Most dividend stocks made payments to shareholders on a quarterly basis. But not all companies pay quarterly dividends. In rarer cases, companies may pay dividends to shareholders annually or semi-annually. There is an even more appealing group known as monthly dividend stocks.
These are stocks that pay dividends once a month, equating to 12 dividend payments per year. Monthly dividend stocks are more attractive than quarterly, semi-annually or annual dividend payers because investors receive more frequent dividends.
Stocks That Pay Monthly Dividends
For investors who want their dividend income to pay for monthly expenses, monthly dividend stocks are quite appealing. The following 12 monthly dividend stocks make 12 dividend payments each year.
1. Realty Income (O)
Realty Income is a retail-focused REIT that owns more than 6,500 properties. The company owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties. Further, this means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment.
Realty Income is arguably the most well-known (and best) monthly dividend stock. In fact, the company has trademarked itself as The Monthly Dividend Company to cement this reputation.
Realty Income has declared over 600 consecutive monthly dividend payments without interruption and has increased its dividend over 100 times since its initial public offering in 1994. Realty Income is a member of the Dividend Aristocrats list.
The company has generated steady growth for decades. According to Realty Income, it has grown its earnings-per-share in 24 out of the past 25 years. Shares have a current dividend yield of 4.1%.
2. Main Street Capital (MAIN)
Main Street Capital is a Business Development Company, or BDC. The company operates as a debt and equity investor for lower middle market companies (those with $10-$150 million of annual revenues) seeking to transform their capital structures. The BDC has the capability to invest in both debt and equity.
Main Street Capital Corporation also invests in the private debt of middle market companies and has an asset management advisory business
Main Street has a 6% dividend yield. The company has never reduced its monthly dividend payout since its 2007 IPO, and has raised the dividend by over 80% since it went public. Also, Main Street has paid cumulative dividends exceeding $31 per share since its IPO.
3. SL Green Realty (SLG)
SL Green is Manhattan’s largest office landlord, and currently owns 96 buildings totaling 41 million square feet. Office real estate is extremely challenged, as the coronavirus pandemic has forced many people to work at home. Also, SL Green’s performance has improved in recent quarters.
In the 2021 first quarter, SL Green’s same-store net operating income decreased 1.4% year-over-year, but its occupancy rate improved from 93.4% at the end of the previous quarter to 94.2%. Its funds from operations (FFO) per share declined 17%.
On a positive note, rent collection improved meaningfully to 98% of total billings for office, 85.0% of billings for retail and 95.3% of total billings. Investors are counting on the continued reopening as the pandemic ends, and workers steadily return to the office.
Shares have a 4.6% current dividend yield.
4. STAG Industrial (STAG)
STAG Industrial is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has ~462 buildings across 38 states in the United States.
The focus on industrial properties such as warehouses positions STAG well, as these properties are in high demand due to the e-commerce boom. As more consumers spend online instead of physical retail stores, e-commerce is growing at a high rate. More than 40% of STAG’s property portfolio engages in e-commerce activity.
This has resulted in strong performance for STAG, even during difficult times for the broader economy such as the coronavirus pandemic last year. STAG collected 99.6% of its base rental billings in 2020.
In the 2021 first quarter, STAG grew core FFO-per-share by 4.3% year-over-year. Core FFO of $79.8 million for the first quarter of 2021 increased 13% from $70.6 million in the year-ago quarter. Also, STAG Industrial has a 4% current dividend yield.
5. TransAlta Renewables (TRSWF)
TransAlta Renewables is a renewable energy producer based in Canada. It owns 13 hydro facilities, 23 wind farms, 7 natural gas plants, 1 battery asset and 1 solar asset. In total, the company owns directly or through economic interests, an aggregate of over 2,500 megawatts of gross generating capacity in operation.
Renewable energy is a major global growth theme. Costs are rapidly declining for renewable energy production, while demand is rising as global industrial and residential customers increasingly move away from fossil fuels. For 2021, TransAlta Renewables expects comparable EBITDA to grow by 8% at the midpoint of company guidance.
TransAlta pays a monthly dividend of $0.0783 per share in Canadian dollars. Also, in terms of U.S. dollars, the annualized dividend payout of roughly $0.74 per share represents a strong yield above 4%.
6. AGNC Investment Corp. (AGNC)
The company was founded in 2008 and is an internally-managed REIT. Whereas most REITs own physical properties that are leased to tenants, AGNC has a different business model. It operates in a niche of the REIT market: mortgage securities.
AGNC invests in agency mortgage-backed securities. It generates income by collecting interest on its invested assets, minus borrowing costs. It also records gains or losses from its investments and hedging practices.
The majority of investments are fixed-rate agency MBS. Most of these are MBS with a 30-year maturity period. The counterparties to most of AGNC’s assets are located in North America. Counterparties in Europe also represent a significant percentage of the trust’s total portfolio.
The current monthly dividend payout of $0.12 per share represents a nearly 8% dividend yield. Dividend payouts can be volatile with mortgage REITs, although AGNC’s dividend payout appears sustainable at the present time.
7. Gladstone Investment Corp. (GAIN)
Gladstone Investment is a Business Development Company that places debt and equity investments in small and medium privately-held companies. These companies usually have annual EBITDA in the range of $3 million to $20 million.
The trust’s debt investments primarily consist of senior term loans, senior subordinated loans, and junior subordinated loans. Equity investments primarily consist of preferred or common stock, or options as a means of acquiring stock.
Gladstone Investment makes money by receiving interest and dividends on its investments, and it also realizes gains when investments are sold for a profit. It distributes a high level of cash to shareholders, with a 6% current yield.
8. Gladstone Land Corporation (LAND)
Gladstone Land Corporation is a REIT, that specializes in the owning and operating of farmland in the United States. The trust owns nearly 140 farms, comprising over 100,000 acres of farmable land. Gladstone’s business is made up of three different options available to farmers, all of which are done on a triple-net basis. The trust offers long-term sale leaseback transactions, traditional leases of farmland, and outright purchases of farm properties.
Gladstone’s portfolio has an appraised value above $1 billion, and the stock trades with a market capitalization of nearly $500 million.
Gladstone offers farmers a diverse portfolio of high-quality properties. Recessions may hurt the trust’s earnings as farmers that operate on low margins may struggle if a downturn occurs. Weather is another risk factor for Gladstone and its farmers as well, as crop destruction can occur for a variety of reasons. Still, Gladstone’s dividend appears covered with a projected payout ratio of 80% for 2021, and the stock has a 2.4% dividend yield.
9. Prospect Capital Corporation (PSEC)
Prospect Capital Corporation is a business development company, or BDC. It provides private debt and private equity to middle-market companies in the US. The company focuses on direct lending to owner-operated companies, as well as sponsor-backed transactions. Prospect invests primarily in first and second lien senior loans and mezzanine debt.
Prospect reported fiscal third-quarter earnings on May 10th, 2021, with results beating estimates on both the top and bottom lines. Net investment income came to $0.19 per share. This was flat from the same quarter last year. Net asset value ended the March quarter at $9.38, up from $8.96 in the December quarter.
Net investment income on a per share basis covers the dividend but just barely. Therefore, the dividend could be at risk in a severe downturn, although company management has made it clear it intends to defend the payout. Prospect stock has a high yield of 8.6%.
10. Superior Plus (SUUIF)
Superior Plus Corp is a propane distributor in North America. The company generates around $2 billion in annual revenues and is based in Canada. The company previously had a large Specialty Chemicals segment, but sold this business in 2021 to become a pure-play distribution company.
Its Energy Distribution segment is involved in the distribution and retail marketing of propane products, liquid fuels (including heating oil and propane gas), and wholesale liquids marketing services.
In the 2021 first quarter, the company generated an adjusted EBITDA of $17.48 million, 14% higher year-over-year in constant currency. Its U.S. Propane segment grew EBITDA by 35% due to the contribution from acquisitions as well as a boost from unusually cold temperatures.
Superior Plus stock has a 4.8% dividend yield.
11. ARMOUR Residential REIT (ARR)
ARMOUR Residential is a mortgage REIT that invests primarily in residential mortgage-backed securities that are guaranteed or issued by a United States government entity including Fannie Mae, Freddie Mac and Ginnie Mae.
In the 2021 first quarter, ARMOUR’s core income fell 28% quarter-over-quarter. ARMOUR also reported a debt-to-equity ratio of 4.2x, down from 4.8x previously. Its securities portfolio included $7.7 billion of agency MBS and includes TBA securities. Meanwhile, comprehensive income stood at $29.1 million, representing 12% annualized return based on stockholder’s equity at the beginning of the quarter.
ARMOUR’s quality metrics have been volatile given the performance of the trust as rates have moved around over the years. Gross margins have moved down since short-term rates began to rise meaningfully a couple of years ago, although it appears most of that damage has been done. Interest coverage has declined with spreads but also appears to have stabilized.
ARMOUR stock is particularly attractive because of its 10% dividend yield.
12. Whitestone REIT (WSR)
Whitestone is a retail REIT that owns about 58 properties with about 5.0 million square feet of gross leasable area primarily in top U.S. markets in Texas and Arizona. Its tenant base is very diversified with nearly 1,400 tenants. The top 5 industries are restaurant & food service, grocery, financial services, salons, and medical & dental.
During the pandemic, the REIT rightly halted acquisitions and development projects, and reduced expenses, as it focuses on improving its financial position and liquidity. The February 2021 dividend increase is a good sign. Management believes, post-pandemic, investments in acquisitions, re-development, and development projects can drive returns of at least 10%.
At the end of 2020, Whitestone had a debt-to-equity ratio of about 2.1x. Moreover, its dividend is still much lower than before, allowing it to save about $27 million a year versus the previous dividend level. Whitestone has no real estate debt maturing in 2021. Shares currently yield 5.1%.
Monthly Dividend Stocks FAQ
Monthly dividend stocks are attractive in relation to other dividend stocks because of their more frequent dividend payments. With a dividend payment each month, investors can more easily align their dividend income with their living expenses. Monthly dividend payouts also allow for faster compounding of reinvested dividends.
Paying a dividend to shareholders each month creates some additional costs that many companies want to avoid. It also makes a company beholden to a monthly dividend payout, whereas a less frequent dividend payment provides some flexibility against having one bad month which would jeopardize a dividend payout.
Indirectly—many of the companies that pay monthly dividends tend to be from riskier industries such as Business Development Companies and Real Estate Investment Trusts. It is important that investors analyze each stock individually and its underlying fundamentals before investing.
Investors should also consider that many companies with monthly dividend payments are headquartered outside the U.S., which exposes investors to currency risk.