Best Monthly Dividend Stocks | The bank rate
Dividend stocks are a popular way for investors to generate income, especially retired investors who need reliable cash flow. While most dividends are paid on a quarterly basis, some companies make their payouts on a monthly basis, and many investors appreciate this higher frequency, in part because it can help them structure their own budgets more efficiently.
One of the best things about dividend stocks is the thrill of having your payout deposited into your brokerage account without you having to lift a finger. And monthly dividend stocks allow you to experience that joy 12 times a year instead of the usual four times.
Here are seven top monthly dividend stocks, an often overlooked source for monthly dividends as well as what to look out for when looking for monthly dividend stocks.
7 Best Monthly Dividend Stocks
We looked at the relatively small number of companies paying monthly dividends and sorted out some of the best ones that had the following characteristics (data as of June 13, 2022):
- Traded on US exchanges, for easy access
- Market capitalization of more than 2 billion dollars, for a certain financial stability
- No business development companies (BDCs), which are a risky segment that often pays monthly dividends
Monthly dividends are especially popular among real estate investment trusts (REITs) because these companies must pay substantial dividends by law and they have business models with recurring income (rents) that help support cash flow. reliable.
1. Property income (O)
Realty Income is a REIT whose identity is based on monthly dividends, as it is called “The Monthly Dividend Company”. This company owns single-family commercial properties that it leases to quality tenants on a long-term basis, typically over 10 years.
Market capitalization: $38.0 billion
2. Green SL (SLG)
You may not know the name, but SL Green is the REIT behind many Big Apple offices. In fact, the company bills itself as “the largest office owner in New York.” Despite concerns about employees continuing to work from home even as COVID winds down, New York City remains a top market for this type of real estate.
Market capitalization: $3.2 billion
Yield: 7.0 percent
3. Industrial STAG (STAG)
This REIT focuses on industrial properties and warehouses, niches that have performed well in the context of the rise of e-commerce, especially since the advent of COVID. STAG is very successful and expects to grow significantly in the coming years as e-commerce continues to grow.
Market capitalization: $5.6 billion
4. AGNC Investment (AGNC)
AGNC Investment is a REIT, but a specific type called a mortgage REIT, which holds mortgages on real estate rather than the properties themselves. In this REIT’s case, it buys safer, agency-backed residential mortgages. The company has been listed on the stock exchange for over 14 years and has paid significant dividends along the way, although the dividend fluctuates depending on the economic climate.
Market capitalization: $5.8 billion
5. Apple Hospitality REIT (APLE)
This accommodation REIT operates more than 200 hotels under some of the industry’s best-known brands, including Marriott, Hilton and Hyatt. While Apple has been hit hard by the pandemic like many of its peers and had to cut its dividend, it has now returned to a monthly payment.
Market capitalization: $3.4 billion
Yield: 3.8 percent
6. EPR properties (EPR)
EPR calls itself an experiential REIT, and that’s because it focuses on properties where consumers can have a good time, like movie theaters, ski resorts, and other cultural venues. It has been investing in experiential properties for over 20 years, and although it also had to eliminate its dividend during the pandemic, it has returned to a monthly payment.
Market capitalization: $3.4 billion
7. Real Estate Agreement (ADC)
Agree is another name behind the name: it owns over 1,500 properties which it leases from well-known retail companies, such as Advance Auto Parts, PetSmart, AutoZone and many more. This REIT was converted to a monthly payout schedule in 2021, but has been public since 1994.
Market capitalization: $5.1 billion
Yield: 4.0 percent
Discover closed-end funds for monthly dividends
The number of stocks paying monthly dividends is relatively limited, and if you really want a monthly dividend stream, you will have to buy a lot of them, otherwise you will always have regular quarterly dividends. But you also don’t want to put all your money in one or two monthly dividend payments, because you’ll be taking significant risks for the modest benefit of that monthly payment.
But investors have an option if they’re looking for a diversified fund that pays monthly: closed-end funds (CEFs). These funds are collections of stocks and bonds, and they offer some diversification in their investments, helping to reduce their risk.
It is also useful to know that CEFs take on considerable debt to make their investments, which means that they can fluctuate a lot when the market becomes volatile.
Finally, it should be noted that sophisticated investors generally only buy CEFs when they are trading below net asset value, which is the price of all their assets minus their debt. This practice helps build a margin of safety on the investment, helping to protect investors, but it is not a guarantee of safety.
What dividend investors should watch out for
Monthly dividends can be attractive, but don’t be dazzled by the prospect of a regular monthly payout and forget that the underlying company has yet to thrive. When evaluating your monthly dividend stocks, you’ll want to consider the following questions, including some of the secrets to successful dividend investing:
- Dividend sustainability: Dividend sustainability is one of the key things to look out for, regardless of how often your company pays out. If a company reduces the payment, it could cause the stock to drop quickly. It makes no sense to buy a stock for its 5% dividend only to have it fall 20% when it has to cut or eliminate the payout.
- Resilient business model: Companies with a resilient business model will thrive in good times and not fare so badly in bad times, giving them more ways to pay their dividend and ideally grow it over time . Additionally, a resilient business model helps the company not have to cut payments when times get tough.
- High recurring cash flows: A business with high recurring cash flow, such as a subscription business or a real estate business, has greater stability, giving it the ability to safely pay dividends.
These are three issues investors relying on dividends should pay close attention to, but these are in addition to other issues you need to analyze when investing in individual stocks. However, these questions are less relevant when buying the best dividend ETFs.
And those looking for any kind of sustainable dividend stocks (not just monthly payers) should investigate Dividend Aristocrats, which have an enviable track record of returns.
At the end of the line
It can be nice to get paid on your investments on a monthly basis, but it’s essential to remember that the sustainability of dividends is more important than how often you get paid. After all, you could split the typical quarterly dividend into three parts and pay yourself each month. So, focus on finding companies that have a solid track record of paying – and ideally – increasing their payouts.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. Further, investors are cautioned that past performance of investment products does not guarantee future price appreciation.