I recently introduced my girlfriend to investing. More specifically, to dividend stocks. She has taken to it like a duck to water, cautious at first but she has slowly started deploying her (significant) cash savings that were otherwise being whittled away to inflation. Just by starting investing her perception of FIRE (Financial Independence Retire Early) and general view of wealth has been altered.
It is quite common for those new to the market to chase high yields or dividend frequency (I know I did!) but I have been proud of the way she has focused on sustainable cash flow. I will write a separate post on how I look at dividend stocks (hint: dividend growth and dividend stability are my number one criteria!).
However, she has still wanted to get paid as regularly as possible – understandable when one is first starting out. So I started looking for a list of dividend-paying stocks on a monthly basis that are available to UK investors on the most common apps (as it feels many of my generations are moving away from the likes of Hargreaves Lansdown et al). This article is particularly focused around the FreeTrade app, and monthly dividend stocks available in the UK.
I wanted to come up with monthly dividend stocks that both UK and US investors (and others!) could use. As I am based in the UK I have focused on those available on the Freetrade app. Here is the list I came up with, please note this is not investment advice. I have held all of these stocks are some point and they have all served me well, but please do your own research!
1.) PBA – Pembina Pipeline
Pembina Pipeline pays a 6.5% dividend yield and pays out monthly. This company is incorporated in Canada and listed on the NYSE. They own a range of oil and gas infrastructure across Western Canada. The obvious risk to this play is the price of gas dropping, however, there will likely be demand for their services for many years to come. One way to mitigate this risk is to hedge it with a renewable REIT. I am still looking for the perfect hedge, I would consider oil tanker stock a reasonable hedge but it still has the same problems in the very long-term (when we hopefully transition to renewables).
2.) O – Realty Income
Another monthly dividend stock available on FreeTrade is the favourite amongst those chasing financial independence in the UK and US alike. Realty is a Real-estate Investment Trust (REIT), that pays a monthly income. In fact, they even call themselves the “monthly dividend-paying company”. It’s a big part of their brand for attracting investors and employees. They have consistently grown their by an average of 4.5% per annum over the years, and compounded returns stand at 15.1% in the same timeframe (1994 to date). The dividend yield still stands at a healthy 4%.
3.) £SEMB – JP Morgan Emerging Markets Bonds
Finally, a UK option £SEMB is run by JP Morgan and is structured as an ETF. The fund tracks an index of dollar-priced fixed income securities focusing on the emerging markets. SEMB pays a 4% yield and pays its dividend monthly. Worth noting the capital gain performance on this stick has been weak, however, perhaps it could be a reasonable hedge. There is also no withholding tax (15%) unlike with the US companies (if you are investing from the UK)
4.) MAIN – MainStreet Capital
This is certainly a higher risk play, Main Street Capital provide financing to, and invest in the debt of, small market cap companies. However, MAIN pays a 5.67% monthly dividend currently and has nearly a 10-year history of increasing this dividend each quarter. With interest rates going up, I expect the company may take a hit (as money will become more expensive to borrow) but it’s also good to have exposure to such a niche market.
5.) STAG – Stag Industrial
Similar to PBA, STAG is a REIT focused on industrial properties in the US. I first bought them in the first market crash, as I believed this would be quite a recession-proof area (or at least covid proof). I sold it when I bought my house last year, but it has continued to climb in value. This has reduced its dividend to “just” 3% but it’s definitely one to look at on any weakness in the market. It’s probably my favourite pick of the bunch. And it, of course, pays monthly.
I am looking to come up with a monthly dividend portfolio that could hedge things such as oil prices, interest rates, and potential black swan events whilst maintaining a growing rate. Whilst I am position for growth currently, I would like to start building an all-weather portfolio that I can grow in the background.
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How is the COVID situation over there?
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