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Monthly dividend stocks are stocks that pay a dividend every month of the year. If you are already a dividend (or income) investor, you know that most dividend paying stocks pay their investors every two months, or quarterly, so these every month dividend stocks may be new to you. (There’s also stocks that pay annual dividends).

The first main characteristic of every month dividend stocks is that while they are traded as individual stocks on regular stock exchanges (i.e. you can use your online discount broker to buy and sell them), they are usually holding companies, trusts, REITs, master limited partnerships, or closed finish money that invest in a portfolio of income producing assets. This makes every month dividend stocks different from plenty of quarterly dividend paying stocks, which are usually (but not always) individual companies.

Since most every month dividend stocks get their income from plenty of sources, they have a built in diversification of income streams, which can make their every month funds dividend payouts less risky than the dividends from individual companies – a lovely example of this risk would be General Electric (GE), a large conglomerate blue chip stock, which cut it is dividend by 68% in February, 2009. This is a lovely example of a company that is thought about among the most financially solid in the world, is widely held, followed by a lot of analysts, but still cut it is payout, even though a year before the cut most people thought the company would be able to maintain it is quarterly funds payout to investors.

If you are an income investor thinking about an investment in a stock with every month dividends, make sure you do some research on what stocks, bonds, or other income producing assets, actually produce the income for your selected stock. If the stock invests in one industry, for example oil producers, and in this case oil prices go down, your dividend payment (and the price of your every month dividend stock) could go down together with the price of oil.

There is one type of every month dividend stock that deserves a special note of caution for investors seeking consistent dividend timing in their portfolios – these are called Canadian Energy Royalty Trusts. While these stocks provide a every month payment of dividend income, the laws in Canada were changed, and these changes will take effect in 2011. Fundamentally, the laws were changed on these investments so that they will be taxed in Canada as regular corporations (they currently do not pay taxes) beginning in 2011. These new income taxes will have the effect of lowering the yields on these investments, since a number of the income that used to go to investors in the form of a every month payout of dividends will now go to the Canadian government to pay these new taxes. Also, keep in mind that the Canadian government currently withholds 15% of these funds dividend payments to U.S. investors as a non-resident withholding tax, but U.S. investors can also apply for a partial refund of these taxes.

As you can see, every month dividend stocks may have a place in the investment portfolios of people that like dividend investing, as well as a steady stream of income, but as always, you require to do your home work before investing in these stocks.

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