7 Monthly Dividend Stocks that Will Pay Your Rent

i'm gonna show you how to pay your thousand dollar monthly rent from dividends but if you pay more than a grand in rent you need to move that was mean wow top two states for youtube viewers as new york and california i'm going to show you how to pay your 2 000 monthly rent from dividends we're talking monthly dividend stocks to buy today on let's talk money hey bowtie nation joseph hogue with the let's talk money channel i want to send a special shout out to all you out there in the nation thank you for spending a part of your day to be here if you're not part of that community yet just click that little red subscribe button it's free and you'll never miss an episode nation i love dividends all you out there in the nation know dividends is like a religion for me there's nothing better than getting paid to invest but most dividend stocks only send those beautiful checks out once every three months and life doesn't run on a quarterly calendar from rent to the phone bill and that seven dollar beer koozie of the month club you got bills every single month but imagine what life would be like if you didn't have that stress of constantly having to worry about the bills if you had an investment that has you covered on that most important bill that's financial freedom and that's what we're talking about today in this video i'll show you how to use monthly dividend stocks to pay the rent how to find those best dividend stocks to buy and reveal the seven monthly dividend payers that can pay your bills no matter where you live stick around and towards the end of the video i'll also show you exactly how much to invest to produce that two thousand dollars a month to pay your rent in fact the dividend stocks i'm going to highlight in this video pay an average 9.7 percent yield that's more than six times the average dividend yield on the stock market and they've done it while producing a 12 annual return over the last five years and now nation that last fact is super important so i want to explain it putting this list together i could have just picked the highest yield monthly dividend stocks now that's what a lot of investors do they see these high yields like like a 15.6 yield on the san juan basin royalty trust and they invest all their money before they realize it's lost 42 percent over the last five years pretty much wiping out everything they collected in dividends so in these seven monthly dividend stocks i'm going to be focusing on those high dividend yields to provide that cash support you need but also the stocks they're going to add to your portfolio over time but i also want to get your input on this because there is an argument for those higher yielding stocks even if it means a declining share price so what do you think would you rather a little lower monthly cash flow on that dividend if it means that the share price increases as well or do you want as high a dividend as possible even if it means a little bit of that capital destruction scroll down and let me know in the comments below uh dividends versus price appreciation the first monthly dividend stock in our portfolio is horizon technology finance corporation ticker hrzn with a 7.9 dividend yield horizon is a business development corporation a bdc in the life sciences and technology space which means it takes business loans and takes an equity position in those mid-size companies that aren't big enough to issue their own shares in the stock market loans and positions are well diversified across life sciences and tech companies by sector stage of company and geographically now one of the most important measures you want to look for when you're investing in these bdcs is is the average yield on their debt portfolio now that's the interest it collects from companies and you want this to be well above the stock's dividend yield so so you know they can support those monthly payouts and here horizon has a 14.6 average yield on its debt portfolio well above the eight percent dividend and why the stock has been able to produce a 16 annualized return over the last five years so here you're getting half that return in your cash dividend and half in the higher share price next here is one of the most popular monthly dividend funds the globalx nasdaq covered call etf ticker qyld with an eleven and a half percent dividend yield and here i'm going to be using a few of these monthly dividend funds along with the stocks in our list and first because there are just very limited numbers of stocks that pay those monthly dividends there are just 53 stocks traded on the us exchanges with that monthly payout but hundreds of these funds now including these dividend funds also gives us access to these other investment types and the assets that we wouldn't have otherwise also though these monthly dividend funds offer the kind of safety that you're never going to find in an individual stock the funds hold dozens or even hundreds of these stocks and other assets spreading the risk out and making sure it can put that money in your pocket every single month the qyld holds the tech stocks in the nasdaq 100 index and then sells call options against them to generate that income for its dividends it's paid out monthly distributions regularly for more than six years and has produced a 32 return over the last year the fund invests in large stable tech companies like apple microsoft and amazon for that upside potential and then uses the option strategy for the cash flow we've still got five more dividend stocks to highlight and these are some of the highest yield in the group but first i want to personally invite you to join the daily bow tie my free daily market newsletter with all the stock market news strategies and the trends that you need to know it's absolutely free just something i like to offer for everyone out there in the community so look for the sign up link in the video description below another popular monthly dividend stock here prospect capital corporation ticker psec and it's 9.1 dividend yield prospect is another those business development corporations this one founded in 2004 with over 16 years of dividends and performance the company manages a 5.7 billion portfolio of 122 investments in companies across 39 industries and earns a 9.9 yield on his portfolio that's more than enough to cover the stock's dividend yield and has helped it produce a 13.3 percent annual return over the last five years so here's another dividend stock where you're collecting that high dividend yield plus watching your portfolio grow to churn out more dividends in the future in fact prospect has returned a cumulative 18.60 cents a share in dividends for more than 3.3 billion returns since its 2004 ipo and that payout just keeps on climbing that's the purpose of these bdcs is to act as a bank and investor in these mid-size companies manage those assets and then return 90 of earnings or more as cash flow to investors now all you out there in the nation know i'm not just about to drop seven dividend stock picks in your lap and say good luck that's not how we work here we've still got four more dividend stocks on the list and that strategy for exactly how much to invest but now i want to show you how to look for monthly dividend stocks what to look for so you don't fall into some of those dividend traps like dividend cuts and a falling stock price first here when you're analyzing dividend stocks you want to pay attention to three fundamentals the payout ratio the dividend yield and the total return the dividend yield is just how much the stock pays out each year divided by the stock price this is always shown as an annual percentage even for stocks that pay these monthly dividends for example the aberdeen income credit fund ticker acp pays out a dollar twenty per share over a year so that dollar twenty divided by the share price is a ten point three percent yield but now remember that's on an annual basis if you own that fund you're going to get a dollar twenty divided by twelve or ten cents a share on a monthly dividend the payout ratio or the distribution coverage is a little harder to find but also extremely important now this is the amount of income or the cash flow paid out to cover that dividend for regular stocks it's that annual dividend divided by the earnings per share for master limited partnerships reits and business development companies on the other hand it's going to be the dividend divided by their distributable cash flow i know that's a lot of jargon to throw at you but all these dividend paying stocks are going to disclose that number in their financial statements or you can find it in most investing platforms it's important because a company paying out more in dividends than it's earning obviously can't keep doing that forever and that's when you're going to find problems with these dividend cuts now finally here before we get back to that list of monthly dividend stocks is just check the total return on the stock and please folks just look at the stock chart over the last five years or even better go to yahoo finance and click on this historical data tab now you can change the time period here to five years and then the frequency to monthly prices so the table is a little bit shorter and what you do you're going to want to follow this column for adjusted close now that's the stock price adjusted by dividends so we scroll down to the price five years ago we take this current price 11.56 a share divided by the 643 per share five years ago for a total return of price plus dividends of 80 percent that's the stock's total return over those five years and it better be more than five times the dividend yield or that means investors have been losing money on the share price now there are other things you can watch for when picking your dividend stocks but i just wanted to get you started with these three key elements the basics there i'll leave a link in the video description below to a dividend stocks playlist on the channel that's going to go in depth on everything from from those important dividend dates to the dividend yield and everything that you want to know next on our list of monthly dividend stocks the aberdeen income credit strategies fund ticker acp and its 10.3 percent yield the fund invests roughly 300 million dollars in assets across short-term bonds and loans and companies across u.s uk and europe and in those non-investment grade credit ratings investments here are spread across the sectors with an overweight in consumer discretionary financials and telecom services aberdeen leverages that portfolio of bonds to generate that 10 plus dividend yield and has produced a 12.6 annual return over the last five years now to be honest i'm not usually a fan of these closed in funds because of that leverage and the fees but aberdeen is well run and the performance speaks for itself the sabian royalty trust ticker sbr is one we've highlighted on the channel before with its 9.2 percent dividend yield sabine has an oil and gas portfolio that covers over 2 million acres in florida louisiana mississippi new mexico oklahoma and texas reserves on the asos are estimated to produce at least another eight to ten years and the parent company regularly explores for new assets oil prices have rebounded from last year's low but still trade well below what we saw pre-pandemic and the shares are 20 off their 20 20 peak which leaves plenty of room for upside now distributions in march and april are 39 higher than the first two months of the year as production increases and that crude price stabilizes so this one could produce a higher yield throughout the year next here is dynex capital ticker dx and it's solid eight and a half percent dividend yield with upside potential dynex is a mortgage rate which means instead of holding those properties itself it invests in the mortgages and then makes its money on the difference between those long-term rates and the short-term borrowing costs now most of its loans are in agency residential and commercial loans which are those loans backed by one of the three government agencies that's fannie freddie and ginny may so these are extremely strong loans for the most part and now the most important thing you can watch on these mortgage rates is what's called the net interest spread now this is the difference between what the company is collecting on those loans and what it's paying out on its short term funding and the good news here is we saw that spread increase into the second quarter from about one and a half percent to two percent mid-year so better profitability for the company now mortgage rates also tend to be more volatile than those traditional types of reits that own the properties themselves but they also pay out the higher yields too shares trade for just under book value at .94 times book which is right around that long-term average of the stock now like some of these other monthly payers that probably won't be a huge amount of price upside here but you can count on that eight or nine percent dividend every single month another fund here the high income securities fund took our pcf and its 10.6 dividend yield the fund invests across bdc's special purpose acquisition companies and other income investments and then uses that closed in fund leverage to produce those higher income yields the fund pays nearly all of its earnings out as dividends and has produced a 10 annual return over the last five years so so this is one where you're getting that higher cash flow but maybe less a little less price appreciation in a cash flow portfolio like what we're trying to do here to pay the bills i like using this mix of some stocks with that higher dividend yield and others that might have lower yields but help you grow that portfolio over time so you've got this list of monthly dividend stocks and you can add or subtract from this list but how much do you need to invest to pay your bills how do you get to that point of financial freedom where the dividends cover your rent finding how much you need to invest in a dividend stock or a portfolio for a certain amount of cash flow is actually the easy part first you take how much you want to make each month in dividends so say you want to cover that two thousand dollar rent on the studio apartment above a bowling alley in manhattan then you take that amount times twelve and since dividend yields on stocks are shown on an annual basis this makes it easier to calculate by finding how much you're going to need in the year you then take that number so 24 000 a year for our example divide it by the annual dividend yield on your stock or your dividend portfolio our monthly dividend portfolio here had an average yield of 9.7 which is more than six times the average yield on the stock market take that twenty four thousand divided by nine point seven percent and you need to invest just over two hundred and forty seven thousand dollars to have your stocks pay your rent from now until until you're renting topsoil instead of an apartment okay i know you're saying just a minute you're telling me i need to save almost a quarter of a million dollars to earn that 24 000 a year in dividends well yeah you cannot expect to save a couple of grand and for the market to just rain down easy money nation i am not here to blow smoke up your ass and promise you all rainbows and unicorns but think about this for a second now on a modest 10 annual return and saving just 500 a month you can save that amount within 15 years that's less than half the time most people have a job in and saving a thousand dollars a month gets you there in less than 10 years start now invest regularly and in less than 10 years you could be relaxing not worrying about those bills and enjoying life click on the video to the right for the seven highest paying dividend stocks seven stocks to put the most cash in your pocket don't forget to join the let's talk money community by tapping that subscribe button and clicking the bell notification

Channel: Let's Talk Money! with Joseph Hogue, CFA

Views: 393,875

Rating: 4.9524951 out of 5

Keywords: monthly dividend stocks, monthly dividend stocks to buy, are monthly dividend stocks a good investment, best monthly dividend stocks, dividend stocks to buy, dividend stocks, dividends, dividend investing, live off dividends, dividend stock portfolio, dividend stock list, top dividend stocks, best dividend stocks

Id: Rr4A51xoOZ0

Length: 13min 45sec (825 seconds)

Published: Wed Apr 14 2021