Daily dividend news for investors in dividend stocks
Published Thu, 02 Jul 2020 13:40:36 on Income Investors
These Dividend Stocks Pay Reliable Monthly Income
I know from talking with other income investors that virtually all of them want to earn more frequent payouts from their portfolios.
Hey, I love dividend stocks. But it’s hard to sync their quarterly payouts with monthly expenses.
Bond investors have it even worse. Fixed-income investments tend to only pay coupons once or twice a year. So, for those of us counting on our portfolios to pay the bills, that presents a big challenge.
Thankfully, there’s an answer.
Over the past few years, more companies have dropped the traditional quarterly dividend payout schedule. Instead, hundreds of firms have opted to pay distributions on a monthly basis.
The situation presents a real win-win situation. Companies gain a loyal shareholder base. Investors, meanwhile, can better match their income with their expenses.
Of course, you should never invest in a business based solely on its payout schedule. And plenty of dodgy companies have adopted this tactic to sucker in unsuspecting investors.
But there’s enough quality and variety in this group to build a portfolio that spits out regular cash flow. You just need to do your homework ahead of time to separate the studs from the duds.
I’ve highlighted a few of my favorite dividend stocks in the table below.
Oxford Lane Capital Corp
Eagle Point Credit Company Inc.
North European Oil Royalty Trust
Shaw Communications Inc.
Realty Income Corp
(Sources: Yahoo! Finance and Google Finance, last accessed July 2, 2020.)
Let’s say a few words about these dividend stocks.
Oxford Lane Capital Corp (Nasdaq: OXLC) and Eagle Point Credit Company Inc. (NYSE: ECC) both pay some of the highest yields around. They’re also both out of favor on Wall Street because everyone knows that future earnings growth looks meager at best. These businesses make their living by lending cash to businesses. But thanks to the coronavirus shutdown, analysts expect some defaults in the months ahead.
Then again, anyone collecting a double-digit yield knows they’re taking some risk. But with the U.S. economy poised to reopen, interest income will begin trickling back in. Loan losses will likely be far less than analysts originally feared. And at today’s share prices, investors are being more than well compensated for the risk they’re taking.
North European Oil Royalty Trust (NYSE: NRT) represents the ultimate cash cow business. The partnership earns royalties from the production of natural gas wells in Germany. But rather than investing the proceeds into more drilling, management pays out all of the profits to unitholders. That means, of course, that these payments will eventually stop as the wells run dry. Distributions also vary month to month with changes in energy prices. But in the meantime, unitholders can collect an upfront yield of 14.2%.
It’s pretty straightforward with Shaw Communications Inc (NYSE: SJR): it’s a well-run telecom company serving millions of customers across Western Canada. Customers pay their phone or Internet bills; investors get a 5.2% dividend. A dividend, by the way, that has rolled in like clockwork for decades. Simple. Stable. If the coronavirus locks down the economy again, dividend stocks like Shaw Communications will deliver some of the most reliable income around.
Realty Income Corp’s (NYSE: O) story hasn’t changed in decades. The company owns a sprawling portfolio of retail properties. Each month, these properties generate rental income. And every year, those property values go up by just a little. Over time, that one-two combination has resulted in outstanding returns for shareholders.
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|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|OXFORD LANE CAPITAL||9.73||0.0||0.00||1.62||16.65|
|EAGLE POINT CREDIT||16.14||0.0||-1.13||2.40||14.64|
|NORTH EUROPEAN OIL ROYALTY TRUST||6.37||7.9||0.81||0.88||13.75|
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