How to Determine Monthly Dividend Payouts

Introduction

Dividends are an important part of investing in stocks. They provide a steady stream of income for investors, which can be reinvested or used as a source ofpassive income. Monthlydividend payoutsare particularly attractive to investors because they provide a more frequent stream of income. In this article, we will discuss how to determinemonthly dividend payouts.

Understand the Basics of Dividend Payouts

Before we delve into monthly dividend payouts, it is important to understand the basics of dividend payouts. A dividend is a payment made by a company to its shareholders. It is usually a portion of the company's profits that are distributed to shareholders. Dividends can be paid out in the form of cash, stock, or other assets.

Dividends are usually paid out quarterly, although some companies pay them out monthly or annually. The amount of the dividend payout is determined by the company's board of directors, and it can vary from year to year.

Calculate the Dividend Yield

The dividend yield is an important metric for investors. It is calculated by dividing the annual dividend payout by the stock price. For example, if a stock has an annual dividend payout of $1 and a stock price of $50, the dividend yield would be 2%.

To determine the monthly dividend payout, the dividend yield needs to be divided by 12. Using the above example, the monthly dividend payout would be $0.17.

Research Companies with Monthly Dividend Payouts

Not all companies pay out monthly dividends. It is important to research companies that do pay out monthly dividends. Some examples of companies that pay out monthly dividends include Realty Income, STAG Industrial, and Main Street Capital.

Investors should also consider the company's financial health and stability before investing in a stock. A company that pays out monthly dividends but has poor financials may not be sustainable in the long run.

Conclusion

Monthly dividend payouts can be a great source of passive income for investors. To determine the monthly dividend payout, investors need to understand the basics of dividend payouts, calculate the dividend yield, and research companies with monthly dividend payouts. By doing so, investors can make informed decisions and build a diversified portfolio that includes monthly dividend-paying stocks.