Investing in a mix of dividend stocks can help diversify your portfolio without putting all your eggs -- and dividend income -- in one basket. The key is finding businesses with solid financials and safe payouts.
Three stocks that fit that criteria are Medical Properties Trust (MPW -1.51%), Citigroup (C -0.32%), and Western Union (WU 1.42%). And with all of them paying dividends at different intervals, investing in all three can ensure that you've got recurring income coming into your portfolio each month of the year.
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1. Medical Properties
Real estate investment trusts (REITs) like Medical Properties can be valuable investments to hold given their stability. They usually generate high margins and collect recurring and predictable revenue. And with the company focusing on medical properties, it can add a bit more stability into the mix for investors.
Although the pandemic may have caused disruptions in cash flow for some REITs, Medical Properties remains in solid shape. The company has also been growing through acquisitions, recently completing a $760 million sale-and-leaseback transaction that added 18 behavioral health hospital facilities to its portfolio. And given its solid results, the company could take on more acquisitions in the future.
Through the nine-month period ending Sept. 30, 2021, Medical Properties reported revenue of $1.1 billion, which rose 24% year over year, largely due to acquisitions. Its funds from operations (FFO) per share was $0.44 in the most recent quarter, which leaves ample room to support the REIT's quarterly dividend of $0.28. FFO is a key metric REITs use to measure profitability, and the strong numbers should give investors confidence in the strength of Medical Properties' dividend.
Today, it yields 4.8%, which is more than three times the S&P 500 average of 1.3%. So investing $25,000 into the healthcare REIT would earn you $300 every quarter, which the company pays out every January, April, July, and October.
2. Citigroup
Citigroup is a top bank and a safe investment for income investors to consider. It is a consistently strong performer, normally generating a profit margin of 20%. And with interest rate hikes likely coming this year, its bottom line could look even better as it takes advantage of a larger spread between its interest income and interest expenses -- the bank's bread-and-butter business.
For the period ending Sept. 30, 2021, the bank's total revenue (net of interest expense) was $17.2 billion and flat from the previous year. But thanks to a decline in provisions for credit losses on loans, its net income of $4.6 billion was 48% higher than it was a year ago. That isn't a trend investors can count on in the long haul, but a potential increase in revenue due to a healthier economy should help ensure Citigroup's numbers remain strong in future quarters.
The stock's 3.1% yield is lower than Medical Properties' payout but it's still above average and could be due for a hike -- the company hasn't made one since 2019. Its payout ratio of 23% is relatively low and leaves plenty of room for Citigroup to make a sizable boost if it chooses to do so. For now, if you invested $38,700 into the stock, you could expect to collect $300 every February, May, August, and November.
3. Western Union
Another financial stock that pays a solid yield is Western Union. The company, known for its easy money transfers to countries all over the world, has been seeing strong growth in its digital money transfers. Up 15% year over year, they account for one-quarter of its consumer-to-consumer business, which brought in $1.1 billion for the period ending Sept. 30, 2021. The digital money segment has been fast-growing for Western Union, and through the first three quarters of 2021, it has soared 25%.
However, due to a "slow pace of economic recovery," the overall growth last quarter was a modest 2%, with revenue totaling $1.3 billion. But over the long term, and once a pandemic isn't weighing down businesses, this segment should generate stronger numbers. It's encouraging, nonetheless, that even amid such challenges the company reported a per-share profit of $0.57 -- more than double its quarterly dividend of $0.235.
Investing roughly $24,490 into Western Union's stock, which yields 4.9%, would be enough to generate $300 in quarterly payments. The financial company makes its dividend payments every March, June, September, and December.
