A company distributes its surplus profit to the shareholders in form of dividends.
The board of directors of the company decides to pay a proportion of the profit in dividends
to shareholders.
Many ASX-listed firms pay dividends two times a year in form of ‘interim’ and ‘final’
dividends.
But it is not mandatory for a company to pay dividends twice a year.
Most ASX-listed firms pay dividends after interim or annual results.
However, the companies rarely pay quarterly dividends due to the administrative burden
of issuing thousands of payments regularly.
However, there is a subset of stocks that pays dividends on a regular basis.
These are mainly debt investment funds.
These funds directly disburse loans to borrowers.
Since they receive regular interest on the underlying loaned amount, these funds remain
in a position to issue monthly dividends.
Here are five debt funds that pay monthly dividends:
KKR Credit Income Fund (ASX:KKC)
It is a listed investment trust which invests in investment funds managed by KKR's credit
investment teams.
MCP’s will pay a dividend of AU$0.025 on 15 July 2021.
For the financial year ended 30 June 2022, KKC targets a distribution of 4.8% based on
the net tangible asset (NTA) per unit of AU$2.501.
The manager is confident that KKC will continue to target a distribution yield within the
range of 4% - 6% per annum over a complete market cycle.
READ MORE: What are the risks of investing in high dividend stocks?
MCP Income Opportunities Trust (ASX:MOT)
MCP Income Opportunities Trust (MOT) seeks to provide investors exposure to a portfolio
of private credit investments such as warrants, options, preference shares and equity.
MCP’s will pay a dividend of AU$0.019 on 8 July 2021.
The annual dividend yield stands at 7.04%.
MCP Master Income Trust (ASX:MXT)
The investors can get direct exposure to the Australian corporate loan market, a space
dominated by regulated banks, through MCP Master Income Trust.
MCP will pay a dividend of AU$0.006 on 8 July 2021.
The annual dividend yield stands at 4.66%.
NB Global Corporate Income Trust (ASX:NBI)
NB Global corporate Income Trust invests in high yield bonds of large, liquid global companies
to provide stable monthly income.
NB Global will pay a dividend of AU$0.017 on 9 July 2021.
As of the close of business on Wednesday, 30 June 2021, the unaudited estimate of the
NTA per unit of NB Global Corporate Income Trust was AU$2.05.
Perpetual Credit Income Trust (ASX:PCI)
The fund seeks to provide regular income by investing in a diversified credit and fixed
income asset portfolio.
It targets a total return equal to the RBA’s cash rate plus 3.25% per annum through the
economic cycle.
Perpetual Credit Income Trust will pay a dividend of AU$0.003 on 7 July 2021
Why do not companies pay regular dividends?
As already discussed, companies do not find it efficient from cost-benefit analysis to
issue dividends on a regular basis.
It involves higher costs for a company to issue thousands of payments regularly.