Dividend stocks are excellent investments if you want to generate recurring cash flow. The big downside is that most dividend stocks only pay you every three months, which may not be optimal if you want to generate monthly income from them to supplement your earnings.
But there’s a way around that without having to invest in stocks that specifically pay you monthly. Instead of limiting your options, simply invest in dividend stocks that pay out at different times of the year. By investing in at least three dividend stocks, you can strategically select income investments that provide you with cash flow every month of the year.
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Three stocks that could be excellent options for such a strategy are: Kraft Heinz (NASDAQ: KHC), Procter & Gamble (NYSE:PG)And Toronto Dominion Bank (NYSE:TD). By investing in all three of these companies, you can build your portfolio around some solid dividend stocks while ensuring you receive a dividend every month.
Kraft Heinz is known for its strong consumer brands and products found in millions of homes across the country. It is the type of stock that can provide a reliable long-term investment. And the dividend is a major reason why many investors buy the food stocks. Kraft has paid a stable quarterly dividend of $0.40 since 2019, yielding about 4.8% today. It makes payments in March, June, September and December.
The company has faced challenges due to inflation as consumers have shifted to private label products. But overall, the company’s financial results still look pretty good. Through the first nine months of the year, Kraft’s sales totaled $19.3 billion, representing a year-over-year decline of 2.6%. Investors may be concerned about the massive 71% drop in profits this year, but if you discount goodwill impairments, profits would fall by a more modest 17%.
However, the company has generated more than $3 billion in free cash flow over the past twelve months, which far exceeds the $1.9 billion it paid out in dividends during that period. Even with the headwinds it faces today, Kraft’s dividend still looks safe. And as economic conditions improve, the financials should also improve.
Another top consumer company to invest in is Procter & Gamble, with brands like Tide, Pampers and Gillette helping it reach a wide range of customers. It has an excellent track record of paying and increasing its dividend. The stock is a Dividend King and has increased payouts for 68 years in a row, with the most recent increase being a 7% dividend hike earlier this year. It makes payments in February, May, August and November. Currently, the stock is yielding 2.4%, which isn’t as high as Kraft, but still better than the stock. S&P500 average 1.3%.
