Did you know that there are well over 100 monthly dividend stocks that payout distributions 12 times per year? The majority of dividend paying stocks distribute a quarterly dividend every 3 months to its shareholders, making this monthly group a unique investment opportunity. These securities are some of the highest dividend paying stocks that you can find today based on dividend yields.
There are many different categories that monthly dividend stocks can fall into. The list below details 3 of the more popular categories and classifications.
Types of Monthly Dividend Stocks
Most of the monthly dividend stocks fall into one of the following categories.
- Canadian Royalty Trusts – Canadian royalty trusts are commonly referred to as CanRoys. Most of these companies are structured in a way where they can pay the majority of their earnings out as dividend payments. In addition, almost all of these trusts pay a monthly distribution as opposed to the traditional quarterly schedule. Based on recent changes in the Canadian tax laws, many of these Canroys will no longer be able to payout their current distributions, so be sure to complete your due diligence before investing.
- REIT – Real estate investment trusts (REIT) are some of the most dynamic dividend stocks that an investor can purchase. They are also some of the most risky stocks available today and should be carefully studied before making any investment decisions. The trust consists of a pool of money that is used to make real estate and mortgage loan investments. The income that is generated is then passed on to the shareholders in the form of a dividend.
- Income Trusts – An income trust is an entity that buys and holds assets in a trust account. These trusts are bought and sold just as any other stock would be traded in the market. The one advantage to owning a trust is that the majority of income generated is passed directly on to the trust account holders in the form of a dividend payment. Most of the trusts choose to pay a monthly dividend. A typical return from an income trust is much higher than a traditional stock because they are considered to be riskier. As a result, income trusts are some of the highest dividend paying stocks that are available.
Do your Homework!
Investing in monthly dividend stocks can be a valuable portion of your overall portfolio. Just remember to keep in mind that many of these types of stocks come with a much higher risk than a typical traded security. Be sure to always complete your homework on a stock before making an investment choice, regardless the type of security.
Provided you are properly diversified and feel comfortable with your homework, an income trust, CanRoy, or REIT can be a wise investment choice. Just remember that these types of investments should only make up a small portion of your overall portfolio!
