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While most stocks pay quarterly dividends, investors can still construct a portfolio that allows them to get paid monthly.
How? Let me explain –
The first stock pays its dividend in January, April, July, and October. The second stock pays out in February, May, August, and November. And finally, the third stock will pay its dividend in March, June, September, and December.
So, investors can reap steady monthly paydays with just a little positioning.
A combination of Coca-Cola KO, Caterpillar CAT, and McDonald’s MCD shares would provide precisely the blend needed for this portfolio. Let’s take a closer look at each one.
Coca-Cola
Coca-Cola is an American multinational corporation best known for its flagship Coca-Cola beverage. KO’s substantial brand equity, marketing, research, and innovation have helped it become the titan it is today.
The company has seen its earnings outlook drift higher as of late, indicating bullish sentiment from analysts and landing the stock into a Zacks Rank #2 (Buy).
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Reflecting an unparalleled commitment to shareholders, KO holds the rank of a Dividend King, paying out investors increased dividend payouts for at least 50 consecutive years.
Currently, Coca-Cola’s annual dividend yields 2.9% annually, nicely above the Zacks Consumer Staples sector average. The company’s shareholder-friendly nature is illustrated below.
Image Source: Zacks Investment Research
Caterpillar
Caterpillar is the world’s largest construction-equipment manufacturer. We see its iconic yellow machines at nearly every construction site. Similar to KO, Caterpillar has seen its near-term earnings outlook inch higher as of late, indicating an optimistic outlook from analysts.
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In addition, the company’s shares aren’t expensive, with the current 14.3X forward earnings multiple sitting below the 15.8X five-year median and highs of 21.4X in 2022.
Image Source: Zacks Investment Research
Keep an eye out for Caterpillar’s upcoming quarterly release on April 27th; the Zacks Consensus EPS Estimate of $3.79 suggests an improvement of more than 30% year-over-year. Our consensus revenue estimate stands at $15.2 billion, 12% higher than the year-ago figure.
Image Source: Zacks Investment Research
McDonald’s
We’re all familiar with the restaurant titan McDonald’s, seeing those golden arches at seemingly every stop.
The company rewards its shareholders handsomely, with its annual dividend currently yielding 2.1%. Impressively, the company has grown its payout by more than 7% over the last five years.
Image Source: Zacks Investment Research
Perhaps to the surprise of some, MCD shares have been quietly strong over the last five years, penciling in a sizable 106% gain and widely outperforming the S&P 500.
Image Source: Zacks Investment Research
Bottom Line
Investors love dividends, as they provide a nice buffer against the impact of drawdowns in other positions and provide a passive income stream.
And while most companies pay their dividends on a quarterly basis, investors can construct a portfolio that allows for monthly payouts with just a bit of positioning.
For those interested in this type of portfolio, the combination of all three stocks above – Coca-Cola KO, Caterpillar CAT, and McDonald’s MCD – would provide the necessary blend needed.
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Caterpillar Inc. (CAT) : Free Stock Analysis Report
CocaCola Company (The) (KO) : Free Stock Analysis Report
McDonald’s Corporation (MCD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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