Buy These Three 3%-5% Yielding Dividend Stocks To Get A Dividend Check In All 12 Months

Includes: INTC, KMI, MO
by: Bob Ciura


To generate a steady stream of income, it's possible to invest in individual stocks to earn a dividend check in all 12 months of the year.

Rather than buy a stock that pays a dividend in each month, there's a better solution: buy multiple stocks that provide diversification as well as high yields.

Here are three stocks, encompassing a broad range of sectors, that pay 3%-5% yields and will provide an investor a dividend check every month.

One of the best things about dividend investing is that the payouts provide income that you're free to spend anywhere you want. These payments can greatly help investors cover life's inevitable expenses. However, this is sometimes difficult when buying individual stocks, because most dividend stocks pay their dividends quarterly, which results in a fairly uneven income stream. Fortunately, there is a convenient way around this to get a steadier income stream. One way would be to make a very large investment in a single stock that pays monthly dividends. That would work, but buying just one stock exposes the investor to single-stock risk.

Another way would be to dig deeper into companies' dividend payment schedules. It's entirely possible to find a small group of dividend stocks that pay their investors every three months, but with these stocks, you can scatter dividend payments throughout the year. That way, your portfolio will be more diverse than just buying one stock, and also generate a consistent income stream. Here are three stocks that offer scattered dividend payments, which will allow the investor to receive a dividend check in all 12 months.

January, April, July, October

For a company that pays its first quarterly dividend in the first month of the year, and every three months thereafter, I recommend one of the most well-known dividend stocks of them all: tobacco giant Altria Group (NYSE:MO), which operates the Marlboro brand in the United States, as well as a number of smokeless tobacco brands, a wine business, and a significant stake in alcohol company SABMiller plc.

Altria's dividend track record is nothing short of legendary. The company has increased its shareholder payout 48 times in the past 46 years. The stock has performed very well also, as Altria's total shareholder return for the five years ending December 31, 2014, was 230%, which solidly outperformed the S&P 500's 105% return in the same period. Altria's stated policy is to distribute 80% of its adjusted earnings, and at its recent stock price, Altria yields 4.3%.

The tobacco business is an extremely lucrative one. Capital spending requirements are low, and because the product is literally addictive, Altria enjoys tremendous pricing power.

February, May, August, and November

For each of these four months, I'd suggest investors look at oil and gas midstream operators, which commonly make their distributions in these months. These companies own and operate oil and natural gas pipelines and storage terminals. They collect fees based on transportation volumes, and as a result, are not very vulnerable to volatile commodity prices.

Their structure is very similar to toll roads. Because of this, midstream oil and gas companies are extremely stable and generate consistent cash flow, which allows them to distribute the bulk of their cash flow to their investors. My favorite of them is Kinder Morgan Inc. (NYSE:KMI). Kinder Morgan pays a hefty 4.8% yield, and has also grown its dividend rapidly over the past several years. Its most recent $0.48 per-share dividend was 14% higher than the same dividend last year. And management has pledged to pay $2 per share in dividends this year, which would represent 17% growth from the $1.71 per share paid in 2014. This dividend is very manageable, as Kinder Morgan grew distributable cash flow by 21% last year.

The main driver of Kinder Morgan's significant dividend growth forecast is the consolidation that took place last year. The $77 billion roll-up of its various entities, including Kinder Morgan Energy Partners, Kinder Morgan Management, and El Paso Pipeline Partners, created major synergy opportunities. This transaction paved the way for significant dividend growth going forward, because the new company enjoys a lower cost of capital.

March, June, September, December

For these final four months, I'd recommend a technology stock to round out a diversified mix of stocks. One of the highest-yield technology stocks that pays its dividend in these months is chip giant Intel Corporation (NASDAQ: INTC). Intel pays a 3% dividend yield, which is quite strong for a technology company. The reason why Intel can pay such a relatively high yield is because it's a huge company; in fact one of the largest semiconductor companies in the world, and generates a lot of cash.

Intel raked in $10.3 billion of free cash flow last year, and paid $4.4 billion of dividends. That represents a modest 42% free cash flow payout ratio, which should allow for Intel's dividend to grow over time. Intel has increased its dividend by 8% compounded annually over the past five years.


The beauty of dividend investing is getting paid to do nothing. Companies that pay dividends reward their shareholders with strong income each and every quarter, and the most well-run companies will actually increase their dividends each year like clockwork. Altria, Kinder Morgan, and Intel are leaders in their respective industries that each pay high dividend yields and the prospect of dividend growth.

By investing in these three, an investor can form a small, blended portfolio across the consumer staples, energy, and technology sectors. An equal-weighted investment in these three stocks would provide a 4% yield. Even better, investors would receive dividend checks in every month of the year, in a steady stream of income that can be used to help pay for everyday expenses.

Disclosure: The author is long MO, KMI.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.