Income investors are accustomed to getting paid on a regular schedule, and for most, that’s quarterly. But some stocks on the market can provide more frequent monthly payouts, making them ideal components of a paycheque portfolio.
The more frequent payouts make expenses easier to track, and the payments coincide with monthly bills. Those are just a few of the more obvious benefits of building a paycheque portfolio from a collection of monthly payers.
There’s no shortage of great monthly dividend stocks that can help meet that paycheque portfolio goal.
Here’s a look at two of those options.
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Start your paycheque portfolio with grocery-anchored real estate
The first stock for investors to consider in their paycheque portfolio is Slate Grocery REIT (TSX: SGR.UN). Slate is one of Canada’s REITs with a focus on grocery-anchored properties in the U.S.
Grocers provide an essential service that consumers need regardless of how the market moves. Beyond the grocery-anchor tenants, Slate’s portfolio includes smaller secondary tenants.
These are businesses that offer a similar essential appeal to customers, providing customer traffic. By way of example, that includes restaurants, pharmacies, banks, smaller retail outlets and doctors’ offices.
Turning to income, Slate offers an impressive monthly distribution that carries a yield of 8.9% as of the time of writing.
For prospective investors seeking to build that paycheque portfolio, an investment of $25,000 in Slate will generate approximately $185 each month.
Investors who aren’t ready to draw on that income can choose to reinvest those distributions. When reinvested, those monthly distributions can purchase additional units each month, allowing the income stream to compound over time.
Add some Canadian retail and mixed-use exposure
The second stock to consider in a paycheque portfolio is SmartCentres REIT (TSX: SRU.UN). Unlike Slate’s focus on the U.S. market, SmartCentres owns retail properties in metro markets across Canada.
Those SmartCentres properties are predominantly retail, or more specifically, essential-based retail. This gives the REIT an additional, yet complementary revenue stream for investors to consider. Many of those sites are also anchored by Walmart, furthering that defensive appeal and traffic numbers.
Another key point to note is SmartCentres’ growth. In recent years, the REIT has expanded to properties outside of its retail core. That includes apartments, office space, and self-storage properties.
This gives the REIT an additional, yet complementary revenue stream for investors to consider.
SmartCentres provides investors with a monthly distribution, which, as of the time of writing, works out to a yield of 6.1%. When using the same $25,000 example from above, investors can expect to generate approximately $125 each month from that investment.
And that monthly income can be reinvested to generate several new shares each month.
Build your paycheque portfolio from a recurring income stream
Building that paycheque portfolio requires a recurring flow of investment income. That’s where both Slate and SmartCentres become appealing options to consider.
Both generate ample income, are diversified, and offer some defensive appeal to investors.
Together, they also show how investors can blend a higher-yield holding with a steadier income stock to build a more balanced monthly income stream.
In my opinion, one or both should occupy a small position in a larger, well-diversified portfolio.
Buy them, hold them, and watch your paycheque portfolio grow.
