Last month I posted about a monthly dividend income portfolio using 25 of the top strongest stocks from VDIGX. These stocks included strong mature companies that pay a quarterly dividend. In that post I used Excel Solver to find the optimal allocation of shares in order to achieve a monthly dividend income of $2,000 per month.
This month I decided to create a new portfolio using only stocks that pay a monthly dividend instead of quarterly.
Monthly Dividend Income Stocks
I did a quick Google search and found this post for monthly dividend income paying stocks with high dividend yields. I picked out 20 stocks from this article and built a portfolio out of it. Since these are high-yield dividend stocks, I need to make a disclaimer that these tend to be a little more risky.
With these 20 stocks, I used Excel Solver to determine how many shares of each stock I need to buy in order to meet my objectives. This time, the objective is to earn $1,000 per month in dividends instead of $2,000. But you can easily scale out the results by doubling the number of stocks you need to buy.
The 20 Monthly Dividend Income Stocks
The 20 stocks I picked out to put into the monthly dividend income portfolio are:
- AGNC Investment Corp (AGNC)
- Capitala Finance Corp (CPTA)
- EPR Properties (EPR)
- Gladstone Investment Corporation (GAIN)
- Gladtone Capital Corporation (GLAD)
- Global Net Lease Inc (GNL)
- Harvest Capital Credit Corp (HCAP)
- Gladstone Land Corp (LAND)
- LTC Properties Inc (LTC)
- Main Street Capital Corporation (MAIN)
- Realty Income Corp (O)
- Omaga Healthcare Investors Inc (OHI)
- Orchid Island Capital Inc (ORC)
- Pembina Pipeline Corp (PBA)
- Prospect Capital Corporation (PSEC)
- Sabine Royalty Trust (SBR)
- Shaw Communications Inc (SJR)
- Stag Industrial Inc (STAG)
- Vermillion Energy Inc (VET)
- Whitestone REIT (WSR)
I added an additional constraint this time to the Excel Solver algorithm. The new constraint makes it so that no one stock is greater than 7% of the whole portfolio.
This to mitigate the problem where Excel picks the 1 stock that has the highest monthly dividend income and allocates 100% of the portfolio into that stock.
In additional to that, I modified the old constraint to now have the stocks produce a monthly dividend income of $1,000 instead of $2,000. I also kept the original constraint where each stock must have at least 1 share allocated.
After running Excel Solver, the resulting portfolio was:
Based on these number of shares, the cost to implement the portfolio at current market prices is $155,655.86.
So if your goal is to earn $1,000 in monthly dividend income, you can invest $155,655.86 following this model. However, there is no guarantee that these companies will maintain their current dividend payments. Some might increase their payout and some might decrease.
There are a lot of high-dividend yield stocks in this list and I’m personally am cautious about investing too much into them. My favorite monthly dividend income stock is still Realty Income so I’m glad that stock was in this portfolio.
If you invested $155,655 and built this portfolio now, it would take about 156 months to recoup all your money. Which means that it’ll take more than 10 years.
However, lots of these companies have had dividend increases according to their dividend history on Nasdaq. So ultimately, the time frame will probably be less than 10 years.
Additionally, you probably will only be earning exactly $1,000 per month during this year. Since some companies have a history of increase their dividend payouts, this means next year your monthly dividend income will change.
So hopefully, the dividend increases will outweigh annual inflation.
Here is the link to download the Excel file I used for this simulation: Download Here