Are you looking for a way to supplement your income and add to your monthly cash flow? Dividend stocks can be an ideal way to accomplish that objective. And while there aren't many stocks out there that pay you on a monthly basis, there is a way you can get around that hurdle, and that's by investing in stocks with different payment schedules.
GlaxoSmithKline (GSK 1.61%), Verizon Communications (VZ 0.65%), and Gilead Sciences (GILD 1.37%) all pay at different times during the year. And with all of them paying more than three times the S&P 500 average yield of 1.3%, you can collect much more from them than your average stock. Investing $49,334 across these investments can bring in about $200 for your portfolio every month.
U.K.-based drugmaker GlaxoSmithKline has the highest yield on this list at around 5% per year. The company normally makes dividend payments every January, April, July, and October. And to collect $200 in each of those months, you'll need to invest approximately $16,000 into the stock.
The company is a solid, stable business to invest in and can be an ideal option for income investors. In the past year, its share price has risen by more than 20% while the S&P 500 has risen by only 14%. In recent months, investors have been moving toward more conservative investments, and GlaxoSmithKline fits the bill.
Typically, the business generates a net income that's at least 12% of revenue, and its gross margins are also usually strong at more than 65% of the top line. This past year, the company reported free cash flow of 4.4 billion pounds, which is higher than the 4 billion pounds it pays annually in dividends.
The company is going to separate from its consumer healthcare business later this year, but the company says its dividend policies and payouts will remain unchanged after the spinoff and there should be no cause for concern for investors.
The "new" GlaxoSmithKline (which will include its pharmaceutical and vaccine businesses) is expected to grow between 5% and 7% in 2022. The company also has an active research pipeline for 21 vaccines and 43 medicines, which should ensure that its operations continue to grow over the long run.
The healthcare stock is a stalwart, and with strong margins and plenty of growth opportunities ahead, it makes for a solid income-generating investment to own for years.
2. Verizon Communications
Telecom stocks are normally attractive investments for their long-term stability and attractive payouts. And Verizon, with its 4.8% yield, is no exception. It makes quarterly payments every February, May, August, and November. To collect $200 in those months, you'll need to invest approximately $16,667 into the stock.
Like GlaxoSmithKline, this is another business that is good at producing strong, consistent profits. In each of the past five years, the lowest its net margin has dipped to was 11.9% of revenue. And sales have been within a range of $126 billion and $134 billion during that time.
Through a potential return to normal in the economy this year (i.e., more travel-related roaming charges) and rising adoption of 5G phones (the carrier now estimates more than one in three of its wireless customers have one), the company's financials should continue to improve this year.
Verizon's payout ratio of less than 50% is relatively modest and makes this a safe income stock to hold. Over the past year, shares of Verizon have been fairly stable, declining by a little more than 1%.
3. Gilead Sciences
Gilead Sciences has been the worst-performing stock on this list as its shares are down by 7% over the past 12 months. But that has made its dividend even more attractive as the stock is now yielding around 4.8%. That's roughly the same as Verizon, and that means investors would need to invest a similar amount in Gilead ($16,667) to receive $200 quarterly payments.
Gilead makes payments to shareholders every March, June, September, and December. Combined with the other stocks, this would give investors in these three companies some cash flow coming in each month of the year.
Although investors may be worried about the stock's fall this past year, much of that is due to an uninspiring earnings report that it released earlier this month, where sales of $7.2 billion for the last three months of 2021 were down 2% from the prior-year period. Losses of exclusivity in multiple drugs have hurt the company's top line, but like GlaxoSmithKline, Gilead has a promising pipeline with dozens of trials ongoing. Included in that is a promising twice-a-year HIV injectable, lenacapavir, which could be a game-changer for patients tired of taking daily pills.
And in the short term, the dividend still looks safe. For 2022, Gilead projects its earnings per share to be at least $4.70, which is plenty of buffer from the $2.92 it pays out in dividends per share over the course of a full year. Shares of Gilead are near their 52-week lows, and years from now, the current price could look like a bargain.