Stocks of companies that pay shareholders a regular, monthly dividend distribution can be a great option for investors relying on the yield from their portfolios to support their everyday living expenses, like retirees.
Great news then, is that these two stocks not only pay their shareholders a monthly distribution, but additionally yield 8.62% and 12.92% on an annual basis, meaning that those monthly distributions stand to be a meaning dollar amount, based on an initial investment of $10,000 or more.
Chemtrade Logistics Income Fund (TSX:CHE.UN) is an investment I’m really interested in these days for a number of reasons.
Obviously we could look to the stock’s current dividend yield — just under 13% annually is a big reason to get excited — but it’s important to note that sometimes high dividend yields can be misleading if they aren’t well supported by a company’s underlying cash flows and earnings.
Yet here in the case of CHE stock, that scenario doesn’t appear to be as much of a risk.
In its first-quarter reporting, management updated its guidance for 2019, which, if it can deliver on its promises, makes it appear as though the current $1.20 annual distribution ($0.10 per month) looks safe for now.
CHE also happens to be a stock that’s been deeply oversold by the market — a factor that can oftentimes lead to above-average returns as well.
But beyond the allure of AD’s 8.62% dividend yield backed by a relatively conservative payout ratio of less than 80% I find Alaris unique business model to be truly fascinating.
That’s because rather than manufacture a product or deliver a service to its customers, what AD does is basically find companies to invest in, take an ownership stake in those companies, and then distribute a share of its earnings in those companies as dividends to its own shareholders.
Essentially, it resembles a “funds of funds” so to speak, but without the egregious performance fees and lockup periods that are frequently employed by highly paid alternative asset managers.
In addition, Alaris is currently trading at a trailing price-to-earnings yield of less than 10 times its last year’s earnings, meaning that not only does the current dividend look attractive at current levels, but the entire company as a whole looks as though its “on sale” at the moment.
Foolish bottom line
Not only do these two stocks pay out consistent monthly dividend distributions that can help with budgeting for monthly household expenditures, but they are also offering yields right now that are considerably above the market average.
Investors, particularly retirees and those living off fixed incomes, may want to give these two companies a hard look for consideration in their individual savings accounts.
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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 Jason Phillips has no position in any of the stocks mentioned. Alaris Royalty Corp. is a recommendation of Dividend Investor Canada.