5 stocks that pay monthly dividends: a complete guide!

When it comes to investing in the stock market, many investors aim to obtain a consistent stream of passive income through dividends.

While some dividends are paid quarterly or annually, there is a special category of shares that offer monthly dividends.

These shares can provide a stable source of income, which is particularly attractive for investors looking for a regular cash flow.

In this article, we'll present five stocks that pay monthly dividends, allowing you to strengthen your portfolio and achieve your financial goals.

What are dividends?

Dividends are a form of profit distribution that companies make to shareholders as a return on the investment made in the company.

When a company makes a profit, it can decide to allocate part of that profit to distribute it to shareholders in the form of dividends.

This distribution is a way of rewarding shareholders for the capital invested in the company and also of sharing positive financial results.

Dividends can be paid out in different ways, the most common being in cash, but they can also be in the form of additional shares in the company (known as stock dividends) or even in the form of property or other assets.

Generally, companies announce dividends on a regular basis, stating the date of payment and the amount to be distributed per share.

Dividends can be a significant part of the total return on a stock investment, especially for investors looking for regular income.

When receiving dividends, shareholders have the option of reinvesting them in the company, buying more shares or simply using these payments as a source of income.

It's important to note that not all companies pay dividends.

Some companies choose to fully reinvest their profits back into the business, seeking growth and expansion. Other companies may choose to pay dividends only at certain times or in specific circumstances.

Companies that pay monthly dividends

Investing in dividend-paying companies is a popular strategy for investors looking for regular income and potential capital growth.

While some companies choose to reinvest their profits, others are committed to distributing a significant part of their earnings to shareholders in the form of dividends.

The 5 companies that pay the highest dividends in Brazil are:

• Petrobras (PETR4): Dividend Yield (DY) of 71%
• Marfrig (MRFG3): Dividend Yield (DY) of 32.5%
• CSN Mineração (CMIN3): Dividend Yield (DY) of 19%
• Taesa (TAEE11): Dividend Yield (DY) of 16%
• CSN (CSNA3): Dividend Yield (DY) of 16%

How to diversify your portfolio to achieve higher dividends

Diversifying your investment portfolio is an essential strategy for seeking higher dividends and reducing the risks associated with investments.

Diversification allows you to distribute your capital between different sectors, companies and financial instruments in order to reduce exposure to specific market events or individual companies.

Invest in different sectors and industries

By investing in different sectors, you expose yourself to a variety of companies with different characteristics and performance.

For example, it can be interesting to have shares in companies in sectors such as technology, health, energy and basic consumption.

This way, you can benefit from growth trends in different areas and mitigate the risk of a single industry negatively affecting your dividends.

Choose companies with a history of consistent dividends

When selecting companies for your dividend portfolio, it is important to consider those with a proven track record of paying regular dividends over time.

Companies with a history of growth and financial stability are more likely to maintain their dividends, even in periods of economic uncertainty.

Assess the financial health of companies

Check the financial health of the companies you are investing in, analyzing indicators such as debt/equity ratio, operating cash flow and dividend coverage.

Companies with low levels of debt, stable cash flow and the ability to cover their dividends with consistent profits are more likely to maintain and increase dividend payments over time.

Consider investing in dividend funds

In addition to investing directly in shares, you can also diversify your exposure to dividends through investment funds focused on dividends.

These funds are made up of a basket of shares in companies that pay dividends, offering instant diversification.

They can be an interesting option for investors who wish to have diversified exposure to dividends without the need to select companies individually.

Reinvest dividends received: An effective way to increase your profits dividends over time is to reinvest the payments received.

By opting for dividend reinvestment, you can buy more shares in the company, which increases your potential future return and allows you to take advantage of the power of compound interest.

Conclusion

Diversifying your investment portfolio is a crucial strategy for seeking higher dividends and reducing the risks associated with investments.

By investing in different sectors, companies and financial instruments, you can benefit from the potential for growth and stability in various areas of the economy.

What's more, by choosing companies with a consistent history of paying dividends and solid financial health, you increase your chances of receiving regular and reliable dividends over time.

Diversification can also be achieved by investing in dividend funds, which offer exposure to a basket of shares in companies that pay dividends.

These funds instantly provide effective diversification, even for investors with limited knowledge of the stock market.

Reinvesting dividends received is another smart strategy to increase your potential return.

By reinvesting dividend payments, you are taking advantage of the benefits of compound interest, buying more shares and potentially increasing your future dividend earnings.

However, it is essential to remember that diversification does not completely eliminate risk. It is important to conduct careful research and analysis before making any investment and to consider your own financial objectives, risk tolerance and investment horizon.