3 Dividend Stocks to Earn Steady Monthly Income in 2018

Here is how dividend stocks, such as Inter Pipeline Ltd. (TSX:IPL), can help you build a diversified monthly income portfolio in 2018.

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Nothing is certain in life, except for bills and taxes. Investors who have an income portfolio that helps pay monthly bills have a great advantage when compared to those who rely only on a fixed salary and are always living hand to mouth.

Building a portfolio with stocks that pay monthly dividends has other advantages, too. You get better compounding when you get paid dividends every month and re-invest them back to buy more shares.

Once you have decided to set aside your savings to generate passive income, the next step in your journey is to pick some stocks that provide stable monthly income. Here are my top picks for 2018.

Inter Pipeline Ltd. (TSX:IPL) is a Calgary-based energy infrastructure company running a large oil pipeline network, transporting energy products, processing natural gas, and managing bulk storage facilities for liquid energy assets in Europe.

During the recent oil slump, IPL strengthened its position in the industry, acquiring Williams Canada for $1.35 billion. It also plans to build a $1.85 billion polypropylene manufacturing plant by 2021. These growth initiatives have put the company in a position to produce steady cash flows for its investors in the years to come.

IPL generates most of its revenue and cash flows from long-term, fee-based contracts. This certainty in its revenues reduces the company’s exposure to volatile energy prices, making the stock a stable provider of monthly income. The company has hiked its dividend in each of the past four years.

Trading at $27.72 a share, IPL offers an attractive 6% annual dividend yield, which translates into a $0.14-a-share monthly payout.

Shaw Communications Inc.  (TSX:SJR.B)(NYSE:SJR)

Shaw gives nice diversification away from volatile energy stocks. This telecom operator is fast gaining the market share in Canada’s wireless market after it acquired the Freedom Mobile.

Many telecom analysts believe Shaw, a smaller player when compared to the top three operators, will play the role of disruptor, as its management targets to capture at least a quarter of the Canadian wireless market through its Freedom Mobile network.

In the most recent earnings report, Shaw posted robust growth in its wireless segment, adding 41,014 subscribers in the fourth quarter, pushing revenue 16% higher from the business.

Shaw stock offers a 3.96% yearly dividend yield, which translates into a monthly payout of $0.9875 a share.

RioCan Real Estate Investment Trust (TSX:REI.UN) is Canada’s largest REIT with 300 retail properties across Canada. It owns and manages the country’s largest portfolio of shopping centres.

RioCan stock now yields 5.86% on an annual basis, which is close to the best dividend yield on this stock since 2010.

I think this is a good time for investors seeking monthly income to add this top-quality REIT to their portfolios. At a 6% dividend yield, you’ll be getting a monthly distribution of $0.115 a share from a company whose tenants include some of the top retailers in the world.

The bottom line

These three stocks can get you started on building a diversified monthly income portfolio. But as you get serious about earning passive income, you will need to save more and add more top-quality dividend stocks. This is a slow but proven way to earn extra income to help you pay your monthly bills.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Haris Anwar has no position in any stocks mentioned.

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