Dividend stocks usually make payments every quarter -- but that doesn't mean you can't invest in a way that lets you receive cash from your income-generating investments every month. if you invest in stocks that pay at different times during the quarter, the dividend income can continue to flow into your portfolio each month of the year.
Three stocks that pay more than the S&P 500 average, stagger their payouts, and could be great buys right now are Merck (MRK 0.92%), General Mills (GIS 1.06%), and Duke Energy (DUK -0.12%). Let's find out a bit more about these three dividend stocks.
1. Merck
Merck is a top drugmaker, known for its popular cancer-fighting drug Keytruda. Over the trailing 12 months, the healthcare company reported profits of $15.3 billion on revenue of just under $59 billion, for an impressive net margin of 26%. While investors may be concerned about Keytruda losing patent protection later this decade, Merck has 30 phase-three trials ongoing that could lead to many potential revenue-generating products in the long run.
The company has both time and money to make the moves it needs to find growth opportunities; in the past year, Merck generated free cash flow totaling $15.2 billion. That leaves plenty of room to pay for its dividend (which cost the company $6.9 billion over the past four quarters) while still investing in itself and pursuing acquisitions, like its purchase of rare disease company Acceleron Pharma, which it closed on in 2021.
Merck pays a yield of 2.7%, which is around a full point higher than the 1.7% the S&P 500 averages. The company typically makes dividend payments every January, April, July, and October.
Between its growth opportunities and attractive payout, Merck is an investment that could be suitable for all types of investors.
2. General Mills
Consumer packaged foods company General Mills is an attractive investment for risk-averse investors. Its cereals and food products are staples in households all over the world. And the business is proving to be resilient even as it raised prices to battle inflation.
The company's net sales totaled $5.2 billion for the period ending Nov. 27, and were up 4% year over year while profits of $605.9 million rose by a modest 1%. The company's earnings per share of $1.01 are nearly double its quarterly dividend of $0.54. Overall, there are no signs of concerns about General Mills' dividend, which today yields 2.8%. Investors normally receive the company's disbursements every February, May, August, and November.
Last year, General Mills was a hot stock to buy, achieving gains of 24% (while the S&P declined 19%). Given how resilient the business appears to be and the stable dividend it offers, it could again be a market-beating stock to own in 2023.
3. Duke Energy
The highest yield on this list belongs to Duke Energy, with a payout yield that's right around 4%. The utility company, which serves over 8 million people across the country, makes payments every March, June, September, and December, typically around the middle of the month.
The benefit of investing in a utility business is that investors generally don't see significant volatility from the business. In Duke's earnings for the period ending Sept. 30, 2022, its earnings per share (EPS) of $1.81 were up from the $1.79 per-share profit the company reported a year earlier. And when looking at the past three quarters, the year-to-date EPS results total $4.03 -- only three cents higher than what it reported in the prior-year period.
Duke's payout ratio is 80% of its earnings, which is somewhat high but still sustainable. And the company has also shown no signs of worry, with Duke raising its dividend payments by 13% over the past five years.
