How To Build A Portfolio Of Aristocrats With Dividends Every Month (2024)

Shareholders in dividend-paying stocks received nice raises in 2018 . Indeed , for 2018, net dividends rose $58.4 billion, compared to a gain of $37.1 billion in 2017, explains dividend expert Chuck Carlson, editor of DRIP Investor and a contributing expert at MoneyShow.com.

For the year, 2,768 issues increased their payments, a nearly 5% increase over 2017. Dividend increases in 2018 were driven by healthy corporate profits and turbo-charged cash flows from lower corporate taxes.

Not surprisingly, the number of companies decreasing dividends fell more than 9% year over year. And to give an idea of how widespread dividend paying has become, more than 82% of the stocks in the S&P 500 currently pay a dividend, 70% of the stocks in the S&P MidCap 400 Index, and 52% of the stocks in the S&P SmallCap 600.

Whether 2019 can better the strong performance of 2018 is uncertain. Corporate earnings growth will likely slow this year from the heady levels of 2018. Thus, while dividend investors should still see plenty of payments this year, growth in those payments will likely be less than what was seen in 2018.

One group of stocks that should continue their dividend-increasing ways are what S&P Dow Jones calls “Dividend Aristocrats.” These are stocks that have boosted their dividends for at least 20 consecutive years.

Many investors require a certain amount of dividend flow to pay for monthly expenses and to meet other cash-flow needs. It is not unusual for cash-flow-hungry investors to think purely of bonds as vehicles for generating cash flow.

However, dividends, especially fast-growing dividend streams, can be an especially attractive way to generate cash flow. One problem with stocks is that they typically pay dividends only quarterly (every three months).

However, there is a way to generate dividend checks every month of the year by owning a basket of stocks that stagger quarterly dividend payment dates. The lists below include all of the Dividend Aristocrats that offer direct purchase plans, whereby any investor may buy the first share and every share directly from the company.

The list is broken down by quarterly dividend payment dates. By owning stocks from each of the three dividend-payment periods, investors can receive dividend checks every month of the year. Our favorites in each payment period are bolded.

Dividends paid in January, April, July and October

• Coca-Cola — yielding 3.4%
• Community Bank Systems — yielding 2.4%
• Essex Properties — yielding 2.7%
• Federal Realty — yielding 3.0%
• Franklin Resources — yielding 3.2%
• Kimberly-Clark — yielding 3.5%
• Lincoln Electric — yielding 2.1%
• McCormick — yielding 1.8%
• MDU Resources Group — yielding 3.1%
• Medtronic — yielding 2/2%
• National Fuel Gas — yielding 2.9%
• New Jersey Resources — yielding 2.5%
• Nordson — yielding 1.0%
• PepsiCo — yielding 3.2%
• Roper Technologies — yielding 0.6%
• RPM International — yielding 2.4%
• UGI — yielding 1.9%
• Walmart — yielding 2.1%

Dividends paid in February, May, August and November

• AbbVie — yielding 5.3%
• — yielding 2.7%
• — yielding 6.7%
• California Water Service — yielding 1.6%
• Caterpillar — yielding 2.5%
• Clorox — yielding 2.5%
• Eaton Vance — yielding 3.4%
• Lowe's Companies — yielding 1.8%
• National Retail Properties — yielding 3.8%
• People's United Financial — yielding 4.0%
• — yielding 2.9%
• Realty Income — yielding 3.9%

Dividends paid in March, June, September and December

• Aflac — yielding 2.2%
• American States Water — yielding 1.6%
• Aqua America — yielding 2.5%
• Atmos Energy — yielding 2.2%
• Becton Dickinson — yielding 1.2%
• Bemis — yielding 2.4%
• Black Hills — yielding 2.9%
• Chevron — yielding 4.0%
• — yielding 1.4%
• Commerce Bancshares — yielding 1.7%
• Cullen/Frost Banker — yielding 2.6%
• Dover — yielding 2.1%
• Emerson Electric — yielding 2.9%
• Exxon Mobil — yielding 4.2%
• IBM — yielding 4.5%
• J.M. Smucker — yielding 3.3%
• McDonald's — yielding 2.6%
• Mercury General — yielding 4.7%
• Old Republic — yielding 3.7%
• PPG Industries — yielding 1.8%
• — yielding 1.1%
• — yielding 1.9%
• Target — yielding 3.5%
• United Technologies — yielding 2.4%
• VF Corp. — yielding 2.4%
• Walgreens Boots Alliance — yielding 2.4%

To be sure, many investors may still want to reinvest at least a portion of their dividends to buy additional shares of stock. The good news is that many of the companies listed here offer “partial dividend reinvestment” whereby investors can designate a portion of their dividends for reinvestment while receiving the remainder in a check.

It’s worth noting that a dividend-every-month portfolio not only smooths out cash flows but also provides an excellent way to dollar-cost average invest for folks reinvesting at least a portion of the dividends.

In other words, by owning a basket of stocks that creates monthly dividend reinvestment, investors are assured of putting money back into the market every month. The table lists many attractive stocks for DRIP investors.

While I have highlighted a few of my favorites, all of these stocks, by virtue of their long-term dividend records, offer high-quality selections. Below are reviews of my favorites from each of the three payment periods.

UGI pays dividends every January, April, July, and October. The firm, a provider of propane and regulated natural-gas utility services, yields nearly 2%.

That may be viewed as rather skimpy for a utility, but UGI’s growth profile is much better than the average utility stock. And that growth profile is one reason the company’s dividend increases are likely to be above-average for the group.

Utility stocks received a break recently when the Fed said it would go slow on future rate increases. I like quality utilities and view them as essential pieces in building a dividend-every-month portfolio. The minimum initial investment in the company’s direct-purchase plan is just $50.

Realty Income is kind of the “Swiss army knife” for investors who want dividends every month. Indeed, while I listed Realty Income in the group that pays dividend February, May, August, and November — this payment period typically has the fewest payers — the reality is that Realty Income pays a dividend every month of the year.

Furthermore, the company increases the dividend with regularity — 100 dividend increases since 1994. Real estate investment trusts have been decent performers of late.

While I have rarely been a big backer of REITs, I am warming to the group this year. Realty Income, which purchases commercial real estate and leases to tenants under long-term net lease agreements, generally 10- 20 years, offers a nice play in the sector, especially for investors who want monthly cash flow.

Minimum initial investment in the company’s direct-purchase plan is $1,500. The firm will waive the minimum if an investor agrees to automatic monthly investment via electronic debit of a bank account of at least $100.

The March, June, September, and December dividend-payment schedule is typically the most common and thus has the most choices for DRIP investors.

Aflac represents a classic “Steady Eddie” in this payment group. The company, which provides voluntary supplemental health and life insurance products in the U.S. and Japan, has boosted the dividend for more than 35 consecutive years.

The current yield of 2.2% provides a nice kicker to total-return potential. Aflac’s direct-purchase plan has a minimum initial investment of $1,000. There is no enrollment fee and no fee to purchase shares in the plan.