Passive income is income that requires no work hours. You don’t have to work at all or require little effort to earn money. It is also called progressive passive income.
A monthly dividend is one of the great options for passive income! Dividends are regular payments to the shareholders paid by companies. It’s a portion of profits or reserves, so if the company didn’t make enough money… sometimes there is no dividends payment. But still, it can be your additional passive income (:
If you want to learn how to build a monthly dividend portfolio, you have come to the right place.
How to Create a Monthly Dividend Portfolio Click To Tweet
Disclaimer: I’m not a financial expert. All content provided is for informational purposes only. This post may contain affiliate links, meaning I get a small commission if you decide to make a purchase through my links, at no additional cost to you. Please read my full disclaimer here for more info.
Here is a summary of steps to build a monthly dividend portfolio:
- Find out dividend stocks
- Find out the dividend payable date for each stock
- Pick the stocks for your monthly dividend portfolio
- Purchase the stocks you have picked
- Reinvest dividend to grow
I used Dividend.com and made this dividend calendar.
Note: I picked these 34 dividend stocks for this article, but there are more than 34 dividend stocks on the market. Please do your own research. I just presented the dividend calendar as an example.
Typically, stock dividends are paid quarterly. (Or some of them are anomalies) So, I created 4 different colors of group. If you buy a stock from each color of group, you’ll earn a dividend every month.
Before dive into each color’s dividend stocks, here are two investment vocabulary you must know!
Dividend yield = financial ratio that shows how much a company pays out in dividends each year relative to its stock price.
For example, you’ll earn $30 a year if you invest $1000 with a 3% dividend yield. (1000 x 0.03) You’ll earn $300 a year if you invest $10,000 with a 3% dividend yield. (10000 x 0.03)
Dividend yield changes daily because it is linked to the stock’s price. As the stock rises, the yield drops, and vice versa.
Years of consecutive dividend = Years that company has paid a dividend continuously. It’s like a credit score. For instance, we can trust 50 years of consecutive dividend companies than 1 year of consecutive dividend companies.
Blue group stock dividends paid in January, April, July, October:
- MO: Altria / dividend yield 6.90% / 12 years of consecutive dividend
- PM: Philip Morris / dividend yield 4.93% / 12 years of consecutive dividend
- KMB: Kimberly-Clark / dividend yield 3.51% / 49 years of consecutive dividend
- MRK: Merck & Co. / dividend yield 3.52% / 1 years of consecutive dividend
- CSCO: Cisco Systems / dividend yield 2.81% / 7 years of consecutive dividend
- GPC: Genuine Parts Company / dividend yield 2.47% / 59 years of consecutive dividend
- JPM: JPMorgan Chase / dividend yield 2.17% / 1 years of consecutive dividend
- NKE: Nike / dividend yield 0.77% / 1 years of consecutive dividend
- MDT: Medtronic / dividend yield 1.86% / 44 years of consecutive dividend
Sky Blue group stock dividends paid in February, May, August, November:
- COST: Costco / dividend yield 0.84% / 16 years of consecutive dividend
- PG: Procter & Gamble / dividend yield 2.44% / 59 years of consecutive dividend
- AAPL: Apple Inc. / dividend yield 0.67% / 8 years of consecutive dividend
- ABT: Abbott Labs / dividend yield 1.53% / 49 years of consecutive dividend
- ABBV: AbbVie Inc. / dividend yield 4.42% / 49 years of consecutive dividend
- VZ: Verizon / dividend yield 4.43% / 14 years of consecutive dividend
- MA: Master Card / dividend yield 0.47% / 1 years of consecutive dividend
- T: AT&T / dividend yield 7.09% / 37 years of consecutive dividend
- CAT: Caterpillar Inc. / dividend yield 1.70% / 28 years of consecutive dividend
Orange group stock dividends paid in March, June, September, December:
- XOM: Exxon Mobil / dividend yield 5.76% / 1 years of consecutive dividend
- CVX: Chevron Corp / dividend yield 4.84% / 34 years of consecutive dividend
- JNJ: Johnson & Johnson / dividend yield 2.44% / 59 years of consecutive dividend
- PFE: Pfizer / dividend yield 2.99% / 1 years of consecutive dividend
- DUK: Duke Energy / dividend yield 3.84% / 14 years of consecutive dividend
- SO: Southern Company / dividend yield 4.04% / 19 years of consecutive dividend
- MCD: McDonald’s / dividend yield 2.18% / 45 years of consecutive dividend
- BA: Boeing Co. / dividend yield 3.78% / 0 years of consecutive dividend
- MMM: 3M / dividend yield 2.90% / 59 years of consecutive dividend
- IBM: IBM Corp / dividend yield 4.52% / 21 years of consecutive dividend
- MSFT: Microsoft / dividend yield 0.86% / 11 years of consecutive dividend
- INTC: Intel Corp / dividend yield 2.38% / 1 years of consecutive dividend
Yellow group stock dividends paid anomaly
- PEP: PepsiCo / dividend yield 2.77% / 49 years of consecutive dividend
- KO: Coca-Cola Co. / dividend yield 2.98% / 59 years of consecutive dividend
- WMT: Wal-Mart Stores / dividend yield 1.54% / 45 years of consecutive dividend
- DIS: The Walt Disney Company / dividend yield 1.42% / 0 years of consecutive dividend
How Many Stocks Do You Need for Monthly Dividends?
You can build a monthly dividend portfolio with 3 stocks. Pick 1 stock from each color of group!
Here are some examples:
- MO: Altria / approximately$49.78 per share
- T: AT&T / approximately$29.23 per share
- CVX: Chevron Corp / approximately$107.59 per share
Let’s assume that you purchased 6 shares of Altria, 11 shares of AT&T, and 3 shares of Chevron Corp stocks. It will be a $942.98 investment.
With the $942.98 investment, you’ll earn $5.16 from Altria, $22.88 from AT&T, and $16.08 from Chevron Corp a year. (Total $44.12 a year)
I hope these guides help you build a monthly dividend portfolio! Remember, you still need to pay taxes on the dividend income. And don’t pick a stock based on dividend yield. If the stock price itself dropped, you’ll lose investment money. Moreover, there will be tax for dividends paid from companies outside of the country you live in.
Always do some research before you invest money!
If you want to maintain the same asset allocation for an extended period of time and still expect rewards, no time for building a portfolio, check Bogleheads invest here.