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Passive Income - Monthly Dividend Stocks

Updated on February 4, 2012

Passive income streams are many and one of the ones I love the most are the monthly dividend paying stocks. These companies take out profit from each month earned and pay out a monthly dividend to all their shareholders. Where most dividend paying stocks payout, on a quarterly, semi-annual or annual basis these are paying out every month.

The idea of monthly income is not a new some companies have been doing it for quite awhile. They are stocks or bonds sold by companies usually in the form of trust, REITS, or managed fund companies. Even though they are a combination or portfolio of other companies the individual stock symbol can still be traded as normal on the exchange they are listed on. This is the biggest difference in monthly dividend paying funds compared to individual companies although some individual companies do participate, as well.

The great benefits of having monthly income from dividend stocks that pay monthly is most of them are diversified. The diversification among many different stocks has some significant advantages to individual investors. One it makes the funds less risky to investors because the dividend can maintain the diversification in many companies. Plus the risk of your dividend being cut is significantly less due to the diversification. One solid example is GM they had a quarterly dividend, paid out exceptionally well even through some of the toughest of reorganization. They just cut their dividend by quite a bit and will probably not be back to the same level for years. Yet, people thought this was a solid stock to invest in, and most thought it would never go down and be cut like it was.

As with any type of investment the mechanics of investing is the same. Always do your research on every company that you want to do business with. No matter if it is a fund, a stock, options or any additional information regarding the process of purchasing stock. You want to look at dividends of course, but there are many other things you want to look at for a company. The biggest example is with the fluctuation of oil prices on the market. If, the prices go up or down on a steep level, this may cause the monthly dividends prices to fluctuate as well.

As you can see, monthly dividend stocks may have a place in the investment portfolios of people that like dividend investing, and a steady stream of income, but as always, you need to do your homework before investing in these stocks.


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