While you have probably heard about stocks that pay dividends every quarter, did you know that there are many stocks that pay monthly dividends? When most income investors think about investing for dividends, they naturally look at safe, stable companies like McDonald’s(MCD), Proctor & Gamble(PG), and IBM (IBM), which have a long history of paying quarterly dividends. These types of dividend stocks are usually financially stable, have a lot of liquidity so they are easy to buy and sell, and have enough income and cash reserves to cover their cash dividend payouts to investors every three months.
There are a couple of issues that investors in these type of quarterly dividend stocks should consider. First, the investors’ income stream is exposed to a single company for each stock that they own, and second, depending on the mix of stocks in the investors portfolio, the dividend income can be very lumpy (i.e. most of the dividend money arrives in one month of the quarter, leaving the remaining two months with very little cash coming in.

