Monthly Dividends

Looking forward to the year ahead, I have summarized my expected dividend payments and put it together in a nice, motivational format. What do I mean by that? Being a numbers guy, I crunched the numbers. Let me summarize the highlights:

On average, I will receive 8 dividend payments per month. 3 of those are coming from monthly dividend-paying companies. 5 are from quarterly, semi-annual or annually paying corporations.

This also means that, on average, I receive a dividend payment every 4 days. In reality though, due to the payment structure of most companies, it’s rather every 2 weeks.

The total expected dividend growth for the year 2020 is anywhere between 15% (conservative assumption) to 40% (optimistic assumption). I put the pessimistic one in my budget first, better to be positively surprised later.

My annual yield on the currently invested amount will come up to 4,53% – after taxes. This might go down if I add more capital to the portfolio, and it will increase if my dividend estimates should move higher than expected. As I do have some plans to balance my portfolio and to do some adjustments, I am pretty confident that my dividend yield might reach over 5% by the end of 2020.

Compounding interests and monthly dividends

Now, in the 4th year of investing, I start to see and feel the power of compound interests. It’s just growing. Some shares rise, some fall. But the more I diversify, the more the portfolio can balance and bounce in the right direction.

And then, all paid-out dividends are being re-invested and create just more income.

This becomes especially obvious with companies that pay monthly dividends. These few cents, that come up on top every few months when I re-invest into an existing or in a new position, really start adding up.

By 2021, and with adding 3 more monthly dividend payers, I should receive a dividend payment every 3 days. Every single one of these dividends will be, on average, a double-digit one, enough to potentially cover all my regular daily and monthly expenses. Even without living too frugally.

Not enough yet to cover the rent, but enough for everything else.
A major step closer to FIRE.

The markets are not ready to stop

Of course, this is also due to the fact that we have a robust economy and the Wall Street party didn’t stop yet. Most experts out there and I, don’t think that there is a high risk of recession in the US at the moment.

But at the same time, I am hesitant to deploy more cash into US-Dollar-based companies. There are just too many uncertainties with the impeachment, the drama with Iran and the rising tensions with China and Russia to keep a very high level of confidence.

So instead, and with the exception of the 3 monthly dividend payers, I will go for European stocks. Mainly the UK and the Netherlands, as many of them pay quarterly dividends. Regarding the UK, I have the suspicion that BREXIT might turn out not as bad as expected, which would push the British Pound back on track. The UK also doesn’t have a withholding tax on dividends, which is a great bonus.

The Netherlands charge me a 15% withholding tax, but it’s still moderate and given the highly innovative nature and sharp business acumen of this small but scenic country, I see some opportunities to invest there.

The 3 monthly dividend payers that I am looking at are by the way the following ones:

  • STAG Industrial (STAG)
  • Gladstone Commercial Corporation (GOOD)
  • Realty Income (O)

Disclosure: This article may feel, sound and be interpreted as financial advice, but it’s not. Investors are required to do their own due diligence, and accept risks that are associated with stocks and market investments.

Planning the next year

Today is the last day of the first week of December and it’s about time to get serious about the plan for 2020. I have spent some sleepless nights on reviewing my personal budget for the next year, adjusting savings targets, expenses and thinking about upcoming opportunities.

Health

For 2020, I target a savings rate of “only” around 30% of my regular work income. This doesn’t include my other income sources from investments and dividends. The target is set lower than in previous years because I want to allocate some resources in the next year into another important asset which doesn’t generate income per se: Health.

Full body check-ups for the whole family, dental treatments, scans and whatever should come up that is better fixed earlier than later. Human bodies are not meant to last. We require maintenance like every other machine out there and every once in awhile a check-up and some preventive maintenance are required.

Passive Income

I will spend the next few evenings to make the first projection for my dividend income for the next year. I think it should reach a growth rate of 30-40% and thus reach about a third of my final target which would make me fully financially independent. Not rich, but independent.

It’s amazing to observe how the speed of growth is accelerating now just after 4 years of consistent savings and investments. The first two years were pretty slow, but in 2020 I will have a 3-digit passive income every single month of the year, and given the speed of growth, in 2-3 years it should get to 4 digits.

Travel

But all this would be pointless without some fun along the way. Therefore, while I was never able to afford it when I was younger, I am now planning a trip with my family to Disneyland Tokyo sometime in March. I promised my wife a trip to Japan almost 6 years ago and I just can’t delay it any longer. The vacation has been already approved by my employer and I am going to purchase the tickets today or tomorrow. We will plan 4-5 days for Tokio, 4 days for Kyoto and 4-5 days for the area around Fukuoka/Kyushu.

A little later on in June we will visit Europe. I didn’t start planning for that trip yet, because while this will be vacations, I have to discuss with my wife about the destinations in detail. We are seriously considering moving to Europe in 2021 or 2022 and plan to visit countries that may offer the best opportunities for us to do so. My wife worries about food and schools, I worry about taxes. So obviously we are not perfectly aligned yet.

Hard to believe that only 24 days from now it will be the year 2020…

How to prepare for a market crash

The stock market has been going up for quite some time now, and every now and then we can read about some market analysts predicting the next crash or crisis. The common consensus is that it’s not whether a market crash will happen, but only when it will happen. And I fully agree. It would be foolish to think that markets can only go up. Someday, something will happen that will send share prices to rock bottom.

How investors can prepare for a market crash

And yet, every long-term investor out there will tell you the same thing: Staying in the market is the only right choice. Peter Lynch comes to mind with his fairly accurate quote that “far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

Yet this doesn’t mean that there is nothing that could or should be done. And in my case, I follow the strategy of long-term focused investors. I invest in dividend-paying companies. Especially in those which have a track record of paying out dividends even when a recession hits their profits.

The rationale behind it is two-fold.

For one, I want to make sure to have a steady cash-flow coming in, no matter what happens around the world. Those companies that not only survived the financial crisis back in 2007 and 2008 but also managed to keep or even to increase their dividends are great picks in my view.

In my personal portfolio, this would be companies like AT&T (T), Royal Dutch Shell (RDSB), AbbVie (ABBV), or GlaxoSmithKline (GSK). Other reliable candidates are the likes of Starbucks (SBUX), Apple (AAPL), Imperial Brands (IMBBF), Vodafone (VOD), E.On (EONGY).

Communications, Utilities, Medical, and Consumer stocks have proven reliable partners over the years to keep generating cash-flows no matter what. This kind of companies are called SWANs, because they let investors Sleep Well At Night.

Secondly, having a steady and continuous cash-flow allows an investor to take advantage of market corrections. While others might sweat and crumble watching their portfolio value crashing down, investors with large passive income from dividends get into the unique position of having the opportunity to buy company shares at rock-bottom prices. Following Warren Buffetts mantra of “being greedy when others are fearful”, this strategy has proven to provide outstanding results in the long-run.

Not giving into emotions

All this is easier said than done. And yes, I have been there. On a few occasions, I have watched some of my shares dropping as much as 70% or even 80%. When the value of your portfolio drops down from 50.000 Euros to be only 10.000 Euros – it really does hurt.

You can’t sleep. You get nervous, you get easy to panic and it seems that you get constantly into a bad mood.

This has completely changed since I started to focus on dividend-paying stocks. While I still have some shares that are rather speculative and pay none or very tiny dividends, the majority of my investments are in those stable and long-term focused business models.

Stable investments help us to keep our emotions in check and thus to make smarter decisions. And in the long-run, there is no smarter financial decision than to be invested.

Disclosure: I own shares of all the companies mentioned in this article.

What to do with your Christmas bonus?

I am sitting at Starbucks (SBUX) and listening to some old Christmas jingles. Yes, even the Starbucks in Thailand is playing American jingles as Christmas is drawing near.

For many hard-working employees out there, this time of the year is not only an opportunity to spend some days with friends, family and to eat more than we usually do. It’s also the time when many employers pay a Christmas bonus. And the big questions is: What to do with it?

I know Apple (AAPL) got the new iPhone out and the Camera is really great. Plenty of people seem to think so because it’s constantly sold out in all the shops around here. I pre-ordered my iPhone 11Pro and just got it a week ago. It is awesome. It is also very expensive. So the question is, should you really spend so much money, or is there a better way?

Buying without spending

Me buying the iPhone was not a spontaneous decision. I was using my iPhone 6s for almost 5 years now and it was simply time. However, I also didn’t pay for it in a lump sum.

I got it with a 1-year contract which reduced my purchasing price by around 6.000 THB, almost 180 Euros. Then I put it on my credit card to collect cash-back-points and turned the total amount into an installment plan for 6 months. It will now cost me roughly 150 Euros a month, 6 months long, at a 0,79% interest rate – and it will be covered entirely by the dividends from my investments which I receive monthly.

So in the end, I didn’t even touch any of my cash to get it, and I will enjoy the benefits of the phone hopefully for another 5 years.

As for the Christmas money, well, I don’t get any. There is no such thing in Thailand. However, IF I would work in a place where a Christmas bonus is a thing, I would have done exactly the same. And the Christmas money would go straight in my investment account.

Conscious spending

There are many ways how we can get great things without actually spending money on them. A little preparation, creativity, and thinking. That’s all it takes.

And if you don’t receive monthly dividends just yet, then, even more, you should start investing now. The sooner you can start receiving and/or increase your passive income, the more money you will have left to keep increasing your assets and preparing for a worry-free future.

Disclosure: I have shares of Apple.

Why investing in Pharma makes sense

Today, let me dive a little into the topic of income-investment and why I believe that every income-focused investor should have some pharma stocks in his or her portfolio.

As my readers know, my goal is to escape the rat race with the help of investments in the stock market. With my eyes targeting financial independence, having a passive stream of income is crucial. One way to get it is to invest in dividend-paying companies. The strategy is called income-investing and it is a reliable strategy of building up passive income, large enough to be able paying bills (and more) once the decision to retire has been made.

When it comes to income-investing ideas, how to pick a stock, and what one needs to be aware of, the pharma industry emerges quickly as a good direction to look at.

Profits for years to come

My personal portfolio contains shares of two pharmaceutical companies: AbbVie (ABBV) and GlaxoSmithKline (GSK). They are not THE biggest in the industry, but large enough to reward their shareholders with frequent dividends for many years now. And chances are good that this won’t change anytime soon.

Big Pharma is a term that is being used in a mostly negative manner. Overcharging customers, abusing their power, and either way, health should be free for all, shouldn’t it? Maybe. Maybe not. But what is pretty certain is that this industry has a tremendous cash-flow that is only increasing with a growing and ageing population.

People get sick. It’s how humans work. We get sick, we get better. For most of the time anyway. But the part of getting better for most of the time involves medications, treatments, surgeries, vaccines, anti-biotics, hospital stays. It’s a never-ending battle that will always require someone to develop, produce and distribute all those essential products that help us to have a long and healthy life.

They can do what no one else can

Some people may think that supporting Big Pharma can’t be the only way to get things done. Some smaller companies should be able to pull it off as well, right? Research, development, production, distribution. Well, the bad news is, that smaller companies simply can’t do all this. And even if they try to share the work process with other companies, chances are that they either fail or can’t make enough profit for a sustainable contribution.

There was a recent story about a company called Achaogen that comes to my mind. The company was working on a new type of antibiotics. The scientists and researchers were looking for a way to develop a new type of antibiotics, as the currently widely available versions are becoming increasingly less effective. They were largely successful in the beginning but failed after a very short time in operation. The business was just not profitable enough to sustain.

This case highlights the need for some for really large economies of scale, cross-incentives among products, and distribution scale that a small company simply can’t sustain. And we are talking only about antibiotics. How about those much larger and even more cost-intensive projects. Cancer, HIV, dementia. There are so many challenges in front of us. They require the right people, with the right education and research experience, the right equipment, sufficient funding, the right connections for distribution and the stamina to dive through ups and downs of the world without going bankrupt.

Bill Gates, for example, is working closely with many companies including GlaxoSmithKline through his Gates Foundation. When asked about the reason for this collaboration instead of just using his immense wealth to simply find solutions on his own, he said it very simply: These companies can do things that no one else can do.

This is a powerful statement for any investor out there. It says that, to a large part, there are not many alternatives. That’s a big moat to cross and perfect protection for any long-term investor.

The risks are limited

Unsurprisingly, AbbVie and GlaxoSmithKline are both considered to be rewarding long-term investments for income investors not only by me but by pretty much every analyst out there. The combination of the long-term focus, available resources, knowledge and power of distribution, together with a reliable and stable cash-flow give pharma companies excellent risk/reward ratios.

Some analysts point out that the big cash-cows might at some point disappear, especially when cheaper alternatives come to market. When patents run out. When the competition catches up. These concerns are legit. It will happen. But unlike some electronic toys or tools, health is a different story with plenty of areas that are still under development and which are almost impossible to copy in a simple and cost-efficient process. The electronic cycle for product improvement is only roughly 1 year and has very limited regulations in place. Health related products take 10-15 years to develop and are subjected to heavy approval processes and regulations. This will always keep the competition at pace, even if some profit margins might occasionally suffer or take a blow.

Disclosure: I own all stocks mentioned in this article.

Dividends are everyones friends

I am a strong promoter of companies that benefit shareholders by distributing dividends. While many companies refuse to do so in order to keep the cash for future investments, I believe that since a shareholder carries risk in regards to the companies success, he or she should also reap a reward from his investment and participate in the companies profits.

There is obviously no guarantee for any company to generate profits for a lifetime, but there are companies that have paid dividends and rewarded their shareholders in a very reliable manner.

Dividend Kings and Dividend Aristocrats

The terms Dividend Kings and Dividend Aristocrats are being associated with companies that have not only distributed dividends for 50 or 25 years respectively without a single interruption. They also have never lowered the dividend payout but increased it every single year.

For investors who are looking for a regular income to receive out of their investments, these are the stocks that might be the most attractive ones to look at, as they earned a status that promises a relatively secure financial future. A promise of paying out dividends for as long as one stays invested.

Compounding dividends

This is not only tempting for retirement investors who are looking to secure their nest egg while continue generating a steady cash-flow. It is even more interesting to young investors who possess two important traits: Time and patience. The magic words that come into play here are “compounding dividends”.

Stocks that generate regularly increasing income do not only secure a return on your investment. But given enough time, they might easily outgrow it by ridiculous amounts. How is this possible?

For these companies, revenue and profit growth lead to dividend increases. If a company can grow its dividend by 10% year on year, it will almost double it’s dividend payouts within 6 years.

So for example, if you buy now shares of AT&T (the biggest telecom provider in the US) which yield 5.8% at the time of writing this article, and AT&T would increase its dividend by 10% year on year, then over the next 6 years your return on investment would grow year on year and reach a return of over 11% by 2025. This would look like this:

2019 = 5.80 %
2020 = 6.38 %
2021 = 7.02 %
2022 = 7.72 %
2023 = 8.49 %
2024 = 9.34 %
2025 = 10.27 %
2026 = 11.30 %

The power of time and patience

So just imagine how this will play out if you keep holding the stock for another 30 years. At some point, your yield on investment might actually outgrow your initial investment. Every. Single. Year. Ridiculous? Crazy? Impossible? Not at all. Let me bring up the greatest investor of all times: Mr Warren Buffet.

One of the largest investments in his lifetime was to put money into Coca Cola. Not only did the value of the company shares appreciate over his lifetime but so did the dividends. From what I was reading, his annual dividends on Coca Cola offer a yield on cost of anything between 40-55% – depending on which source you follow.

Just think of it: You put 100.000$ in a company and given enough time it will return to you between 40.000-55.000$ – every single year. And not only that, but it keeps growing and you don’t need to lift a finger.

The astonishing thing is that Coca Cola and AT&T are not the only examples out there. As of the time of writing, the 2019 list of Dividends Kings has these companies on it:

  • Amer. States Water(AWR)
  • Dover (DOV)
  • Northwest Nat. (NWN)
  • Emerson Electric (EMR)
  • Genuine Parts (GPC)
  • Procter & Gamble (PG)
  • Parker Hannifin (PH)
  • 3M (MMM)
  • Cincinnati Fin. (CINF)
  • Johnson &Johnson (JNJ)
  • Coca-Cola (KO)
  • Lancaster Colony (LANC)
  • Lowe’s (LOW)
  • Colgate-Palmolive (CL)
  • Nordson (NDSN)
  • F & M Bank (FMCB)
  • Tootsie Roll Industries (TR)
  • Hormel Foods (HRL)
  • ABM Industries (ABM)
  • California Water Services (CWT)
  • Federal Realty Inv. Trust (FRT)
  • Stepan (SCL)
  • SJW Group (SJW)
  • Stanley Black & Decker (SWK)
  • Target (TGT)
  • Commerce Bancshares (CHSH)

Personally, I haven’t bought a single Dividend King stock yet. I have two current Dividend Aristocrats in my portfolio, namely AT&T (T) and AbbVie (ABBV). And I am purchasing stocks that I expect to become a Dividend Aristocrat at some point in the future. Apple (AAPL) is such a company as is Starbucks (SBUX) which I also both owe.

Over the next two years, I am planning to purchase several of the official Dividend Aristocrats and to add them to my portfolio. I am currently looking at 3M, Coca Cola,  and Target and will probably purchase some shares within this or during the first quarter of the next year.

I am not entirely focused on dividends only, but having a good mix of shares that offer great potential for growth as well as companies that will secure me a steady cash-flow and grow it year on year is a pretty great combination. Dividends can be an investor’s best friend as they create exactly what every FIRE aspirant is looking for: A steadily growing passive income.

Disclosure: I own shares of AT&T, AbbVie, Apple and Starbucks. 

What I will do when the markets crash

The stock market is pretty rough for a couple of weeks now. Some people predict the next financial crisis. Others think it’s just a correction. And then you have all the doom scenarios out there, putting our entire financial system in question.

The truth is, I have no clue what is going to happen. No one has. Whatever happens, there will be someone out there who “predicted” it right. He or she is going to catch some glory and probably write a book or come up in some magazines and newspapers as the next Costolany. I mean even now some of the doom scenarios are being presented by “the one who accurately predicted the 2007 / 2008 crisis.” Yes of course. Somebody got to be right.

Either way, it really doesn’t change my strategy much. Because in the long run, all those ups and downs simply don’t matter. So I keep being invested – in full.

What I did recently though is to put my ETF saving plans on hold. I decided that I will save up my monthly dividends for the time being and try to amass a cash position of around 20% of my portfolio. I will then try to keep a cash-float or approx. 10-20% at all times, so if any of my nice dividend payers comes down too strong, I will be in the immediate position to buy more shares. Cost-averaging down and increasing my dividend yield on cost and cash-flow.

Which companies I am looking at in particular? One company is Shell. Royal Dutch Shell. The shares are down 16% from my last purchase and with a dividend yield of over 6,6% it’s a screaming buy. Yes, there are reasons for the shares price to have dropped, but get this: This company have never missed a dividend payment since WW2.

The German chemistry giant BASF expects drops in profits with the on-going China tensions. And yet the company has reaffirmed investors that the dividend will neither be revoked nor will it be cut.

On the healthcare front, we have GlaxoSmithKline (GSK) and AbbVie, shining through my Numbers (the mac version of Excel) sheet with great dividend yields. And while both companies have their problems, we can surely rely on people needing medicine for the foreseeable future.

Real Estate is usually a good market to be in when regular companies face challenging times. So it only makes sense that I also look at some REITs. Iron Mountain and Ladder Corp. offer great yields and remained very stable during the recent turmoils.

To sum up, I am not ignorant enough to pretend that the markets wouldn’t signal tough times ahead. But again, history gave us great lessons, and while history doesn’t necessarily repeat itself, the odds are in favour of those who invest. It’s usually specifically those tough times that offer the greatest opportunities.

4 Reasons not to invest – Having no money

A majority of people out there thinks that investing is not for everyone. A recent survey by Blackrock revealed some critical reasons across generations, and as for why people would postpone or even not consider to invest at all. My previous post was about the no. 1 topic from that list, the access to and understanding of financial information:

  1. Access to and understanding of information about investing
  2. Having not enough money to start investing
  3. Being too worried about one’s current financial situation (and thus being too busy to worry about the future)
  4. Being afraid of losing everything

When you look at the second and third point, they do appear to be connected with each other. And surely they are. So today we take a look at the point no. 2 & 3.

It takes money to make money

A popular phrase, but is it really true? As always, it depends. If you talk to entrepreneurs, they will most certainly say “no” to it. For entrepreneurs, all you need is a great idea, dedication and hard work to make money.

But this doesn’t sound like the right approach to me. The goal for me is to stop trading time for money. Hard work and dedication always require to do exactly just the opposite.

So when you talk to investors, it’s a different story. For investors, it’s all about having money and making it work for you. As Warren Buffett likes to say: “If you can’t figure out how to make money while you sleep, you will have to work until you die.”

In other words, you have to figure out a way how to make money without having to trade time for it. The professional term for this is “passive income”.

Investing is the king of passive income 

If you just type in Google the term “passive income”, the result might produce various topics for further research. The website “Good Financial Cents” has this list in petto:

  • Savings Account
  • High Dividend Stocks
  • Passive Real Estate
  • Betterment
  • CDs
  • Index Funds
  • Corporate Bonds
  • Lending Club
  • Rent Your Space
  • Start a Blog
  • Buy a Blog
  • Affiliatize a Blog
  • Online Course or Guide
  • Online Tasks
  • Online Rebates
  • Cashback Credit Cards
  • Sleep Studies
  • Advertise with Your Car
  • Rent Your Car
  • Rideshare Driving
  • Silent Partner
  • Buy a Business
  • Outsource Your Business

Feel free to visit the website for more details on each and every single point.

From all these opportunities, investing in dividend stocks is probably the most efficient one. This is for several reasons, the most important one being that it’s completely scalable without any extra effort. Of course you need money to get started, but that is it. The only thing you need to get and/or to increase your passive income is additional money. With every additional Penny invested in a dividend-paying company, you increase your annual income.

Now you might argue that you need to trade time for money to have those funds necessary for investment in the first place. And it is true. But from some point onwards, those dividends that come up every month, quarter or year, they can and will grow your account without you having to lift a finger. Dividends grow, get re-invested and compound. In the long-run, it’s the single least-effort-strategy to go with.

How much do you need?

The belief that you need a lot of money to get started is not wrong, but it is flawed. You can start with as little as 25 Euros a month. That’s less than 1 Euro a day. But of course, with such a small investment it would take a very long time to let it grow large enough to be able to retire on it. It’s not impossible, but it’s not something to rely on.

The more you invest, the more return your investment can create. So it is advisable to invest larger amounts and to keep that investment growing until you reach a critical mass that becomes basically self-sufficient. My target: Getting to 100.000 Euros.

100.000 Euros invested in high-yield dividend stocks, REITs and BDCs or even CEFs can create stable returns of 6% or higher – after-tax. That is equal to 6.000 Euros a year. 500 Euros a month. Once you get there, your stock-investment becomes basically entirely self-sufficient. Whether you put in an automated savings-plan or add/buy more stocks each month on your own. The money just keeps coming.

With the above mentioned yield on your investment, every 1000 Euros that you re-invest will add to your annual income another 60 Euros. Times 6, that’s additional 360 Euros a year or 30 Euros a month. So just after 1 year, your monthly return will already increase to 530 Euros on average. And it will keep growing at a higher pace after that, year on year, following dividend increases and the compounding effect.

And the best part is, that you won’t need to do anything for this to happen.

Not having money and being worried about the present

So back to the original point for people not investing because of not having enough money, or to be too worried about the present. I am certain that this is for many the case. But you have to overcome it and find ways to get started. Even if it starts with only 25 Euros a month.

I like to compare this kind of situation with education or training. For example: If you can’t read and write, and your family has no money, you might be forced to engage in low-skilled-labor jobs that will ensure your families survival. But, if you keep doing it without looking for ways to improve yourself, you will never get out of this circle.

If you, however, put in the effort to study and to learn new skills, even if it’s in the late hours after work every day, on weekends, public holidays, whenever you can squeeze out that extra hour, you will set yourself up to be able to take advantage of opportunities that may pop up in the future.

So yes, not having money and being worried is absolutely a valid reason. But success won’t come to those who don’t set themselves up to be ready for it. As Warren Buffett likes to say: “The harder I worked, the luckier I got.” Look where that got him.

About monthly dividend stocks

It has been a while since I introduced the idea of receiving monthly dividends. To be more precise, the article was about receiving dividends every 2 weeks – with only 2 stocks in your portfolio. If you like to take a look, you will find the article HERE.

It’s easy to create a portfolio with dividend-paying stocks and if you buy the right ones, then it’s even easier to create a portfolio that will pay you monthly. Or even weekly. So where and how do you find these companies? Don’t despair, I got you covered.

Having a long-standing tradition of taking care of its shareholders, most of these stocks are either of US or Canadian origin. Some are just regular companies, some are REITs and some of them are BDCs. The two companies that I mentioned in the above-linked article are called Realty Income and Gladstone Investment Trust. One is a REIT, the other one being a BDC. But there are more. As of now and if I am not mistaken, 39 to be exact.

Out of those 39, I chose only 10. They have a solid market capitalization and sufficient data and forum discussions available online on them. The 10 companies are as follows. I sorted them alphabetically, without any specific evaluation in place:

  • AGNC Investment Corp.
  • Apple Hospitality REIT, Inc.
  • EPR Properties
  • Gladstone Capital Corp.
  • Gladstone Commercial Corp.
  • LTC Properties, Inc.
  • Main Street Capital Corp.
  • Prospect Capital Corp.
  • Shaw Communications, Inc.
  • STAG Industrial, Inc.

There you go, plenty of research for you right there to fill your weekend. Among all the monthly dividend paying stocks, one name stands out as a seemingly dedicated company to offer its shareholders as many monthly opportunities as possible. Gladstone. Gladstone Investment (GAIN), Gladstone Capital (GLAD), Gladstone Commercial (GOOD) and Gladstone Land (LAND) are four popular investments among monthly dividend seekers. Gladstone Land is not on my list above but you might want to do some research on it anyway. Gladstone Investment is also not mentioned here, but it pops up in my previous article and you can read more about it if you click on the above link.

Also just to mention, the Apple Hospitality REIT has absolutely nothing to do with the technology company that we all know as Apple. I have no idea whether there is any dispute on the name/branding, but both companies are not related whatsoever.

The benefits of monthly payments

You don’t need monthly-paying stocks to receive monthly dividends. You could also buy a bunch of other companies which pay dividends on an annual, semi-annual, or quarterly basis. If you purchase enough of different types of them, then you will surely also get to the point that you receive dividends each and every month.

But well, with monthly paying stocks it is just an easier way to get there. If well structured and wisely chosen, you might even get to a point that you receive weekly dividends. Isn’t that amazing?

Well, not everybody thinks so and there are plenty of debates and discussions on whether a monthly payment is indeed a benefit. At the end of the day, whether you receive a partial dividend every month or a lump sum once a year shouldn’t make any difference, right? Some argue even that the reduction in bank-fees alone would justify for a company to not make any monthly distributions.

For me, it’s more of a psychological thing. The immediate, and frequent satisfaction of seeing my investments paying off simply feels great. Watching my portfolio and dividends growing and seeing it first becoming a supplement to my regular salary, and later, as the dividend income keeps growing more, to see it developing into a full-fletched source of income for my future. It’s very rewarding.

We all have a living to make. We all have monthly bills to pay. Monthly dividends are a great way to get this under control. Especially if you aim for FIRE.

As Warren Buffett said, if you can’t figure out a way to earn money as you sleep, you will have to keep working until you die. Now I definitely don’t want that.

Recent article updates

On another note, I have recently updated two of my most read articles so far. Nothing is set in stone, and as I learn more I will keep updating some content every now and then. So if you like to read again why Nobody wants to get rich slowly or about The Rat Race, then please feel free to do so.

Disclosure

And finally, not to forget the obligatory disclosure. I have shares of Realty Income, Gladstone Capital, Gladstone Investment and Main Street Capital in my personal portfolio. Furthermore, I intend to have stocks of all the above-mentioned companies in my portfolio over the course of this year.

You should have a personal budget, right?

One of the most common recommendations for solid financial planning is to have a personal budget in place. It can help you immensely to allocate your resources where they are needed the most, to analyze your expenses and to stay on top of your finances at all times. So it’s not surprising to hear this advice frequently. Personally, I also follow a very strict personal budget which looks almost like my companies P&L statement.

However, just because something helps one person, doesn’t mean that it’s good for everyone. Some people might not have the time to work on a personal budget plan. Some might hate Excel (or Numbers for Mac users), and others might just feel annoyed about micro-managing their financial lives. If you are one of those people, don’t despair. A budget is helpful, but I wouldn’t say that you need it to succeed financially.

Hitting your savings/investment target

What you actually really (and only) need is not necessarily a budget, but simply to hit your savings and investment targets.

Following a budget is a great exercise to learn how to control your income and expenses, but you could also go for a simpler and less micro-managed way. You could simply fix a target of how much you want to see yourself having saved up or invested in a specific timeframe.

Let’s say you want to see yourself having 100.000 Euros invested over a course of 10 years. This means that you need to save and invest 10.000 Euros a year on average – no matter how.

This is where you can stop, or expand a little further, it’s up to you. As long as you can hit this self-imposed target and it helps you to get closer to your end-target, you will be doing just fine.

I like to break ambitious targets into smaller, more reachable goals. 10.000 Euros sounds like a lot, but divide it by 12 to set a monthly goal and you will be down to a little over 800 Euros. Break it even further down by days and you will come down to just a little more than 27 Euros a day.

Now HOW you get those 27 Euros a day is completely up to you. Whether you save it on groceries or hot coffees, take it from your salary or take up a side-gig to increase your cash flow and to send the money into your investment account. It’s your choice. If you have some other passive income in place, like an annual bonus payment from your company, incoming dividends or interest from existing investments, or whatever will reduce your need for commitment, it counts.

This is another way to manage your money and it has some allure because it’s simple, less time consuming and it might not give you the feeling of restricting yourself too much and to still enjoy life (almost) to it’s fullest.

It’s all about your commitment

Working on our finances is similar to working out in a gym. You have to find the right way that works for you. You need to feel comfortable with the method you chose to ensure that your commitment to your goal never fades. As long as you got this in place, there is nothing to worry about and a budget might be not necessary.

Having said that and to stick with the gym analogy, if you got ambitious targets then you got to put a lot of effort into it to make it happen. A budget is just a tool that can help you to understand how the game works, but even a budget will not replace your commitment and efforts.