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 particularly 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 dividend stocks that offer good yields, strong operations and monthly income.
AGNC Investment Corp. (ticker: AGNC)
AGNC is a real estate investment trust, or REIT, meaning it can avoid certain corporate tax burdens simply by virtue of delivering 90% of taxable income back to shareholders. However, the company is not a property manager but instead invests in residential mortgage “pass-through” securities and other mortgage-related investments that are guaranteed by U.S. government-sponsored enterprises like Fannie Mae or Freddie Mac. While not totally free of risk, the involvement of the government is an important backstop to these residential loans and helps to provide a measure of certainty to AGNC shareholders. Shares are up 21% or so year to date, thanks to a strong housing market and rising interest rates, but income-oriented investors should be most pleased with the generous 12-cent monthly dividend.
Current yield: 7.72%
PennantPark Floating Rate Capital (PFLT)
Asset manager PennantPark is primarily a lender to “subprime” middle-market companies, meaning companies with less-than-stellar credit ratings that must pay a higher rate on their loans to offset a higher risk profile. PFLT mitigates this risk for shareholders first by doing exhaustive research before issuing any debt, and then by focusing on a structure where it’s the “first lien” debt — meaning it’s first in line among creditors who want to get paid back in the event of bankruptcy. The icing on the cake is that its floating-rate loans actually see interest rates change with the market — and seeing as rates have been rising recently, that means borrowers with this kind of loan are paying PFLT even more now than they were in 2020 even though their loan structure hasn’t changed. Shares are up about 20% year to date as a result of this interest rate trend, but the yield alone on PennantPark makes this monthly dividend payer worth a look regardless of short-term stock movement.
Current yield: 8.99%
Prospect Capital Corp. (PSEC)
Prospect Capital is a monthly dividend stock that invests in other businesses and then passes on a share of the profits to investors. And lately, the PSEC portfolio has shown a lot of potential according to Wall Street; share prices are up 60% or so in the last 12 months, and the stock has surged roughly 85% from its 52-week low last summer. The real appeal for dividend investors is the income potential of Prospect, which focuses mainly on private debt and private equity investments to companies that range from candle manufacturers and specialty finance firms to media and IT service providers. As these investments pay off across well-diversified group of holdings, Prospect enjoys fairly consistent revenue — and consistent monthly dividends with a tremendous yield.
Current yield: 8.23%
Gladstone Investment Corp. (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 buyouts. In other words, these are companies small enough to be purchased fairly easily as they only have about $20 million to $100 million in revenue, but they are not so small as to be insubstantial. One of its most prominent investments is Brunswick, a bowling products company with a great brand but an admittedly niche business. By picking and choosing investments like this, GAIN can support reliable monthly dividends — and as a sweetener, the stock is also up 42% year to date on strong performance.
Current yield: 5.83%
Horizon Technology Finance Corp. (HRZN)
Horizon primarily offers financing to the tech sector, as you might’ve guessed from its name. However, it’s not only invested in digital marketing or big data companies, as its portfolio of investments right now includes a wide array of pharmaceutical and health care technology firms. These include companies like MustangBio, a biotechnology company working on genetically modified therapies for rare forms of cancer. These kind of development-stage drug companies can be incredibly risky investments all by themselves, but Horizon’s diversified approach helps provide a measure of stability — as evidenced by the company’s generous 10-cent per share dividend that is paid like clockwork each month.
Current yield: 7.18%
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 roughly 6,600 properties that are primarily occupied by big-name retailers including Walgreens Boots Alliance (WBA) and Dollar General Corp. (DG). Dividends have moved only fractionally higher in the last year or two, but that’s a pretty good sign considering the pandemic-related disruptions that struck many commercial real estate firms. The company is quite proud of its track record of more than 600 consecutive monthly dividends as of this writing, and investors can have confidence it will continue to build on that history going forward.
Current yield: 3.99%
SL Green Realty Corp. (SLG)
SL Green Realty is a REIT that’s focused on Manhattan commercial real estate. It currently owns a stake in about 84 buildings that command roughly 38 million square feet in one of the most desirable cities on the planet. While there were concerns last year about the pandemic affecting rents and occupancy, SLG has proven resilient both in its share price and in its dividend payments. Shares have surged about 40% year to date in 2021, and its monthly distributions have held firm at just more than 30 cents per share.
Current yield: 4.59%
Stag Industrial (STAG)
Stag is an industrial park operator that owns and leases single-tenant industrial buildings and warehouses to manufacturers, shipping companies and anyone who needs a big property to conduct their business. With only one name on the lease, it may sound like there’s a bit more risk than having a diverse group of tenants. However, it actually offers reliability since you’re not dealing with thousands of clients and the contracts are often 10-year agreements or longer. And with top Stag tenants including tech giant Amazon.com (AMZN), automaker Ford Motor Co. (F) and shipping giant FedEx Corp. (FDX), investors can have confidence the rent checks won’t bounce. Shares have jumped about 21% so far in 2021, and the 12-cent dividend remains very sustainable.
Current yield: 3.94%
Eight of the best monthly dividend stocks to buy now:
— AGNC Investment Corp. (AGNC)
— PennantPark Floating Rate Capital (PFLT)
— Prospect Capital Corp. (PSEC)
— Gladstone Investment Corp. (GAIN)
— Horizon Technology Finance Corp. (HRZN)
— Realty Income Corp. (O)
— SL Green Realty Corp. (SLG)
— Stag Industrial (STAG)
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Update 06/03/21: This story was published at an earlier date and has been updated with new information.