Stock to replace your savings account with
One of the best things about having a savings account is receiving monthly interest on your balance, but one of the biggest negatives are how small the interest is. Most of the direct access/non-fixed deposit savings accounts usually run around 2%-4% interest per annum which is very low in the grand scheme of things. This meagre 2%-4% is easily out performable, aspecially over the long run.
How do you replace your savings account?
The easiest way to do this is with dividend stocks that pay out monthly, this allows you to receive monthly dividends but also capital growth if the stock goes up. Stocks like these are hard to find, especially when it come to finding one that also has good growth associated with it. You'll see that the higher the dividend payout the lower the stock growth is, this is usually the case as a higher reinvestment rate allows higher growth of the stock.
Main Street Capital Corporation (MAIN)
MAIN is a well know name in the monthly dividend community, they're a asset managment company that produces great results and has great security around them.
| Dividend Yield | EPS | PE ratio |
|---|---|---|
| 6.14% | 4.8 | 8.55 |
STAG Industrial, Inc. (STAG)
STAG is a REIT(Real estate investment trust) which means that you get indirect access to the property market. Real estate is usually a very safe bet when it comes to investing as the value of land has only been on the increase over the last several years. STAG is a good company to look at and offers a good investment. REITs are some of my favorite types of investments.
| Dividend Yield | EPS | PE ratio |
|---|---|---|
| 3.54% | 1.15 | 36.1 |
Realty Income Corporation (O)
O is another REIT, one that's know for their monthly dividends and takes pride in delivering monthly dividends no matter what the market does. They're so proud of delivering monthly dividends that they even market their company as "The monhtly dividend company". At the time of this blog, they've had 620 consecutive months of dividend payouts and 98 consecutive quarterly dividend increases.
| Dividend Yield | EPS | PE ratio |
|---|---|---|
| 4.19% | 0.87 | 81.92 |
Global X NASDAQ 100 Covered Call ETF (QYLD)
QYLD is a bit different from the previous stocks as it is not a stock, it's in fact a ETF, this ETF is a produces a great monthly dividend but it does not experience much capital growth, but if you reinvest your dividends you'll have great compounded growth in no time. This ETF focuses on the S&P500.
| Dividend Yield | EPS | PE ratio |
|---|---|---|
| 11.8% | n/a | n/a |
Global X S&P 500 Covered Call ETF (XYLD)
XYLD is not much different from QYLD, as it works the exact same, but it runs on a different index, QYLD runs on the S&P500 and XYLD runs on the NASDAQ 100. XYLD has a lower dividend yield but allows you acces into a different market reducing your overall risk.
| Dividend Yield | EPS | PE ratio |
|---|---|---|
| 9.58% | n/a | n/a |
How to manage these investments
Once you've moved some money into a trading account, it will be wise to invest in a few of these rather than just one. This will mitigate your risk and in the case of one of them diving you won't be affected as much. The best will probably be to invest in all of them at the same time, equally spreading your money between all of them, with time you can decide to focus on one or the other allowing that investment to grow. As you will be receiving monthly payouts of dividends it will be best to reinvest them and allow them to grow till you need the money.