Using Dividend Paying Stocks to Create Monthly Income

If you are trying to live off of your investments, you might want to try to have some new income coming in each month, rather than once a year or once every quarter. CPP, OAS, GIS, most annuities and most pensions pay monthly. It’s also possible to have some of the income from your investments pay monthly.

Canadian Dividend Stocks that pay a Monthly Distribution


Many of the stocks that pay a dividend or distribution monthly are targeting the needs of people requiring a monthly income. They are often stocks that don’t offer huge potential to increase in capital value, but which can provide a steady, modest profit.

The industries these companies are in can vary widely.

Diversifying a Canadian Monthly Dividend Stock Portfolio

Movies
Cineplex (CGX) is a Canadian stock that pays a monthly dividend. As you may know, it is a company that owns and runs movie theatres. From their own website, Cineplex Entertainment says their theatre brands include Cinema City, Cineplex Odeon, Coliseum, Colossus, Famous Players, Galaxy, ScotiaBank Theatres, and Silver City. They also offer online movie sales and other products.

Many investing websites claim that people keep going to the movies even when the economy is poor. I’m not sure whether that is true, or whether “past performance is any guarantee of future performance” but it’s an interesting theory.

Uniforms
K-Bro Linen Systems (KBL) is another Canadian stock that pays a monthly dividend. This is one of those companies that keeps beavering away behind the scenes without most of us noticing them. They provide, wash and deliver linens including uniforms to many businesses across Canada. They started as a diaper washing service. Now they provide clean uniforms and bed linens to many major hospitals and other industries.

The price of a K-Bro share has increased rather dramatically in the past two years, I’m pleased to say. That could mean that they will continue to climb, flatten out, or tumble dramatically. That’s the problem with the stock market: no one will guarantee me what will happen next!

However, in theory, people should continue to need clean uniforms and linens no matter which way the economy goes. In reality, someone might invent a new cleaning technology and wipe out the entire industry in weeks. After all, how many diapers did you send out to get cleaned during the past ten years?

So I’m not saying buy KBL. I’m just stating a fact: it pays a nice monthly dividend. And it’s in quite a different area of business than Cineplex.

Mortgages
Firm Capital Mortgage Investment (FC) is yet another Canadian stock that pays a monthly distribution. At this time, it pays interest, not a dividend. According to their company website, Firm Capital “is a non-bank lender providing residential and commercial real estate finance.”

You’d have to look at the details on the company to see if you think their strategy is sound and whether it meets your ethical criteria. And, as anyone who invested in US real estate in the 2000s knows, supplying mortgages can be a risky business. Don’t buy shares in FC without investigating it yourself and understanding the risks.

UPDATE: Also be aware that as interest rates start to climb, companies that deal in mortgages may drop in value for reasons I don’t fully understand but which I have read more knowledgeable analysts talk about. Do your research!

Fast Food
Several of the fast food businesses are available as stocks that pay monthly distributions. These payments may be dividends, non-eligible dividends, interest or return of capital. You have to check the details before deciding if the investment is a good fit for you.

One example is A&W. Yes, shares in the root beer and burger chain are sold on the TSX under the symbol AW.UN. Distributions are paid monthly.

You have to decide for yourself whether they are financially stable and whether selling fast food which could potentially be unhealthy is ethically acceptable to you. I’m just saying the shares are out there.

Movies, linens, mortgages and fast food. While I’m sure these all tie together somehow, they are not 4 stocks in the exact same category of business. So as you can see, you can diversity your holdings into various parts of the market, while still earning a monthly income.

Disclaimer
I’m not saying “buy these stocks.” I’m just saying these are examples of Canadian stocks that pay monthly distributions. Do your research, or hire someone trustworthy to do it for you. I just want you to know there are choices out there that may meet your needs nicely.

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Do you have a favourite Canadian (or American!) stock that pays a monthly distribution? Please share your experiences with a comment.

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