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I'm intrigued by the prospects of owning companies which pay monthly dividends.
I wanted to know what your thoughts on this subjects are.
Do you have any monthly dividend paying companies in your portfolios?
What do you consider the cons/pros of such a stock?
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07-17-2014, 08:43 AM
(This post was last modified: 07-17-2014, 08:44 AM by Dividend Watcher.)
I don't look at payment schedule. What matters to me is the ability of the company to grow and the ability and commitment to pay an increasing dividend.
Monthly vs. quarterly payments only nets you a small increase in compounded return and that's only if you reinvest the proceeds. Without reinvestment, you're left with company performance and the dividend yield.
That being said, if you're using the income to fund current expenses such as during retirement, it helps with budgeting and levels the cash flow stream but you can do that in other ways. I do own Realty Income (O) but not for its dividend schedule.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
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Some stocks that I own are Realty Income (O) and American Realty Capital Properties (ARCP).
Linn Co. (LNCO) is another that pays monthly.
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Shaw Communications (SJR) also pays monthly, IIRC.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
Since O is a REIT, you should look at FFO instead of PE when doing your research. That is what I do. I never look at PE when I'm evaluating REITs.
Don't remember ARCP reducing dividends in Feb, but I'm not positive on that and I will need to look into it further.
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07-17-2014, 04:36 PM
(This post was last modified: 07-17-2014, 04:38 PM by Dividend Watcher.)
(07-17-2014, 03:47 PM)daat99 Wrote: SJR looks attractive (PE wise) but their erratic dividend schedule will trigger my "sell when dividends are reduced" rule too fast (I counted 3 reductions between 2014 and 2012 and then I just stopped counting them).
Shaw is a Canadian company also listed on the American exchanges. The fluctuations are due to currency translation. My Canadian banks do the same thing. Over longer periods of time, it will average out but you have to be patient. Ten years ago US$1=CAD$1.50 or so. Today they are close to par (US$1=CAD$1). It will bounce between the 2 extremes. Go to their IR website and see what they list as the declared dividend in Canadian currency.
I should also add that there's no tax withheld if your holding is in a qualified retirement account such as an IRA. If it's in a taxable account, taxes will be withheld. Also, make sure your broker doesn't withhold them regardless of the tax treaties. I've heard some brokerages take the lazy way out and withhold regardless.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
daat99,
FFO is funds from operations.