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Do you receive checks in the mail for doing absolutely nothing? If not, why not?
You can start receiving monthly income by investing in dividend paying stocks. Dividends are provided by public companies as a means of rewarding investors who believe in their company. It’s typically much better than the rewards you get for shopping at some of your favorite stores.
Not every company pays a dividend and there is no guarantee that a company will pay a dividend every year. But a dividend is an attractive feature for investors who are looking for a steady and “safe” source of income. Popular companies like Apple, Walmart, JPMorgan, and Disney all pay quarterly dividends. And there are companies like Target, Lowe’s, Johnson & Johnson, and Abbott Labs that have consistently increased their dividends to shareholders for over 40 years!
Most companies pay quarterly dividends but there are some companies out there who have committed to paying their shareholders monthly dividends. Real estate investment trusts (REITs) and energy royalty trusts are two types of companies that believe in monthly dividends. Not all REITs and energy royalty trusts believe in monthly dividends but there are a few that do.
How is this possible?
REITs own, finance, or operate portfolios of income-producing real estate and reward investors with attractive dividend yields. REITs aren’t doing it out of the kindness of their heart; high returns are required in order for a REIT to maintain it’s favorable tax structure. REITs don’t have to pay corporate taxes as long as they pay 90% of their income to investors in the form of dividends. REITs also receive monthly income from their tenants who are locked in agreements that require them to pay rent every month.
That’s why companies like Chatham Lodging Trust (NYSE: CLDT) and EPR Properties (NYSE: EPR) are able to pay a monthly dividend to investors. And these companies have even committed to growing their dividends!
Some companies give extra dividends on top of their normal dividend distributions. Companies call these payments “special dividends”. It’s a one time payment that can’t be predicted. This usually happens when a company has a wildly profitable year and wants to give a dividend “bonus” to their shareholders.
Are you a fan of Victoria’s Secret? L Brands (NYSE: LB) owns Victoria’s Secret as well as Bath & Body Works. On March 4, 2016, the company paid a special dividend of $2.00 per share, payable along with their regular quarterly dividend.
Unfortunately, your traditional finance sites like Yahoo Finance doesn’t broadcast this. You might not know if a company paid a special dividend unless you read the annual report or subscribed to an investment research academy that is constantly researching these anomalies in the market.
Are you ready to learn more about getting monthly checks in the mail before you retire? Sign up for a strategy session and subscribe to Wealthy Women Weekly for more insights!
Disclaimer: Wealthy Women Daily is solely educational and informational, and is not intended to give investment or trading advice of any kind. Not all asset classes are suitable for all investors. Wealthy Women Daily is a research academy that provides you with the data and analysis you need to make an informed investment decision. It is your responsibility to talk to an expert to understand how specific investments will impact you during tax time.
