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%.
The company recently posted its first quarter results for fiscal 2025, which were relatively stable overall. Net sales of $21.7 billion for the period ended September 30 fell just 1% year over year and operating income rose 1% to just under $5.8 billion. While Procter & Gamble may not be a top growth stock to own, its stable and fairly consistent results can make it an attractive option for buy-and-hold investors.
The highest yielding stock on this list is Toronto-Dominion Bank, which pays 5.3%. The Canadian-based bank pays a dividend in January, April, July and October every year. Together with the other stocks on this list, that would ensure you receive a dividend every month of the year.
Toronto-Dominion shares haven’t been a popular buy among investors lately as there are concerns that the Canadian and U.S. economies aren’t in good shape, which could weigh on profits. Moreover, the bank was recently hit with a massive $3 billion fine for not doing enough to stop criminals from laundering money. Asset limits will also be placed, hampering short-term growth prospects.
However, this is a good example of what can be a bad news buy for investors. The bank stock has typically posted strong, consistent gains over the years, and while the headwinds it faces today are concerning, they shouldn’t cripple the business either. Buying on weakness gives investors the opportunity to secure higher-than-normal returns for the stock, while potentially setting themselves up for future gains as the bank strengthens its internal controls and processes and improves its overall operations.
Consider the following before buying shares in Kraft Heinz:
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David Jagielski has no position in the stocks mentioned. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
Would you like to receive a dividend every month? Invest in these 3 high-yield stocks. was originally published by The Motley Fool
