By: Costas Bocelli — October 15, 2020
Get Paid Every Month With These 3 Stocks
Central banks have declared war on income investors and savers.
And make no mistake, you are in their crosshairs.
Traditional sources of income like Treasury bonds, money markets, and CDs generate a pittance return, if anything at all.
Uncle Sam is screwing you over, as we discussed in last week’s article.
But it doesn’t have to be this way.
There are alternatives to finding safe, reliable, and steady income streams.
I’m talking about income streams that can generate three times… four times… five times... or even more than what you’d otherwise earn holding U.S. Treasury bonds.
So for today, I’m going to share an income-generating strategy and three investments that you can make right now that will get you paid each and every month.
The beauty of it all is that once you buy into these three investments, you’re good to go.
There’s nothing else you need to do except watch the cash distributions get deposited directly into your bank account every 30 days or so.
If that sounds enticing, then keep reading.
The search for these higher-yielding investments starts with looking within the right asset class.
You see, most income-oriented investors are focused on Fixed Income.
But that’s a big mistake in this type of market environment.
Instead, the focus should be on U.S. Equities.
Let me explain…
U.S. Equities is a strong asset class.
Actually, it’s the strongest of the six major asset classes in terms of relative strength.
But it’s also a place where you’ll find many dividend-paying stocks that generate returns higher than what you can earn through traditional fixed-income securities such as government bonds.
As I mentioned last week, there are 315 stocks in the S&P 500 Index that are yielding more than 1% annually. And there are 39 stocks within this index that yield more than 2% annually.
But the U.S. stock market is far broader than the S&P 500.
If we include the S&P 600 (small-cap index) and the S&P 400 (mid-cap index) to the mix, we’d find that 504 stocks distribute dividends to their shareholders that yield 2% or more annually.
That’s a wide selection of income-generating securities.
So which ones are the most attractive?
That’s a great question.
And fortunately we’ve got the perfect answer.
In fact, by following this simple strategy I’m about to reveal, you could receive relatively high-income returns each and every month, like clockwork.
Think of it as belonging to the “Check of the Month” club.
And, if you decide to join, you could expect to see cash fall into your account every 30 days or so.
The strategy involves buying three high-yielding, quarterly dividend-paying stocks. (You could own more than three stocks if you want, but you’ll only need to own three at a time to get paid each and every month.)
The key is to make sure that none of their respective quarterly disbursement dates occurs in the same month. There might be some overlap (by a day or so), but the point is to have the disbursements spread over 30-day periods.
This will ensure that you receive at least one dividend check each and every month. This strategy works because many publicly traded companies pay regular dividends to shareholders for years, or even decades.
And they tend to stick to a predictable payout schedule.
(Nasdaq.com is a great resource for researching dividend-paying companies. Here’s a link to its dividend calendar. Bookmark it for future reference.)
That said, we’ll want to identify an early-cycle, mid-cycle, and late-cycle dividend payer. Here are the three quarterly cycle patterns:
- (Early): January, April, July, and October.
- (Mid): February, May, August, and November.
- (Late): March, June, September, and December.
Now, if we can find a high-dividend-paying stock in each of these cycles, then we’ll be set up to receive a dividend check each and every month.
That said, when building a “Check of the Month” portfolio, it’s not only important to select high-yielding stocks, but also to identify the ones that possess strong traits of technical strength.
At True Market Insider, we believe that price action serves as a reliable measure of risk.
That’s why our investment approach focuses so heavily on the technical merits of a security. And by applying the Relative Strength methodology, we're able to focus on the stronger-performing securities while avoiding the weaker ones.
With that in mind, each stock to be included in the strategy must meet three specific criteria.
Each stock must...
- Distribute a dividend that yields a 2% or higher annual return…
- Trade in a positive trend on its trend chart...
- Demonstrate long-term relative strength versus the stock market.
Following these guidelines increases the odds that the positive technical attributes will continue to bolster the stock price and, in turn, provide capital appreciation to go along with the quarterly income distributions.
After all, what’s the point of earning a 4%+ return if the asset drops in value by 20% or more?
Of course, no investing strategy is guaranteed.
But we've found that stocks that possess positive characteristics of technical strength tend to continue to outperform on a relative basis.
In Sector Prophets Pro, our data analytics product, you can easily identify the relative strength attributes on thousands of stocks.
So once you compile a list of stocks that reside in each of the three payout cycles, you’ll then be able to toss aside the weaker ones and focus on the stronger ones.
When you identify one stock to own from each of the three cycles, you’ll be assured of getting paid each and every month.
Here Are 3 Stocks That Will Get You Paid Every Month
The early quarter dividend payer is Patterson Cos. (PDCO), a supplier of dental and animal healthcare products in the U.S., U.K., and Canada.
Patterson is a small-cap company (<$3 billion), but sports a very fat dividend yield.
Today’s actually the ex-dividend date (October 15), so buying the stock today will not entitle you to the $0.26 per share dividend distribution that will be paid on October 30.
But, as you can see, the company has been paying its shareholders that $0.26 per share like clockwork each and every quarter.
At the recent price of $26.50, the stock is yielding +4.0% annually, more than five times that of a U.S. 10-Year Treasury bond.
The mid-quarter dividend payer is Chemours Co. (CC),a mid-sized supplier of performance chemicals in North America, Asia Pacific, Latin America, the Middle East, and Europe.
This is another smallish (market-cap of $3.8 billion) under-the-radar stock that distributes a big juicy dividend to its shareholders.
Over the past few years, you can see that the company has been raising its quarterly distributions payouts.
Chemours recently made a $0.25 per share payment to its shareholders on September 15 to shareholders of record on August 17.
At the recent price of $23.00, the stock is yielding +4.3% annually, and nearly six times that of a U.S. 10-Year Treasury bond.
Expect the company to announce the next dividend distribution (declaration date) sometime at the end of this month.
And the late-quarter dividend payer is Garmin Ltd. (GRMN),a large-cap manufacturer of consumer electronics and communications equipment worldwide.
Garmin is another one of those companies that pays its shareholders an above-average yield and has steadily increased its quarterly distributions over the past few years.
Garmin paid out $0.61 per share on September 30.
At the recent price of $98 per share, the stock is yielding +2.5% annually -- well above the current rate paid by owning U.S. Treasuries.
Expect the company to announce the next dividend distribution (declaration date) within the next couple of weeks. The next payment should be made on the last day of the year (December 31, 2020).
Not only do all three of these stocks generate consistent, above-average returns, but all three also possess strong traits of technical strength.
So you see, there are ways to generate a monthly income that can produce superior returns.
And one of those ways is creating a “Check of the Month” portfolio that only needs three strong stocks.
In a future column, I’ll show you a nifty technique that you can apply to your dividend-paying stocks to generate even more income and turbo-charge those returns.