Dividend stocks make for great investments if you want to generate recurring cash flow. The big downside is that most dividend stocks pay you only every three months, which may not be optimal if you want to generate monthly income from them to help supplement your earnings.
But there is a way you can get around that, without having to invest in stocks that specifically pay you on a monthly basis. Rather than limiting your options, you can simply invest in dividend stocks that pay at different times of the year. By investing in at least three dividend stocks, you can strategically select income investments that will provide you with cash flow every month of the year.
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Three stocks that can be excellent options for such a strategy are Kraft Heinz (NASDAQ: KHC), Procter & Gamble (NYSE: PG), and Toronto-Dominion Bank (NYSE: TD). By investing in all three of these companies, you can build your portfolio around some solid dividend stocks while ensuring you’re getting a dividend every month.
Kraft Heinz is known for its strong consumer brands and products that are found in millions of homes across the country. It’s the type of stock that can make for a dependable long-term investment. And its dividend is a key reason many investors buy the food stock. Kraft has been paying a steady $0.40 quarterly dividend since 2019, which today yields around 4.8%. It makes payments every March, June, September, and December.
The company has been facing challenges amid inflation as consumers have been trading down to private label products. But overall, the company’s financials still look reasonably good. Through the first nine months of the year, Kraft’s sales totaled $19.3 billion, representing a year-over-year decline of 2.6%. Investors may be concerned with the massive 71% decline in earnings this year, but if you factor out goodwill impairment charges, its profits would be down by a more modest rate of 17%.
The company has, however, generated more than $3 billion in free cash flow over the trailing 12 months, which is far higher than the $1.9 billion it has paid in dividends during that time frame. Even with the headwinds it’s facing today, Kraft’s dividend still looks safe. And as economic conditions improve, so too should its financials.
Another top consumer company to invest in is Procter & Gamble, with brands such as Tide, Pampers, and Gillette helping it reach a broad range of customers. It has a terrific track record for paying and increasing its dividend. The stock is a Dividend King and has raised payouts for an impressive 68 straight years, with the most recent hike being a 7% boost to its dividend earlier this year. It makes payments every February, May, August, and November. Currently, the stock yields 2.4%, which is not as high as Kraft but it’s still better than the S&P 500 average of 1.3%.
