What Are Monthly Dividends? Your Questions Answered

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by Natallia Maksimenko · 3 min read
What Are Monthly Dividends? Your Questions Answered
Photo: QuoteInspector

Monthly dividends can serve as an additional income. Still there are a lot of questions connected with them. Therefore, have a look at the article that will eliminate all the misunderstandings.

In reality, there are a lot of bills to pay every month that you wish you didn’t have to. The only solution to get rid of them is to continue paying. Your income can be sufficient to pay the expenses, but wouldn’t it be nice to have extra money coming in to help out. Monthly dividends can sort out that problem, but what are they? Here is the complete guide to understand it better.

What Are Monthly Dividends?

Monthly dividends are payments made to the investors that own stocks in a company. In this way, revenues are distributed back to investors. This is one of the options for them to earn a return for investing.

Not all dividends are paid monthly in the United States, some of them are per share of the stock. Depending on how many shares you own, you will receive a certain amount back.

How Monthly Dividends  Work?

Dividends are usually paid into the stockholder’s account, but some of them are given in new stocks instead. A company has to approve each dividend and decide on the date and the amount that will be paid.

There is also something known as the ex-dividend date. Investors have to own the stock before this date to receive the dividend. They can sell the stock after that time and still receive the dividend, as long as they owned the shares before the date.

Generally, there are two types of dividends:

  • Regular Dividends: These are the ones that a company knows they will pay consistently over time when they receive earnings. In such situation a company usually provides a regular dividend that can be paid in good and bad years.
  • Special Dividends: Special dividends are the “one-off” payments. Companies use them when they have made a lot of profits or if they have sold some of their assets. The company may also have some saved cash that they don’t need to operate. Announcing a special dividend usually means that they are planning to send money to shareholders, but it will not keep occurring.

What Do Monthly Dividends Do?

Like the term, monthly dividends pay their stockholders monthly. Most companies in the United States pay dividends quarterly. Some of them like special dividends are not paid monthly and often do not keep reoccurring.

Investors find monthly payments more appealing because they get an extra amount of income regularly. Although they may not be as much as quarterly ones, it is an add up.

How Can I Get Monthly Dividends?

There are dividend stocks out there that cater to the needs of the shareholders by making monthly payments. Even some of the most noteworthy and reliable companies pay monthly dividends.

Exchange-Traded Fund (ETF) is a type of fund that owns assets, such as stocks. Some of them pay monthly dividends. A monthly dividend ETF is out there for companies like WisdomTree.

Make Money Monthly

If you are looking to make an extra amount of money, look into monthly dividends. Now that you know more about them, you can reap the benefits that they come with.

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