We all know that great feeling when the cash hits your account on payday. Indeed, it would be nice to position our portfolios in a way such that we’re cut such a nice cheque on top of what’s earned in one’s day job.
Of course, maximizing yield can come with its own fair share of risks. But, at the end of the day, I think that everybody will have a different optimal balance between passive income and growth. In this piece, we’ll have a look at some monthly dividend payers that might be worth exploring for those looking to get paid more often. Of course, if you want something that’s paid monthly, rather than quarterly (that’s more traditional of stocks), you’ve come to the right place.
As always, though, how often a company or exchange-traded fund (ETF) pays distributions or dividends should be secondary to the quality of the actual business or basket of businesses you’ll be buying. Value is number one, and something like yield ought to come after. In any case, this piece will look at monthly payers with generous payouts that might be a great fit for the income-savvy.
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Exchange Income Corp.
There isn’t a whole lot of selection when it comes to monthly-paying TSX stocks. But one name that stands out, at least in my view, is Exchange Income Corp. (TSX: EIF). It’s a fantastic performer of late, soaring more than 117% in the past year or about 175% in the last two years. Indeed, monthly payouts are standard (2.23% dividend yield at the time of this writing).
But with shares of the merger and acquisition-focused aerospace and aviation firm recently going parabolic, I’d be a bit more cautious about loading up all in one go. The yield isn’t as high as it used to be, and while the firm is firing on all cylinders, I just can’t say I’m in a rush to buy at over 35.0 times trailing price-to-earnings (P/E).
With a robust first quarter in the books and plenty of growth runway, though, perhaps it’ll be tough to find an attractive entry point into a company that’s really impressed of late.
Hamilton Enhanced Canadian Covered Call ETF
For investors who would prefer a basket of stocks, Hamilton Enhanced Canadian Covered Call ETF (TSX: HDIV) might be a great fit.
With a yield of around 9.8%, a covered call strategy, which trades off capital upside for premium income (that’s on top of dividends paid by holdings), and the big kicker, which is 25% of cash leverage, HDIV is a unique option for investors who want a bigger dose of monthly passive income and are willing to take on a bit more risk while paying a slightly higher management expense ratio to incorporate an intriguing income-boosting strategy.
It’s a tactical income play, to say the least, but nonetheless, one that might be worth exploring. In short, it’s growthier than your run-of-the-mill covered call ETF, thanks to the cash leverage. It all comes down to investor priorities. For those who just have to have a monthly income and are comfortable taking a bigger plunge on the way down, given how leverage cuts (even modest amounts) both ways, HDIV might be worth watching. I’m not the biggest fan of cash leverage, but modest amounts, like 25%, I think, can be managed by investors, given the extra jolt in bull markets. Just be ready for a wilder ride once the next big dip happens!
