Retirees like these investments for the regular monthly income, and preretirement investors, whether they hold them in their retirement accounts or their taxable portfolios, like these stocks for the faster compounding that monthly dividends provide.
Can monthly compounding make a difference? With a $100,000 portfolio yielding 14% (taxes excluded) over a 10-year period -- assuming the dividends could be reinvested at the same rate -- an investor receiving monthly dividends would be ahead by more than $6,300 vs. quarterly payments, more than $15,200 vs. semiannual payments and more than $31,500 vs. annual dividends.
There are a few caveats relating to these investments, however. First, some of them are thinly traded. Second, with regard to the Canadian royalty trusts, there is a withholding tax on the distributions, and that can affect the yields, especially in retirement plans.
In addition, although Canadian trusts currently avoid double taxation, the Canadian finance minister has proposed taxing all existing trusts as regular corporations, starting in the year 2011. This could affect the yields significantly in the future. However, the measure is far from approved, and the stocks have also fallen significantly, discounting the effect this rule would have on the stocks.Check Stockpickr for the full list of 200 stocks that pay monthly dividends. For other dividend resources on Stockpickr, check out any of the following portfolios:
- Top 100 Highest-Yielding Stocks That Pay Monthly Dividends
- Microcaps With Dividends
- Dividends Are Important
- European Banks With Dividends
- Closed-End Funds Paying Hefty Dividends
- Income Deposit Securities, a list of hybrid stocks/bonds that pay high yields
- High-Yield Tobacco Stocks
- Morgan Stanley: A Yen for Yield, a list of high-yield stocks from the Jan. 22 issue of Barron's, in which Morgan Stanley's Chief U.S. investment strategist, Henry McVey, said the Pension Protection Act of 2006 "adds legs" to his research team's Brave New World thesis -- that as retiring baby boomers start positioning their individual retirement accounts and 401(k)s for income, rather than asset accumulation, they'll boost demand for "equity securities that provide both healthy yield and solid earnings growth"
- Favorite S&P Dividend Aristocrats
- Cramer's Aristocratic Plays, Jim Cramer's top three picks from the above list
- Cheap Aristocrats: a list put together by a Stockpickr user that contains his own version of the Aristocrats that he considers to be cheap values.