards.
Types of REITs
There are different types of REITs: “Equity”, “Mortgage”, and “Hybrid”. Equity REITs consist of investments solely in properties; the value of this kind of REIT depends on the rent accumulated by all of the properties. Mortgage REITs invest in property mortgages and derive their value from the interest collected on the mortgages. Hybrid REITs combine property investment and mortgage investment. Investing in any one these kinds of REITs allows an investor to affordably participate in real estate development.
REITs are also profitable investments because of their tax and dividend advantages. So long as an REIT pays out 90% of its income to its shareholders, it cannot be taxed on the corporate level. Consequently, most High Yield Dividend REITs pass cash flow directly to the investors in the form of dividends, accounting for their high dividend yields. The average dividend yield of REITs is about 5%, but many REITs offer much higher yields.
Taxes
Despite not being taxed on a corporate level, the cash flow distributed to the shareholders through dividends is considered taxable income and must be reported to the IRS. The 10% dividend yields of some REITs, however, more than compensate for income tax expenses. An REIT is designed to be held in an account for enough time for the investor to reap the benefits of the consistent, hefty dividend. Another important feature offered by many REITs is the Dividend Reinvestment Plan; the DRIP allows the shareholder to reinvest the dividend payouts back into the REIT with minimal costs.
REIT Payout Ratio
A useful measurement of the dividend payout of High Yield Dividend REITs is the Dividend Payout Ratio, defined as the annual dividend per share divided by its earnings per share (EPS). As 90% of all earnings of most any REIT are paid out to the shareholders, the payout ratios are almost always high. Some REITs post sporadic payout ratios of over 100%, but such high ratios are impossible to sustain. It is financially advisable to seek out REITs with payout ratios below 100% that offer consistent, healthy dividend yields.
A profitable REIT with a hefty dividend yield is both a rewarding and reliable investment.
Today, more and more investors are turning to growth dividend stocks. Finding stocks with a history of good growth and dividend yields is an excellent way to increase the value of your stock portfolio. You get the steady returns of an annual dividend, high yields and price appreciation. Following are 5 of the best growth dividend stocks.
Companhia de Bebidas das Ameri (NYSE:ABV)
A Brazil based Beverage Company, ABV has a current dividend yield of 16.10% and a 5 year average dividend yield of 16.30%. They have had 6 consecutive years of dividend increases. The dividend growth rate for the last 3 years averaged 46.17% and for the last 5 year period it averaged 31.82%. A January 7, 2011 closing price of $30.20 represents a total 12 month return of 50.55%.
Century Link, Inc. (NYSE:CTL)
An integrated communication company, CTL has a current dividend yield of 6.50%% and a 5 year average dividend yield of 4.70%. They have had 37 consecutive years of dividend increases. The dividend growth rate for the last 3 years averaged 255.47%% and for the last 5 year period it averaged 154.91%. A January 7, 2011 closing price of $44.81 represents a total 12 month return of 36.55%.
Omega Healthcare Investors, Inc. (NYSE:OHI)
A REIT that invests in healthcare facilities, OHI has a current dividend yield of 6.20%% and a 5 year average dividend yield of 6.60%%. They have had 7 consecutive years of dividend increases. The dividend growth rate for the last 3 years averaged 8.40%% and for the last 5 year period it averaged 10.13%. A January 7, 2011 closing price of $22.19 represents a total 12 month return of 18.21%.
Sunoco Logistic Partners LP. (NYSE:SXL)
A company that buys sells and handles crude oil and other refined products, SXL has a current dividend yield of 5.30% and a 5 year average dividend yield of 6.30%. They have had 8 consecutive years of dividend increases. The dividend growth rate for the last 3 years averaged 10.74% and for the last 5 year period it averaged 12.04%. A January 7, 2011 closing price of $84.66 represents a total 12 month return of 30.85%.
United-Guardian, Inc. (NASDAQ:UG)
A company that develops, manufactures and markets personal & healthcare products, pharmaceuticals and specialty industrial products, UG has a current dividend yield of 4.50%% and a 5 year average dividend yield of 5.40%. They have had 7 consecutive
These are just 5 of the best growth dividend stocks. Take a cexercise/>loser look and see if making growth dividend stocks a part of your financial plan can enhance the performance of your investment portfolio.
Dividend stocks are stocks that give investors a periodic and steady cash return on their investments. The value of such stocks lies in their reliability. Compared to equity stocks that can fluctuate greatly in value over the short-term, dividend stocks are more stable and can be a source of recurring cash for the shareholder over the long-term. Often, dividend stocks are offered by mature, well-established companies that have moved beyond their high growth phase and would prefer paying out a portion of their profits as cash dividends to shareholders, rather than re-investing it in the company. As a result, investing in dividend stocks has long been considered a safe haven for those looking for long-term returns from their stock portfolios.
Dividend stocks have lower tax rates
Safety and stability though are not the only advantages of investing in dividend stocks. Another major benefit is the fact that shareholders pay lower taxes on cash dividends than they would on any profits they might make from the short-term sale of an equity stock, for instance. The reason for the lower tax rate on dividend stocks is fairly straightforward. Dividends are taxed twice. The company that is paying out the cash dividends pays taxes on it upfront to the government even before the cash is distributed to the shareholders. Recipients of the dividend are also taxed. Because of this double taxation on dividends, the amount paid by the recipients in the form of taxes is relatively small.
Investing is easier
Investing in dividend stocks is also relatively easier than trying to make money by trading in stocks. Investors who do their research well and choose their dividend stocks wisely are assured of a steady, long-term source of passive income. Beyond the initial research and stock selection, investors really have to do little else to make money from dividend stocks. That’s fundamentally different from trying to be profitable trading stocks where investors typically need to not only choose wisely, but also need to constantly keep monitoring market conditions to find the right moment to buy and sell stocks.
Dividend stocks provide a hedge against inflation
Dividend stocks can also provide a hedge against inflation and a safety buffer during a recession. Dividend stocks typically yield greater returns during an economic boom and therefore can act as a hedge against inflation. During an economic downturn when stocks and bonds exercise/>lose value, shareholders can always choose to cash their dividend checks to tide them over.
Dividend payouts happen even if stock exercise/>loses value
Importantly, the dividend amounts that are paid out during a particular period are not directly dependant on the stock price but rather on the profits the company makes. As a result, even if the value of the company’s stock was to go down suddenly the dividend payouts are unlikely to be impacted, at least so long as profits are more or less in line with expectations.
After years of working, saving, and investing, retirees are faced with the challenge of creating an income stream to meet expenses and provide for their lifestyle in their golden years. While bonds have been the traditional method to achieve this purpose, dividend stocks may offer certain advantages to income-seeking investors.
Income from dividends
The income from dividend stocks is paid to the shareholders usually in the form of an electronic transfer or else a physical check. The retiree is able to use their dividends to pay for basic recurring living expenses in retirement or to fund a particular desired retirement lifestyle.
Capital Appreciation
Seeking to attain dividends necessitates the purchase of a stock. An additional advantage of dividends over other income sources is the capital appreciation of the underlying stock. Exposure to the stock market will possibly increase the volatility of the investor portfolio, but dividend stocks are generally the most stable, well-established companies in the market. The prices of these stocks are generally steadier than the overall market and may compare favorably to the prices of other assets, such as bonds. With individuals living longer and having more years in their retirement, the appreciation of a stock portfolio offers a considerable benefit over other income investments.
DRIPs
If an investor does not require dividends for income purposes, they can take advantage of Dividend Reinvestment Plans (DRIPs) which are offered by many corporations. Instead of receiving the dividend directly from the corporation, the investor can choose to use the dividend payment to buy additional equity shares in the business. While regular taxes are due on the dividend payment, the investor can generally avoid any brokerage commissions or other fees that are usually associated with buying stock. By using DRIPs, the investor is in effect compounding the dividend payments. Since the dividends were used to purchase additional shares of stock, the investor will be eligible to receive additional future dividend payments.
Tax advantages of dividends
One of the main advantages of dividend stocks over other income sources is their tax treatment. While interest and other income from sources such as bonds are taxed at the individual’s normal income tax rate, dividends are taxed at a special rate. With the recent extension of the tax legislation, qualified dividends will be taxed at 15% for at least the next two years. The median wage earner is generally in the 25% ordinary income tax bracket. Those near retirement age may be earning significantly more and therefore will be in a much higher tax bracket. By generating income from dividends, investors can keep more of their earnings for themselves.
CFD’s and forex trading have gained immense popularity over the last several years, especially in the U.K. and Australia due to the extremely high leverage that each financial instrument offers. In typical stock trading, investors are generally offered no leverage; therefore, traders are only able to hold positions they have cash to hold. This protects traders from large, quick losses, but it also leads to Read more
| Company | Ex-Date | Yield |
| Compass Diversified Holdings | 7/21 | 9.33% |
| Healthcare Services Group | 7/21 | 4.19% |
| Banco Latin Americano | 7/22 | 4.74% |
| Royal Bank of Canada | 7/22 | 3.66% |
| Duncan Energy Partners L.P. | 7/28 | 6.21% |
Compass Diversified Holdings
Recently trading under $15 per share buys and manages businesses. As of the end of last year they had 6 companies under their control including a furniture, medical and personnel company.
Healthcare Services Group
HCSG trades on the nasdaq and was recently trading around $21 per share. HCSG provides housekeeping and facility maintenance services to the health care industry.
Banco Latin Americano
BLX is a supranational bank that was established by the central banks of Latin America. It was recently trading around $12 per share with a EPS of 1.32 and a PE ratio under 10.
Royal Bank of Canada
RY was trading at 51.36 on 7/16/10 with a EPS of 3.79 and a PE ratio of 13.55. RY provides many different banking services to the global community.
Duncan Energy Partners L.P.
DEP has an EPS of 1.59 and a PE ratio of 18.01. Duncan specializes in natural gas transportation.
There are still 6 stocks that yield over 7% and have their ex-dividend date coming up this month.
| Company | Symbol | Ex-Date | Yield |
| Fifth Street Finance | FSC | 5/18 | 9.99% |
| Medallion Financial | TAXI | 5/19 | 7.47% |
| Safe Bulkers, Inc. | SB | 5/19 | 7.64% |
| Teekay Tankers | TNK | 5/19 | 12.31% |
| Eni | E | 5/24 | 7.18% |
| Cherokee Inc. | CHKE | 5/27 | 7.34% |
May brings us some familiar names that are paying higher than average yields. I’ve included the ex-dividend date for each stock. If you want to qualify for the dividend this quarter you need to own the stock at the cexercise/>lose of trading the day before the ex-dividend date.
| Company | Symbol | Ex-Date | Yield |
| Eli Lilly | LLY | 12-May | 5.6% |
| Qwest | Q | 19-May | 6.1% |
| Nokia | NOK | 7-May | 4.00% |
| Pfizer | PFE | 5-May | 4.37% |
Eli Lilly – LLY
Eli Lilly sells medical products all over the world. ELi has a solid stock price, trading at over $30 a share. EPS is almost $4 and the P/E ratio is very low, just around $9. The one year target estimate is just about 7% higher than what the stock is trading at today. Read more
