The check-a-month strategy involves buying a group of high-yielding, quarterly-dividend-paying stocks with dividend payment dates spread across the quarter so that the client receives a dividend check(s) each month.
Breadth in the fixed income market is the narrowest it has been in several months as most US core groups now sit near the bottom of the Asset Class Group Scores fixed income rankings. Meanwhile, high yield spreads have widened recently suggesting a risk-off posture towards credit, making this a challenging environment for investors seeking yield. With that in mind, we though this would be an opportune time to update our check-a-month strategy. The check-a-month strategy involves buying a group of high-yielding, quarterly-dividend-paying stocks with dividend payment dates spread across the quarter so that the client receives a dividend check(s) each month.
When building a check-a-month portfolio, it is essential to select not only high-yielding stocks but also stocks with a healthy technical picture to better stack the odds of future outperformance in your favor. After all, your client won't be impressed with their 3% yield if the market value of their portfolio drops by 15%. Looking only at dividend yield, we found that there are 114 stocks in the S&P 500 with a dividend yield of 3% or higher. However, when we narrow our search using a technical overlay, we are left with 32 stocks. A list of all the criteria we inputted in the Security Screener tool is below:
S&P 500 Universe
Price = >$10
Trend = Positive
Technical Attributes = 3+
Dividend Yield > 3%
You will find all 32 names in the table below categorized into three groups based on their usual dividend payment schedule. We've highlighted a couple of our favorites below the table.
Early Quarter Dividend Payout (January, April, July, October)
Mid-Quarter Dividend Payout (February, May, August, November)
Late Quarter Dividend Payout (March, June, September, December)
CFG Citizens Financial Group Inc ($58.61) - Banks – CFG is a 5for 5’er that ranks ninth of 168 names in the favored banks sector matrix and carries a 3.17% yield. CFG has demonstrated long-term relative strength versus its peers as it has been on an RS buy signal against the NDW Bank Index (DWABANK) since 2017. On its default chart, the stock returned to a buy signal this week when it broke a double top at $60, but remains below the middle of its trading band, offering a potentially opportune entry point for long exposure. Year-to-date (through 3/25) CFG has gained 1.73% on a price return basis.
DRI Darden Restaurants, Inc. ($198.87) - Restaurants -DRI is a 4 for 5’er that has been on market and peer RS buy signals since 2020 and 2021 respectively and carries a 3.06% yield. On its default chart, DRI has completed four consecutive buy signal, most recently breaking a double top at $216 last month. DRI has subsequently pulled back to form significant support at $196, as the stock has reversed up from that level three times since January. Year-to-date (through 3/25) DRI has gained 9.59% on a price return basis, outperforming the S&P 500 (SPX) by more than 13%.
