Monday, August 18, 2008

Dividend Stocks: How to Get Paid Regularly

Business Week has an article on how to get regular dividend checks. The article talks about selecting dividend stocks that pay out dividends on different months so you can get a payment each month. They talk specifially about purchasing 6 stocks that will allow you to received two dividend checks each month.

I have never taken a look at different dates my stocks pay dividends as I am reinvesting the dividends. This is an interesting concept for someone in or nearing retirement. It seems like I receive one or two dividends a month from my 30 dividend stocks. The only stock that I own that pays a monthly distribution is Penn West Energy Trust (PWE) which is a Canadian income trust that I recently posted about. Favorite Canadian Dividend Stock: Penn West Energy Trust (PWE)

I don't see regular dividend amounts each month as much of a concern since you will get the same amount of income per year. In retirement, I plan to have a years worth of cash reserves. I may start tracking dividends that are paid in cash into my Zecco brokerage account. I then take the cash distributions to purchase additional stock of my choosing to balance my holdings or to add to some stocks that have dropped in price. Tracking the stocks will allow me to know when I will have some addition cash to make purchases.

The article also gives some examples of six stocks that one my use to produce regular income. The stocks are some good conservative dividend stocks that you may want to further research. Dividends: How to Get Paid Regularly


Investors looking for regular income from their investments generally want that income to be paid out regularly throughout the year. To help investors accomplish this, we've grouped a select number of stocks according to the dates on which they usually pay quarterly dividends.

Here's how it works. By purchasing just these six issues, you would receive two dividend checks per month during the course of the year. We've gone one step further and identified exactly how many shares to purchase in order to receive monthly income of about $100. For example, you could buy 185 shares of Pepco, 75 shares of PNC Financial Services, 125 shares of AT&T, 125 shares of Oneok, 75 shares of Integrys Energy Group, and 25 shares of Dominion Resources.

At recent prices, the six-stock portfolio would cost $28,925 (before brokerage commissions) and provide annual income of $1,200, for a yield of 4.1%. That is much higher than the current 2.2% yield on the S&P 500. In addition, all the stocks on the list are ranked 4 STARS (buy) or 5 STARS (strong buy) by Standard & Poor's equity analysts for expected above-average price appreciation over the next 12 months.

Company Ticker S&P STARS Rank (Div Yield 7/30/08)
Pepco POM 4 (4.3%)
PNC Financial Services PNC 4 (3.6%)
AT&T T 5 (5.1%)
Oneok OKE 5 (3.4%)
Integrys Energy Group TEG 4 (5.2%)
Dominion Resources D 4 (3.5%)
Disclosure: The Div Guy owns share of PWE and OKE at the time of this post.