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All Contents © 2019The Kiplinger Washington Editors
By Jeffrey R. Kosnett, Senior Editor
| November 21, 2019
Most U.S. companies that pay dividends do it quarterly, or once every 90 days or so (foreign firms usually pay but once or twice a year). If your income stocks are on the same schedule, your payments will come much less regularly than, say, your relentless gas and electric bills.
That's why many retirees and other dividend fans try to arrange matters so the income arrives more frequently. You can easily assemble a set of excellent dividend stocks with staggered pay dates. That's the idea of our Dividend-a-Month portfolio, assembled by the editors of Kiplinger's Investing for Income: cash every month, without interruption. You can play the calendar without dabbling in questionable stocks or worrying about the reliability of dividends.
As a practical matter, note two key dates for dividend stocks. One is the "record date," the deadline to be a shareholder so you get the next payment. The record date is usually three to six weeks before the "payment date," which is when the dollars should appear in your brokerage account. We're using the actual arrival of the payment to match companies with their months.
Data is as of Nov. 20. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
Market value: $55.4 billion
Dividend yield: 2.5%
5-year annual dividend growth: 17.5%
Payout schedule: January, April, July, October
Illinois Tool Works (ITW, $172.44) is a global manufacturer and inventor with many segments from car parts to welding supplies to restaurant equipment. Only half of its revenues are generated in North America, with the rest coming from around the world.
ITW also is a Dividend Aristocrat – one that has improved its annual payout for 56 consecutive years.
Market value: $39.9 billion
Dividend yield: 3.7%
5-year annual dividend growth: 27.9%
Payout schedule: February, May, August, November
Valero Energy (VLO, $97.19) is the world's largest independent refiner (meaning a refinery owner that does not produce its own oil).
It's named after the original moniker of The Alamo – Misión San Antonio de Valero – the symbol of Valero Energy's hometown.
Market value: $251.9 billion
Dividend yield: 2.2%
5-year annual dividend growth: 5.9%
Payout schedule: March, June, September, December
Famous chip producer Intel (INTC, $57.90) was among the first technology titans to start paying dividends. It hasn't raised its quarterly dole every single year since its first payout in 1992, but it has authorized 23 increases across that time.
Courtesy Mike Mozart via Flickr
Market value: $22.3 billion
Dividend yield: 1.4%
5-year annual dividend growth: 8.9%
McCormick (MKC, $167.95) is a classic income-and-growth investment that's fueled by its great brands, from Old Bay Seasoning in its Maryland backyard to household names in Europe, Asia and Latin America.
Another Aristocrat, McCormick increased its dividend by 10% starting with the October payout, extending its streak of annual dividend hikes to 34 years.
Market value: $97.5 billion
Dividend yield: 2.7%
5-year annual dividend growth: 17.3%
Giant drugstore chain CVS Health (CVS, $74.92) also features a pharmacy benefits management business and has extended into providing patient care via its MinuteClinics.
Its latest venture: CVS jumped into the health-insurance arena in 2018 via a roughly $70 billion merger with Aetna.
Market value: $4.0 billion
Dividend yield: 2.3%
5-year annual dividend growth: N/A
Payout schedule: Monthly
The WisdomTree U.S. MidCap Dividend Fund (DON, $37.11) is an exchange-traded fund (ETF) that targets companies with market caps between $2 billion and $18 billion. It invests about 25% of the portfolio in real estate investment trusts (REITs) and utilities.
One special feature about DON: It pays a dividend every month.
Market value: $406.6 billion
Dividend yield: 2.8%
5-year annual dividend growth: 12.8%
JPMorgan Chase (JPM, $129.63) is America's largest banks by assets and one of the largest financial firms in the world. In addition to serving millions of customers through its retail arm, it also offers commercial banking, investment banking and asset management, among other businesses.
Like most banks, JPM was forced to cut its payout amid the Great Recession to a nickel per share. However, it has aggressively grown those payouts since 2011, to 90 cents per share – more than double what it paid out before the 2007-09 bear market.
Market value: $25.4 billion
Dividend yield: 3.5%
5-year annual dividend growth: 4.0%
Realty Income (O, $77.99) is a well-known REIT that owns more than 5,900 single-tenant properties. It leases those properties out retailers such as CVS and Walgreens (WBA), gyms, theaters and restaurants, typically with long-term agreements.
Realty Income is one of the market's most well-known monthly dividend stocks and has a history of frequent (though small) payout increases.
Market value: $357.8 billion
5-year annual dividend growth: 6.5%
Johnson & Johnson (JNJ, $135.94) is one of the world's biggest and most diversified health-care companies, boasting not just consumer brands such as Tylenol and Band-Aids, but pharmaceutical and medical-device divisions too.
Investors have had to deal with the occasional controversy. However, J&J has a tremendous growth record, as well as a 57-year streak of consecutive dividend improvements.
Market value: $73.8 billion
Dividend yield: 2.1%
5-year annual dividend growth: 10.2%
Automatic Data Processing (ADP, $170.58) likely prints out your paycheck among the millions it handles across 140 countries.
ADP, yet another Dividend Aristocrat, recently announced a 15% boost to its quarterly payout – good for its 45th uninterrupted year of growing dividends.
Market value: $53.3 billion
5-year annual dividend growth: 16.7%
General Dynamics (GD, $184.33) is another Dividend Aristocrat, this time in the defense space. GD owns technology and military businesses, from jet planes to tanks and submarines, and it also makes Gulfstream civilian jets. Two-thirds of the revenue comes from the U.S. government.
GD is among the younger Aristocrats, at 26 years of higher payouts. (Membership requires 25 consecutive years.)
Market value: $45.2 billion
Dividend yield: 3.1%
5-year annual dividend growth: 5.3%
American Electric Power (AEP, $91.46) is our favorite no-nonsense, no-frills electric-generating enterprise. with operations in 11 Midwestern and Southern states. It has elevated its dividend every year since 2005.