This 9.44% Dividend Stock Pays Cash Every Single Month

Sure, monthly dividend stocks are great. But what if you can get some of the best dividend stocks out there from one ETF and still get payouts monthly?

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 18, 2024 4:20 pm EST

Investing in monthly dividend stocks has long been a popular strategy for those seeking consistent income. Imagine having a reliable source of income flowing into your account every month. It’s like a financial cushion that offers comfort and stability. Yet, while monthly dividend stocks are a fantastic tool, there’s an even better option for those who want to combine convenience, diversification, and high yield: monthly dividend exchange-traded funds (ETFs).

Paper Canadian currency of various denominations — Source: Getty Images

Why these work

Monthly dividend ETFs take the best features of dividend-paying stocks and wrap them in a neat package of diversification. By investing in an ETF, you aren’t tied to the fortunes of a single dividend stock. Instead, your investment is spread across a basket of stocks, meaning the risk of any one company cutting its dividend is mitigated. This diversification is especially appealing to income investors who want to avoid the hassle of monitoring individual stocks. Monthly dividend ETFs are professionally managed, giving you peace of mind while you focus on other priorities.

Enter Harvest Diversified Monthly Income ETF (TSX: HDIF), one of the most compelling options in the Canadian market. HDIF is a standout because it doesn’t just hold stocks. It’s a fund of funds, meaning it holds other ETFs that generate high monthly income. This strategy amplifies diversification while employing covered call strategies, which enhance income potential. In simpler terms, HDIF combines an array of income-generating ETFs under one roof and uses sophisticated strategies to boost your monthly payouts.

Let’s dive into the details of HDIF. As of today, HDIF is trading at $8.92 per unit, offering an attractive yield of approximately 9.44%. With such a high yield, you’re looking at serious cash flow for your portfolio. The dividend stock has delivered a strong performance this year, with a year-to-date total return of 22.18%. Over the past year, it has returned an impressive 27.20%, highlighting its ability to weather market fluctuations while delivering consistent payouts.

Buying HDIF

The portfolio composition of HDIF is a key factor behind its success. Its top holdings include the Harvest Brand Leaders Plus Income ETF, Harvest Equal Weight Global Utilities Income ETF, and Harvest Healthcare Leaders Income ETF, among others. Each of these ETFs employs covered call strategies to enhance income, and their combined sectors include technology, financial services, healthcare, and utilities. This diverse allocation ensures HDIF is not overly reliant on any single industry, spreading risk and tapping into multiple growth areas.

Looking forward, the outlook for HDIF remains bright. Its diversified portfolio and income-focused strategies position it well for the future. Covered call strategies, a cornerstone of HDIF’s approach, are particularly effective in volatile markets, as they generate income even when stock prices are flat or declining. With a range of underlying ETFs targeting different sectors, HDIF is well-equipped to adapt to shifting market dynamics, providing both growth and income opportunities for investors.

For those seeking monthly income, HDIF offers a hassle-free solution instead of manually picking individual dividend stocks. This requires research and ongoing monitoring, so HDIF simplifies the process. It’s an excellent choice for anyone who values diversification, professional management, and consistent income. Whether you’re looking to supplement your retirement income, reinvest dividends, or simply enjoy a steady cash flow, HDIF ticks all the right boxes.

Bottom line

While monthly dividend stocks are great for generating income, monthly dividend ETFs like HDIF elevate the experience to a whole new level. They provide diversification, mitigate risks, and offer the convenience of professional management, all while delivering attractive yields. With its strong track record, diversified holdings, and high monthly payouts, HDIF stands out as a perfect option for income-focused investors. If you’re ready to turn your portfolio into a reliable income engine, HDIF might just be your ideal co-pilot.