If you're saving for retirement or just need a dependable source
of income, then I have found a fewstocks I consider standouts
for their safety and high yield . With these stocks,
it's possible to build a portfolio generating predictable monthly
income sufficient to cover monthly bills for themortgage ,
utilities and car loan payments. Knowing in advance that you can
count on receiving the income needed to offset these expenses
simplifies budgeting and provides great peace of mind.
Safe and reliable stocks such as these is what we here at
StreetAuthority wecall "
Retirement Savings Stocks
Other advantages to owning monthlydividend stocks are the result
of the acceleratedcompounding effect. With monthly dividends, you
canput each dollar received immediately back to work. Dividends can
be reinvested in newshares more often, causing the dividend income
to grow even faster. Another advantage that is often overlooked is
reduced portfolio volatility. The predictability that comes with
monthly dividends helps establish a floor for thestock 's share
price, which minimizes the risk of big price swings.
A quick bit of research shows there are more than
300investments that pay monthly dividends. The majority of these
investments are closed-end income andbond funds , not individual
stocks. If you prefer individual stocks, then a great place to look
for monthly dividend payers is among lesser-knownasset classes such
asreal estate investment trusts (REITs), business development
companies (BDCs) and Canadian energy trusts.
I've searched through each of these groups for the companies
that pay monthly dividends, and found what I think are the best of
the best. Here they are...
There are also a few foreign companies that pay monthly
dividends, but they don't fall into the asset categories listed
above. Most have American depositary receipts (ADRs) listed on the
major U.S. exchanges. Here is a brief description of each of these
Atlantic Power (
is a Canadian utility company that supplies natural gas mainly to
customers in the United States. Although the company is not
currently profitable due tocurrency depreciation ,earnings are
improving and Atlantic Power anticipates becoming profitable in
2014. Atlantic Power shares yield roughly 9.6%.
Enerplus Corp. (
is one of Canada's largest oil and gas drillers. The company owns
properties in many major resource plays, including the Marcellus
Shale. Enerplus has produced solid income growth in the past three
years, but results have suffered recently due to weak natural gas
prices. As a result, the company was forced to cut its dividend in
half last year. Even at the reduced dividend rate, Enerplus offers
an attractive 8%dividend yield .
Shaw Communications (
is a diversified Canadian communications and media business. The
company provides broadband cable and high-speed Internet services
to more than 3.4 million customers and operates one of the largest
TV networks in Canada. In the first fiscal quarter of 2013 ended
last Novemeber, Shaw's earnings improved 16% to 50 cents a share,
compared with the same period the previous year. The company raised
its dividend 5% in January 2012. Shaw shares currently yield about
Student Transportation (Nasdaq: STB)
is North America's third-largest provider of school bus services.
The company operates a fleet of 9,000 school buses in the United
States and Canada. The stock yields about 8.6%, but because of
aggressive spending on acquisitions, the company has been pursuing
a somewhat risky strategy of relying on debt andequity offerings to
helpfund its dividend.
Monthly dividend payers in Brazil
There are also two Brazilian bank stocks that pay monthly
dividends. The Brazilian government has been pressuring the banking
sector this year to cut interest rates and service fees, so the
stocks were recently affected. Shares of
Itau Unibanco (
are up 4.7% in the past year.
Rival Banco Bradesco SA (
has fared slightly better, with shares up 5.9% the same period.
Both stocks currently yield between 3-4%.
Risks to Consider:
BDC and REIT dividends are generally taxed asordinary income ,
so these stocks are best held in a tax-deferred account. U.S.
citizens pay a 15% foreign tax on Canadian dividends held in a
taxable account. But investors can apply for arefund (foreign
taxcredit ) for at least a portion of the amount withheld when they
file for annualtax return with the InternalRevenue Service.
Even with the higher dividend tax rates, dividend-paying
stocks should remain popular with investors due to their
attractive yields compared with other assets. Most of the monthly
dividend payers listed here provide generous yields, and alloffer
more frequent opportunities for reinvestment. Investors
shouldnote REITs and BDCs are unaffected by the tax rate
change since their dividends are already taxed as ordinary
Action to Take -->
This list of monthly dividend payers is meant to be a starting
point for your own research and are not buy or sell recommendations
for the individual stocks. But if you're saving for retirement or
simply want to build a source of dependable
Retirement Savings Stocks
, then any of these stocks could help you do just that.