Have you diversified your portfolio to protect yourself from the impact of stock market volatility? Bull markets and bear markets come and go all the time. Stock markets are inherently cyclical, and the upticks and downturns are part of how it all works. However, failing to diversify your investments can entail a greater degree of risk to your capital. All it takes is one big slump to wipe away substantial gains if you do not have a well-balanced portfolio.
Investing in blue-chip stocks is an astute way to hedge against stock market uncertainties. That said, investors seeking regular passive income should also consider making dividend investing a part of their strategies.
The best monthly dividend stocks can continue providing returns through regular distributions. This way, you can count on your holdings to line your account balance with cash, even when share prices go down. Dividend investing can let you continue enjoying some returns while you wait for the dust to settle and for your investments to recover to better valuations.
Here is a duo of monthly dividend stocks you can consider adding to your self-directed portfolio for this purpose.
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Exchange Income
Exchange Income Corp. (TSX: EIF) is a $4 billion market-cap corporation involved in several industries. It has an acquisition-focused approach in primarily two industries: manufacturing, and aerospace, aviation services and equipment. The company invests in well-established companies with solid cash flows in different niche markets.
For investors interested in a monthly income stock, this Winnipeg-based corporation can be a prime investment. While it focuses on niche segments of the market, its business model and focus on high-demand sectors let it generate cash while catering to necessities.
As of this writing, EIF stock trades for $77.71 per share. It offers $0.22 per share each month to investors, translating to a 3.4% annualized dividend yield. EIF can be an excellent holding to consider for passive income in the short-term and substantial long-term growth through capital gains, down the line.
Slate Grocery REIT
Slate Grocery REIT (TSX: SGR.UN) is a retail-focused $858.6 million market-cap Real Estate Investment Trust (REIT). Slate is an open-ended mutual fund trust that acquires, owns, and leases a portfolio of over 110 revenue-generating commercial properties across the US. Its niche is on grocery-anchored commercial real estate properties, and it boasts several well-known properties under its belt, including Meres Town Center, Bloomingdale Plaza, Salerno Village Square, and several more.
It has several of the largest names in the retail sector in its tenant base, effectively offering the promise of reliable and recurring revenues for the trust. In turn, the trust provides regular monthly distributions to its investors, letting them generate income like landlords without the hassle.
As of this writing, Slate Grocery REIT trades for $14.52 per share. It pays investors US$0.072 per share each month, translating to a juicy 8.4% annualized dividend yield. The REIT can be a compelling holding to consider for high-yielding dividends.
Foolish takeaway
Monthly dividend stocks can be an optimal way to keep generating an income, even when markets are down. EIF stock and SGR REIT offer an opportunity to create the foundation of a solid, passive-income-focused portfolio. These stocks also offer growth opportunities that can help you achieve your long-term financial goals.
Building a portfolio of such stocks in a Tax-Free Savings Account (TFSA) can help you enjoy the short- and long-term returns from your investment without incurring taxes on dividends or capital gains.
