6 ways to use your monthly dividends
Investing in stocks that pay out monthly dividends is a fantastic way to diversify your investments and wealth while also receiving regular income. Monthly dividends give you the financial freedom to use your earnings in a multitude of ways to best help you reach your long-term financial goals. Consider these six fantastic ways to use your monthly dividends to grow your wealth.
What are monthly dividends?
Monthly dividends are payments made from companies to stockholders on a monthly, rather than quarterly, basis. Also called income stocks, these dividends are paid in cash, so you can use that money however you like. Often, companies with stocks and monthly dividends are in industries like real estate, finance, energy, and utilities, which are all fields that bring in consistent income, making them reliable sources of dividend payouts.
Why you should consider stocks with monthly dividends
Monthly dividends are a great way to earn money through investments. Historically, monthly dividends are much less volatile than bonds and provide a moderately consistent return. They’re also not subject to inflation in the way that other stocks and bonds are, making them a low-risk choice for investors.
6 popular uses for monthly dividends
One of the main benefits of choosing a stock with monthly dividends is the consistent return on investment in cash. You can use that cash payout for whatever you want. If you’re not sure how to best put your money to work for you, consider these six popular options for using monthly dividends:
Reinvest the dividend
One option is reinvesting your dividend payments back into the stock market. You can purchase more shares in a company that pays monthly or quarterly dividends, thus increasing your payouts, or you can invest in other diversified stock options to spread the risk of your overall portfolio.
Place in a high-yield savings account
A high-yield savings account accrues much more interest than a traditional savings account, making it a solid investment choice for your monthly dividends.
Pay down loans
If you have student loans or credit card debt, consider using your monthly dividend payments to pay it down or off. The sooner your debt is gone, the sooner you can begin saving in earnest for your future.
Diversify your portfolio
Consider taking your monthly dividend payments and using that money to invest outside of the stock market. Real estate and other physical commodities are good options to diversify your portfolio.
Save for vacation
There’s nothing wrong with using your monthly dividends for a little fun. You can use your earnings to pay for vacations or other recreational expenses.
Add to an emergency fund
Monthly dividend payments can help you start or add to an existing emergency fund. Use your monthly payments to build a healthy stash of money for use in the case of a financial emergency.
Monthly dividend stocks are valuable in ways beyond just their payouts and stock value. Investing in companies that offer monthly dividends can help you meet your long-term financial goals.