5 Steps To Build A Monthly Dividend Portfolio

A Dividend Portfolio For Monthly Income: Get More Passive Income Today!

building a monthly dividend portfolio

Do you want to know how to build a monthly dividend portfolio?

If you answered yes, you have come to the right place.  So, I’m going to break down the process of how to get monthly dividend checks into 5 easy steps.

5 Steps To Build A Monthly Dividend Portfolio

Here’s a summary of the steps.  It’s your road map for today’s topic on how to get dividends every month.

  1. Identify stocks for your monthly dividend portfolio
  2. Determine the dividend payable date for each stock
  3. Select the stocks for your monthly dividend portfolio
  4. Purchase the stocks you have selected
  5. Smooth your monthly dividends with smart dividend reinvestment

Now, let’s discuss each of these steps so you can build a diversified dividend stock portfolio for regular income.

If you don’t have a lot of money, that’s okay.  I can get you started for about $100.

Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.

1. Identify Stocks For Your Monthly Dividend Portfolio

monthly income portfolio

First of all, you need to find stocks for your monthly dividend portfolio.

You may already have a watch list of dividend stocks you would like to buy.  If not, that’s okay.

Here are a few resources to find dividend-paying stocks. Sourcing them is the first step if you are interested in how to get dividends from stocks.

Use Dividend King and Dividend Aristocrat lists.

Kings have increased their dividends for more than 50 years in a row. While Aristocrats have done so for at least 25 years. And don’t forget about the Dividend Achievers. They are stocks that have increased dividends for 10 years.

The company’s on these lists are impressive, to say the least. But there are more sources where you can find dividend stocks.

Simply Investing.  The Simply Investing Report is a service that provides high-quality dividend stock recommendations.

Read my review of the Simply Investing report right here: Simply Investing report review.

Dividend stock screeners.  Yahoo Finance has a dividend stock screener that I use periodically to generate dividend stock investment ideas.

Dividends Diversify model dividend portfolio.  The Dividends Deluxe model dividend portfolio includes nearly 40 dividends stocks.

Each stock in the portfolio is linked to its most recent dividend stock review.  For our purposes today, I’m going to use stocks from the model dividend portfolio.   In this way, I can show you exactly how to build a regular income from monthly dividends.

Now, let’s move on to step 2 in our quest to build a dividend portfolio for regular income from dividend growth stocks.

2. Determine The Dividend Payable Date For Each Stock

dividend income portfolio

There are several important dates for dividends.  For our purposes today, we only care about the dividend payable date.

In other words, when does the company pay its dividend?  Each company will have a different dividend policy.

For the most part, the timing of dividend payments can be grouped into three main categories. Knowing these categories is important in learning how to get dividends from stocks. Especially if you want dividends every month.

Stocks That Pay Dividends Monthly

Some companies choose to pay dividends every month.

Since we are discussing how to build a monthly dividend portfolio.   What better way than to choose stocks that pay dividends each month?

Well, let me give you a couple of thoughts on this topic. That topic being why monthly dividend stocks may not be the best choice.

First of all, there aren’t a lot of companies that pay monthly dividends.  Furthermore, they tend to be clustered in very few dividend stock market sectors.  Finally, they tend to be a bit riskier.

My favorite company that pays monthly dividends is Realty Income (NYSE: O).  Realty Income is a REIT.  They are appropriately known as the monthly dividend company.

Stocks That Pay Dividends Quarterly

Most companies pay dividends quarterly, or 4 times per year.  This is especially true for companies based in the United States. They are considered quarterly dividend stocks.

Stocks That Pay Dividends Once Or Twice Per Year

Finally, some companies choose to pay dividends twice per year.  And, others choose to pay only once per year.

Companies that pay dividends at these intervals tend to be based outside of the United States.  Most frequently, in Europe or Asia.

Don’t Choose A Stock Based Soley On When It Pays Its Dividend

Here is an important point.  Don’t fall into the trap of picking a dividend stock based only on the month it pays dividends.

There are many things to look at when selecting dividend stocks.  Don’t forget about things like dividend safety and the intrinsic value of the stock when you are ready to purchase. The dividend payable date is just one item to consider.

But, we are trying to build a monthly dividend portfolio for steady dividend income.  So, exactly when a company pays dividends is an important point.

For today’s article, I went through the stocks in the model dividend portfolio.  With one exception, being Realty Income, this dividend portfolio holds quarterly dividend stocks. So, I categorized them based on the months they pay dividends to us.

Stocks That Pay Dividends in January, April, July, And October (Category 1)

Quarterly dividend stocks that usually pay in the 1st month of the quarter:

  • Altria stock
  • ADP
  • Cisco
  • Coca-Cola (a)
  • Genuine Parts
  • Kimberly Clark
  • Medtronic
  • Philip Morris
  • Sysco
  • Walmart (b)

(a) Coca-Cola’s dividend payment pattern is unique for a quarterly dividend stock. It pays dividends in December, April, July, and October. I have included it in this category because it most closely fits this dividend payment pattern.

(b) Walmart’s 3rd and 4th quarter dividends are pulled forward 1 month into June and September.

Stocks That Pay Dividends in February, May, August, And November (Category 2)

Quarterly dividend stocks that pay during the second month of each calendar quarter:

  • Abbott Labs
  • Abbvie
  • Apple
  • AT&T
  • Clorox
  • Hormel Foods
  • Paychex
  • Procter and Gamble
  • Verizon

Stocks That Pay Dividends in March, June, September, And December (Category 3)

Quarterly dividend stocks that pay during the third month of each calendar quarter:

(c) PepsiCo has a unique payment pattern for a quarterly dividend stock. It pays dividends in January, March, June, and September. I have included it in this category because it most closely fits this dividend payment pattern.

To briefly recap, we have identified a watch list of potential dividend stocks.  For each stock, I then determined when they paid dividends.

3. Choose The Stocks For Your Monthly Dividend Portfolio

choose stocks for monthly dividends

Next, we need to decide the best dividend stocks to invest inBut first, let’s step back and think for a moment.

Consider that we started with 38 stocks from my model dividend portfolio.  You may have a similarly large watch list of dividend stocks.

Only 1 of those 38 stocks pays dividends monthly.  All of the others are quarterly dividend stocks. That brings us to an important question…

How Many Stocks Do You Need For Monthly Dividends?

So, how many dividend stocks do you need to own to get paid dividends each month?  The simple answer is 1.

How’s that?  Invest in Realty Income.  The monthly dividend company pays dividends every month.

But buying just 1 dividend stock does not provide enough diversification, in my opinion.  So, do we need to invest in all 38 stocks?  The answer is no.

Owing all 38 stocks may be a great long-term goal.  On the other hand, many of us investors have to start small.

So, a better answer is 3 stocks.  You can build a monthly dividend portfolio with just 3 stocks.  Pick 1 stock from each of the 3 date categories and receive a dividend check every month.

Example Dividend Portfolio For Monthly Income

Let’s work through an example and create a dividend stock portfolio paying monthly dividends.  There is no right or wrong answer on which stocks to pick from the list.  But I suggest that each stock selected is from a different industry for diversification purposes.

So here are 3 stocks I might choose.  And approximately how much 1 share would cost.

That’s a little over $100 in total to start your monthly dividend portfolio.  $101 to be exact.

For that money, you will own a technology company, a telecommunications company, and a company in the retail pharmacy business.

What Will My Monthly Dividend Income Be?

Whether you want a few dollars of dividends per month from your dividend stock portfolio. Or, a much bigger number like $1,000 in monthly dividends. I’m sure you will want to calculate your portfolio’s dividend income.

Here’s how to calculate the monthly dividend income you will receive for 1 share of each stock:

  • Cisco: 1 share x 36 cents per share quarterly dividend
  • AT&T: 1 share x 52 cents per share quarterly dividend
  • Walgreens: 1 share x 47 cents per share quarterly dividend

Below is a table of your monthly dividend income.  I show it assuming you buy 1 share or 10 shares of each stock.

10 shares of each stock will cost about $1,000.  That’s a lot of money.  Don’t let it intimidate you, start small.

Buy 1 share of the first company.  Then add on as money permits and your dividends accumulate.  More on what to do with the monthly dividends you will be receiving in a moment.

Table 1:  Monthly Dividend Portfolio Income

Month1 share10 shares
StockDividendsDividends
Jan-CSCO$.36$3.60
Feb-T$.52$5.20
Mar-WBA$.47$4.70
Apr-CSCO$.36$3.60
May-T$.52$5.20
Jun-WBA$.47$4.70
Jul-CSCO$.36$3.60
Aug-T$.52$5.20
Sep-WBA$.47$4.70
Oct-CSCO$.36$3.60
Nov-T$.52$5.20
Dec-WBA$.47$4.70
Total$5.40$54.00

With more shares, you see how the monthly dividend checks start to flow from a dividend stock portfolio.

Okay now.  You have an organized process to build a dividend portfolio for monthly income.  And know how much dividend income will start rolling in based on the amount of money you will invest in quarterly dividend stocks.

Now it’s time for the fun part.  It’s time to make your investments.

4. Purchase The Stocks For Your Monthly Dividend Portfolio

invest in monthly dividend stocks

The fourth step in how to get dividends from stocks is critical. You won’t make monthly dividends unless you purchase dividend stocks.

Furthermore, to purchase investments for a dividend stock portfolio you need a brokerage account.  It’s important to keep investment costs low. Especially when investing in small amounts.

I trade stocks for free on my smartphone using the Webull app It’s fast, free, and has all the features you need.

For a limited time, Webull is giving away free stock for anyone who opens and funds an account.  Don’t miss out on the free stock. Sign up before the free stock deal ends.

That’s free money to start investing.  Or add to your investments for more dividends.

If you don’t like the stocks Webull gives you for free, sell them.  Then use the cash to buy the dividend stocks you want.  That’s what I did when I opened my account.

This is a great deal and a great app, so don’t miss out on Webull’s limited-time free stock offer.

5. Use Smart Dividend Reinvestment To Increase Your Monthly Dividends

reinvest dividends

Now, it’s time for the fifth and final step in today’s lesson on how to get dividends from stocks. And how to get those dividends every month of the year.

That step being dividend reinvestment. Reinvesting dividends is very important when you want to get the dividend snowball effect working.

You have a couple of options for reinvesting your dividends.

Automate Dividend Reinvestment

First of all, you can automate dividend reinvesting.

What this means is that you tell your brokerage firm to automatically reinvest the dividends paid by a company back into that company’s shares.

Set it up and forget it.  Your monthly cash money from dividends is put back to work in your dividend stocks right away.

On the other hand, investment decisions are taken out of your control.   You may automatically reinvest in shares of an overvalued stock.  Or, a stock you own too much of already.

Manual Lump-Sum Dividend Reinvestment

The second option is to let your dividends accumulate in cash.

Each month put the dividend payments you are making into the dividend stocks of your choice.  Just be sure to choose your investments wisely.  Look for the best value at the time.

As you now know, different stocks pay different dividend amounts in different months.  So, it’s very hard to get the exact same amount of dividends each month from your monthly dividend portfolio.

Even when you go through the process I have reviewed today of carefully selecting quarterly dividend stocks. Based on their dividend payment pattern and dividend payment amounts.

So, I recommend you let the cash coming in from your dividends accumulate in your Webull brokerage account.  Then, reinvest them in stock or stocks that pay dividends in one of your low dividend income months.

This is the manual lump-sum dividend reinvest approach. Following this dividend reinvestment strategy means you can look to invest in dividend stocks to smooth out your monthly dividends.

To make those regular dividend payments as equal as possible for each month of the year. Do this by applying all the tips we have discussed today.

Even more, add some fresh cash from your savings to your monthly dividends received. And make investments more quickly or in larger amounts.

That completes the 5 steps about how to get dividends from stocks. And get those dividends every month. To wrap up, I want to summarize the 5 steps to build a dividend portfolio for monthly income.

Summary:  Building A Monthly Dividend Portfolio For Regular Income

Now you know how to get dividends every month.  The 5 steps to build a monthly dividend portfolio are:

  1. Identify dividend stocks for your monthly dividend portfolio
  2. Determine the dividend payable date for each stock
  3. Select the stocks for your monthly dividend portfolio
  4. Purchase the stocks you have selected
  5. Smooth your monthly dividends through smart dividend reinvestment

Further Reading About Dividend Stock Portfolios And Dividend Stocks

My Favorite Dividend Investing Resources

I own all stocks mentioned in the article.

Disclosure & Disclaimer: I am not a licensed investment adviser, financial adviser, or tax professional. And I am not providing you with individual investment advice, financial guidance, or tax counsel. Furthermore, this website’s only purpose is information & entertainment. And we are not liable for any losses suffered by any party because of information published on this blog.

Start A Dividend Stock Portfolio For Monthly Income Today!

6 thoughts on “5 Steps To Build A Monthly Dividend Portfolio”

  1. Hi Tom,

    Great advice. I’ve started to use a screener to find dividend stocks to buy, especially at lower P/Es. I’m more of a value investor, especially in this market.

    Cheers,
    Miguel

    • Hi Miguel. I think it’s tough to find good value in the market. Economic conditions and earnings seem to be out of sync with stock prices. Tom

  2. Great step by step on how to get monthly dividend income 🙂 I should have added O to my portfolio but never did. Just added a bit more T and WBA recently.

    • Hi GYM. I’ve been hesitant to buy right now. It doesn’t seem like the stock market is reflecting some of the economic realities we are facing. Tom

  3. Hi I did a quick check on your payment dates:
    KO
    12/15/2020
    10/01/2020
    07/01/2020
    04/01/2020
    T
    11/02/2020
    08/03/2020
    05/01/2020
    02/03/2020
    WBA
    12/11/2020
    09/11/2020
    06/12/2020
    03/12/2020

    • Hi Hugo, Thanks for visiting and reading the post in great detail. I appreciate your review on how to build a monthly dividend portfolio. From the quarterly dividend payment information you left, I decided to make an update and enhancement to the article. Mainly since Coke (KO) has an irregular quarterly dividend stock payment pattern as you point out in your comment. So, Coke didn’t fit well with the example I used to build a dividend stock portfolio for monthly income. I decided to replace KO with Cisco (CSCO) in the example. And updated all of the supporting discussion to make the dividend income flow every month. Good luck with your dividend stocks and dividend investing. Come back soon. Thanks again! Tom

Comments are closed.