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Monthly Dividends - Best Stocks That Pay Income Monthly

By Edited Nov 13, 2013 1 0

Are you looking for monthly dividends, in the form of the best monthly dividend stocks that pay you every month? There are a ton of monthly dividend stocks out there, which will pay you every month just for owning the stock. Therefore it is important to scan them and do your due diligence when investing for you monthly income plan.

Why Monthly Dividend Stocks are Better Than Others

I LOVE getting monthly dividends, as opposed to getting dividends once a quarter, twice a year or once a year. It makes it SO much easier to budget your money each month when you are getting your dividend income once a month with a monthly dividend stock.

Think about it - you budget your money every month, not every four months, right? Your monthly budget planner should have how much you make (income) and how much you spend (expenses) every single month.


So why wouldn't you want to plan your budget including a monthly dividend payout? You will have the money you need, and you won't have to wait another 3 months just to receive your dividend.

Why You Need a Monthly Income Plan

 Here is an example of how even a small monthly dividend can help you pay off your bills and manage your finances.

Say you have $10,000 in the bank, earning less than .40 percent interest a year. You currently bring in $2,500 after tax per month and your expenses are about $2,000 per month.

Instead of keeping that $10,000 in a bank earning close to nothing in interest (and losing to inflation every year) you decide to place the funds in a monthly dividend stock or a monthly dividend ETF.

We will split the $10,000 between two investments – first, we will use the stock fund Powershares Preferred Portfolio (PGX). Secondly we will use the REIT Armour Residential (ARR). We will split $5,000 between both of these.

PGX - This dividend paying ETF pays a monthly dividend of about 8 cents per share. A $5,000 investment will get you about 340 shares, meaning you will net approx. $27 per month or $326.40 per year.

ARMOUR - This high dividend yielding REIT pays a monthly dividend of .09 cents per share. The stock price is now $7.04, so you will be able to buy about 700 units. This will net you about $63 per month or $756 a year.

Monthly Income Plan - Total monthly income from investments - $90.

It doesn't sound like much but it certainly helps manage your expenses! Plus there is always the chance your investments will raise their dividends. PLUS, you may want to re-invest those monthly dividends to compound the growth of your investments.

If you re-invest the dividends every month, you will be amazed and how much your monthly income will grow. When the interest of your investments start to produce interest themselves, that's when the money starts to pile up. You can easily double your monthly income in just 6-12 months with this strategy!

And when you have a little cash on the side to invest, remember that just $7 a unit (for Armour) will net you an immediate $.09 increase in your monthly income.

*(Please know these are not investment recommendations, this is just for informational purposes).

Best Book on Dividend Investing?

Get Rich with Dividends: A Proven System for Earning Double-Digit Returns (Agora Series)
Amazon Price: $39.95 $21.27 Buy Now
(price as of Aug 12, 2013)
This is a top pick among investors because it's easy to read and understand for beginners, but it is very in-depth and informative.

Dividend Growth Charts

You must understand that investing in dividend stocks, especially those that payout dividends monthly, is a PROVEN system of creating wealth. With enough time, you WILL get wealthy with compound interest.

The website DividendMonk.com gives this great example: "If you start with a portfolio of $20,000 with a total dividend yield of 4%, and you: Add $1,000 per month, and increase this by 5% each year Reinvest your dividends. Get a total rate of return of 10%, either after taxes or in a tax-deferred account. Then your dividend income will grow like this." See the chart below.

Dividend Growth Chart
Credit: DividendMonk.com

Keep in mind this shows the DIVIDEND INCOME you'll receive, not the total amount of capital or money you've made from your investments. You may very well have turned that original $20,000 investment into $250,000 plus.

This income plan of reinvesting the dividends from your stocks works so well because of the automatic dollar cost averaging effect and compound interest. Every time you re-invest dividends into the stock at a lower price than what you bought it, you are averaging down the total cost of your investment, lowering the total average cost per share of the investment. This gives the investor a lower overall cost for the shares purchased over time, meaning you'll make more money from your investment - again, this is called Dollar Cost Averaging and it's an extremely effective investment strategy that has worked for many successful investors.

You can do this with both stocks, mutual funds OR ETFs. For the best monthly dividend ETFs, check out this article.

Value Averaging: The Safe and Easy Strategy for Higher Investment Returns (Wiley Investment Classics)
Amazon Price: $22.95 $9.63 Buy Now
(price as of Aug 12, 2013)
This book shows you the best way to get wealthy over time - it is NOT a book about how to get rich. Just proven methods on how anybody can build wealth with smart investing through Dollar Cost Averaging!

Best of Luck Making Dividend Income Monthly!

What do you think about Monthly Income investing plans and making dividend income each month? Please comment below and let me know what some of you favorite investments are.

I hope you enjoyed this article on Monthly Dividends - Best Stocks That Pay Income Monthly!

The 100 Best Stocks to Buy in 2013 (100 Best Stocks You Can Buy)
Amazon Price: $15.95 $8.66 Buy Now
(price as of Aug 12, 2013)
What stocks or ETFs will you buy to make your money? Here is a good read on the best stocks to buy in 2013.


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