Do you want to collect dividend income every month? The bad news is that most dividend stocks only pay quarterly. But the good news is that by investing in multiple income-generating investments, you can ensure that you have cash flow coming in each month of the year. The key is to invest in stocks that pay at different intervals.
Three stocks with different payment schedules that can help you do that are CareTrust ( CTRE -0.74% ), Citigroup ( C 1.55% ), and Enbridge ( ENB -0.34% ). Not only are their yields safe, but they are also well above the S&P 500 average of 1.3%.
A real estate investment trust (REIT) can make for a solid option for income-oriented investors. That’s because REITs have to pay 90% of their profits back out to shareholders. And a REIT that is focused on healthcare, such as CareTrust, can help add to the overall stability of the investment (as opposed to residential REITs where there may be more risk involving tenants). CareTrust’s portfolio of assets is also diverse, spanning more than two dozen states. And the bulk of them, more than 70%, are skilled nursing facilities.
The key metric that investors need to be familiar with when looking at REITs is funds available for distribution, or FAD. It’s a REIT’s version of net income, which helps to demonstrate how sustainable its dividend is. Looking at net income alone could suggest that the dividend is not sustainable even though it is, as non-cash expenses oftentimes make a company’s operations look worse than they are.
In 2021, CareTrust’s normalized FAD per share was $1.59. At its current quarterly dividend payment of $0.275, CareTrust’s payout ratio as a percentage of FAD is 69%. The company aims for a payout ratio of approximately 65%, so the current yield is definitely in the ballpark. CareTrust recently raised its payouts this year from $0.265, so there’s no sign of concern from management about the current level of the dividend payment.
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