A great reward for saving up money to invest in stocks is potentially earning some attractive dividend income. The more you save, the more you can stand to earn from a dividend stock. On a 4% yield, for example, a $50,000 investment would generate $2,000 a year in recurring income. If you can invest $100,000, then that same dividend rate would now generate $4,000 in cash every year.
If you want recurring income every month, what you can do is invest in dividend stocks with different payment schedules. Three stocks that yield more than 4% (well above the S&P 500 average of 1.4%) and that together could give you monthly cash flow are Innovative Industrial Properties (IIPR -2.31%), Cracker Barrel Old Country Store (CBRL -1.23%), and Lumen Technologies (LUMN -2.92%).
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1. Innovative Industrial Properties
Innovative Industrial Properties (IIP) is not your average real estate investment trust. The REIT is focused on the federally illicit cannabis industry and can provide valuable cash to marijuana growers through its sale-and-leaseback agreements. It's led to one short-seller calling the company a risky "marijuana bank" more than a REIT. That negative press, along with general softness in the cannabis sector, has led to the stock tumbling more than 50% year to date, far worse than the S&P 500's decline of 16%.
But despite the rumors, the company continues to deliver strong results. Profit margins have normally been 50% of revenue or better. And for the first three months of the year, the REIT's net income totaled $34.7 million and grew 36% year over year. And there's more growth on the horizon as the cannabis industry is still in its early stages, with New Jersey just commencing adult-use marijuana sales last month. New York may not be far behind as it will likely allow recreational sales later this year.
Another way IIP differentiates itself from other REITs is through its aggressive rate hikes. The company raised its dividend payments by 17% earlier this year to $1.75. And in just two years, the dividend has climbed by 75%. Despite all the rate hikes, the payout remains safe; IIP's funds from operations per share last quarter were $1.86.
A falling share price makes this dividend stock look more attractive by the day. At around 5.4%, you would need to invest approximately $29,740 in order to collect $400 when IIP makes dividend payments -- every January, April, July, and October.
2. Cracker Barrel
Cracker Barrel is a more conventional investment. The company operates more than 660 stores across 45 states in the U.S. Its stores are a mix of restaurants and gift shops and can offer investors a way to invest in the reopening of the economy this year and a recovery from COVID-19 lockdowns.
The stock did stop paying dividends during the early stages of the pandemic but resumed by mid-2021. Now that it looks as though things are returning to normal, Cracker Barrel's business is a safer buy. For the period ending Jan. 28, sales of $862.3 million rose 27% year over year, even as the emergence of the omicron variant was threatening the strength of the economic recovery. The company's diluted per-share earnings of $1.6 last quarter were more than double what Cracker Barrel reported in the prior-year period. That leaves plenty of room to cover the company's $1.30 quarterly dividend.
Things could look even stronger in future quarters, with omicron looking to be less of a concern right now. The dividend is stable, and with a yield of 5.4%, it will require a similar investment to the one in IIP to generate $400 every quarter. Cracker Barrel typically makes payments every February, May, August, and November.
3. Lumen Technologies
An underrated dividend stock to own is Lumen Technologies. At 9%, this is the highest-yielding stock on this list by a wide margin. Investors may scoff at the high rate, assuming that it isn't sustainable and likely due for a cut.
But the company's diluted per-share earnings for the first three months of 2022 were $0.59 -- more than double the $0.25 that Lumen currently pays its shareholders every quarter. The telecom company has been an underwhelming investment in recent years as its top line has been declining; in 2021, sales of just under $20 billion were down 5%. However, the company is upgrading its network and expanding its high-speed fiber broadband services, which should help boost revenue down the road.
The dividend looks safe today and could look even better in the future. On a 9% yield, you would need to invest roughly $17,800 to collect $400 every month from this stock. Lumen pays its shareholders every March, June, September, and December. That would put your total investment across all three stocks listed here at $77,280.
