Dividend stocks normally pay you every quarter, which isn't optimal if you want to generate consistent monthly income from your investments. But you can get around that by investing in stocks that pay at different times during the quarter.
Three high-yielding stocks that can provide you with some excellent dividend income are Innovative Industrial Properties (NYSE: IIPR), AT&T (NYSE: T), and Enbridge (NYSE: ENB). Since these stocks pay dividends in different months, investing in all three can result in monthly income for your portfolio. Here's how much you'll want to invest in each of these stocks to create a monthly dividend stream of $200 per month.
Innovative Industrial Properties: $12,500
Innovative Industrial Properties (IIP) is a real estate investment trust that focuses on the cannabis industry. While investing in cannabis stocks can be risky, IIP makes for a bit of a safer option as it isn't involved in growing or selling cannabis itself. It does, however, lease out properties to growers. And its financials have been fairly sound.
Last quarter, for the period ending March 31, IIP reported funds from operations (FFO) per share of $1.98, which was only slightly less than the $2.04 it reported in the prior year period. And that's still higher than its quarterly dividend of $1.82. With the Drug Enforcement Administration (DEA) potentially reclassifying cannabis as a less dangerous substance, pot producers could be in much better financial shape, including potentially paying less in taxes as a result. That, in turn, could open up new growth opportunities for IIP.
Currently, the stock yields 6.4%, and investing $12,500 into IIP could generate $800 per year in dividends, or $200 every quarter. IIP makes payments every January, April, July, and October.
AT&T: $12,500
Telecom giant AT&T pays a similar yield to IIP and with a comparable investment, this stock could also generate $200 in quarterly dividends. It makes payments every February, May, August, and November.
AT&T's yield is a bit high, but it is proving to be safe. The company's financials are in good shape as AT&T generated $2.1 billion more in free cash flow during the first three months of the year versus the same period in 2023. And the business is demonstrating solid growth under less-than-ideal economic conditions; for the 17th consecutive quarter, the company reported at least 200,000 net additions to its fiber business. And it's keeping customers satisfied with AT&T also reporting its lowest-ever first-quarter churn rate in its postpaid phone segment.
With the company trading at just 9 times its trailing earnings, investors could be getting a steal of a deal with what's proving to be a safe dividend stock in AT&T.
Enbridge: $11,000
The highest-yielding stock on this list comes from Canadian-based pipeline company Enbridge. With the yield at 7.3%, you would need to invest a little under $11,000 in this oil and gas stock to generate $200 every time it pays dividends. It makes payments in March, June, September, and December. Together with the other stocks on this list, you would have dividend income coming in every month of the year. And that would also put your total investment across these three stocks at approximately $36,000.
In Enbridge, you're getting a safer-than-average oil and gas stock. Enbridge has long-term contracts that provide it with much more stability than oil producers whose earnings may fluctuate wildly depending on commodity prices. Last year, the company hit its financial guidance for an impressive 18th straight year.
Enbridge has proven itself to be a reliable investment over the years. And it's off to a good start to 2024, reporting that its discounted cash flow (DCF) through the first three months of the year has risen by 9% to 3.5 billion Canadian dollars (approximately $2.56 billion). DCF is what the company uses rather than net income to assess the safety of its dividend; if that's moving in the right direction, that's a great sign for income investors. Enbridge has increased its dividend for 29 straight years, making it an ideal investment for buy-and-hold investors.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Innovative Industrial Properties. The Motley Fool has a disclosure policy.
