Here’s how to get a monthly payday.
Many investors are drawn to dividend stocks because they offer a regular flow of cash that doesn’t depend on the market going up. What’s more, chances are good that a company with a rich history of payouts will keep delivering its regular dividend. That makes monthly dividend stocks very appealing. These income investments offer distributions every 30 days instead of the more typical cycle of once per quarter. If you’re looking for a steady stream of income in retirement or a regular flow of cash to keep your nest egg growing, a monthly dividend stock could be a good fit. Here are eight top stocks that offer good yields, strong operations and monthly income.
Gladstone Investment Corp. (ticker: GAIN)
Gladstone is a business development company, or BDC. This class of publicly traded corporation is in fact run more like a private equity fund or a hedge fund than a traditional business, making investments in other firms through debt and equity stakes and then sharing in the successes or struggles of those firms. Gladstone primarily focuses on “lower middle market companies,” or businesses that only have about $20 million to $100 million in revenue. Thanks to strong management and a good portfolio of investments, the company has continued to see strong returns despite the pandemic. As a result, its monthly dividend is actually up slightly from a year ago even as other stocks have slashed payouts in 2020.
Current yield: 8.2%
Horizon Technology Finance Corp. (HRZN)
Horizon is another one of the best monthly dividend stocks that generates its income from investments in other firms. As you may have guessed by the name, the company primarily offers financing to the tech sector. While the stock certainly took a hit in March amid the worst of the pandemic-sparked volatility, HRZN shares are now up slightly on the year — and most importantly, the company has continued to pay its 10-cent monthly dividend without interruption in 2020. With a portfolio that includes biotechnology stocks as well as more traditional tech and media firms, Horizon is well-positioned to see continued success going forward, too.
Current Yield: 9.3%
LTC Properties (LTC)
LTC is one of the most stable bets on Wall Street, both because of its structure as a real estate investment trust, or REIT, that generates cash from regular tenant rent checks and because it’s in a specific sector that is among the most reliable in the U.S. economy. That sector, of course, is health care for seniors. LTC operates senior housing, nursing centers and other medical-related properties that cater to older Americans. By 2018, there were 52 million Americans aged 65 and older, according to the U.S. Census Bureau, but that number is estimated to roughly double by 2050. This reliable revenue stream and near-certain outlook for the future allows for significant and dependable distributions of 19 cents each month for shareholders.
Current yield: 5.9%
PennantPark Floating Rate Capital (PFLT)
Asset manager PennantPark is primarily a lender to middle market companies, focused on “first lien” debt. This means that the company prefers to only offer cash to firms if it’s first in line to get paid back in the event things go south. PFLT currently has investments in more than 100 companies in dozens of different industries, offering a diversified revenue stream to provide reliability for shareholders. Additionally, in August 2020, the company announced a joint venture with private lender Pantheon to team up on a credit fund to finance additional growth opportunities. With a double-digit yield, PFLT is among the most generous monthly dividend stocks out there right now.
Current yield: 10.6%
Prospect Capital Corp. (PSEC)
Prospect Capital is another monthly dividend stock that invests in other businesses and then passes on a share of the profits to investors via regular distributions. PSEC has been paying 6 cents in dividends to shareholders every month like clockwork since 2017, and that hasn’t changed in 2020 despite the disruptions of the global pandemic. The stock’s wide array of investments currently includes auto parts companies, health care providers, food distributors and media companies, to name a few. This well-diversified group of holdings helps provide consistent revenue that fuels its steady monthly dividend.
Current Yield: 13.3%
Realty Income Corp. (O)
Perhaps the best-known monthly dividend stock, Realty Income bills itself as “The Monthly Dividend Company.” This commercial real estate firm owns 6,500 properties that are primarily occupied by big-name merchants including Walgreens Boots Alliance (WBA) and Dollar General Corp. (DG). Dividends have squeaked fractionally higher this year, which is a good sign when other REITs are cutting back, and Realty Income has been incredibly transparent on its rent collection trends lately with regular updates to shareholders. In fact, in its latest report, the company showed almost 94% of all rent had been collected across its portfolio through November, an excellent coverage rate that ensures normal operations despite the pandemic-related disruptions this year.
Current yield: 4.6%
Shaw Communications (SJR)
Shaw is a Canadian telecommunications company that primarily serves wireless customers but also offers cable TV and landline voice services. Its customer base is admittedly smaller than major U.S. telecoms, but with recent investments in 5G — or fifth generation — technology, it still has potential to keep growing beyond current levels and evolve with the modern marketplace. For income investors, the monthly bills Shaw sends out to its customers will continue to support regular monthly dividend payments that you can rely on. Current payouts of 7.6 cents are in line with pre-pandemic rates and should continue into 2021.
Current yield: 4.9%
Stag Industrial (STAG)
Though technically a real estate company, STAG is a hybrid investment that is very much a play on the industrial sector as it owns and leases “single-tenant” industrial buildings to manufacturers, trucking companies and anyone who needs a big property to conduct their business. These locations are big, but they only have one name on the lease. This niche, as well as this overall structure, offers a lot of reliability, particularly as top tenants include e-commerce giant Amazon.com (AMZN), automaker Ford Motor Co. (F) and shipping giant FedEx Corp. (FDX). With STAG’s habit of negotiating long-term leases that are 10 years or longer in some cases, investors can have confidence that the company will have the cash to cover its monthly dividend of 12 cents through 2021 and beyond.
Current yield: 4.7%
Eight best monthly dividend stocks to buy now:
— Gladstone Investment Corp. (GAIN)
— Horizon Technology Finance Corp. (HRZN)
— LTC Properties (LTC)
— PennantPark Floating Rate Capital (PFLT)
— Prospect Capital Corp. (PSEC)
— Realty Income Corp. (O)
— Shaw Communications (SJR)
— Stag Industrial (STAG)
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Update 12/10/20: This story was published at an earlier date and has been updated with new information.