Tap into five times the dividend yield of the S&P 500.
In recent years, a small group of stocks wowed investors with double-digit dividend yields. Income has lately been much harder to come by as the average annual dividend yield of the S&P 500 has plummeted to 1.31% and the tech-heavy Nasdaq-100 is sitting at a meager 0.71%. Those double-digit yields are all but extinct in 2021, but a handful of stocks still offer impressive yield all the same — and most important for investors looking for reliability, these ones even pay those dividends once a month instead of each quarter. The following seven monthly dividend stocks all yield 6% or more.
AGNC Investment Corp. (ticker: AGNC)
AGNC is a real estate investment trust, or REIT. This special class of stock can avoid certain corporate taxes as long as it delivers 90% of taxable income back to shareholders, meaning a mandate for big dividends. However, it’s important to note that while this company is involved in real estate, AGNC is not a property manager but an investor in residential mortgage securities and other related assets. There is risk here, but these “agency” mortgages are backstopped by U.S. government-sponsored enterprises like Fannie Mae and Freddie Mac. Shares have been choppy in 2021, but the generous 12-cent monthly dividend drives significant gains regardless of the stock price.
Current yield: 9.1%
Gladstone Capital Corp. (GLAD)
Gladstone has a similar operation to AGNC, but its business-focused perspective means that the company invests in corporate debt instead of residential mortgages. This monthly dividend stock is a financial firm focused on extending loans of less than $30 million with terms of less than seven years to smaller companies in various industries including aerospace, communications, technology, materials and real estate. Gladstone has a diversified debt portfolio that helps reduce the risk of a single company or sector running into trouble — and based on the stock’s roughly 35% total return in 2021, this approach can deliver big stock gains along with consistent and generous monthly dividends.
Current yield: 6.78%
Horizon Technology Finance Corp. (HRZN)
Another top performer among monthly dividend stocks in 2021 is Horizon Technology Finance, which has gained 30% year to date — a figure that jumps to 36% when including reinvested dividends — and has repeatedly set multiyear highs. Similar to Gladstone but with a focus on the high-growth potential of tech and biotechnology startups, this stock continues to ride bullish market sentiment around the tech sector via its portfolio of investments in companies like digital lesson platform Education Elements, medical diagnostics firm InfoBionic and solar power firm Enphase Energy (ENPH). As these startups grow and thrive, they deliver profit-sharing and debt payments back to Horizon that fuel 10-cent monthly dividends that have been paid steadily since 2016.
Current yield: 6.95%
LTC Properties Inc. (LTC)
After peaking in late 2019, LTC Properties remains down substantially from its pre-pandemic highs. But there’s reason to believe that this REIT’s juicy dividend is here to stay, considering that it has continued the 19-cent monthly payment uninterrupted despite the volatility of the last few years. LTC owns senior housing and health care properties — with the business basically split 50/50 between assisted living communities and skilled nursing centers — and it’s undeniable that the public health challenges of the last few years have increased costs and weighed down occupancy. Looking at the bigger picture, the baby boomer generation is still destined for retirement and longer life expectancy, driving demand for LTC’s services for many years to come.
Current yield: 6.19%
Main Street Capital Corp. (MAIN)
Main Street Capital is a midsize investment firm with a diversified portfolio of debt and small private equity holdings. Collectively, this lineup of investments is reasonably protected against a downturn thanks to the wide variety of companies in which MAIN has a foothold — from a flower growing company and a hose manufacturer to software firms and energy service companies. And as the U.S. recovery has taken hold in the last year, all of these smaller and specialized companies seem to have found new life. MAIN stock has surged 33% year to date, on top of its generous 20.5-cent dividend.
Current yield: 6.09%
PennantPark Floating Rate Capital Ltd. (PFLT)
Asset manager PennantPark is primarily a lender to midsize companies, 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. That’s a great business to be in, but the icing on the cake is that its floating-rate loans actually see interest rates change with the market — so when rates rise, borrowers with this kind of loan pay PennantPark even more. Shares are up more than 50% in the last 12 months or so, but income investors should be just as attracted to the monthly payout of 9.5 cents that’s good for a tremendous yield.
Current yield: 8.76%
Pembina Pipeline Corp. (PBA)
Pembina is a midstream energy company that operates pipelines, storage facilities and other transportation infrastructure that mainly serve the fracking segment of the North American oil and gas industry. Pembina boasts pipeline capacity of 3.1 million barrels of oil, ground storage of 11 million barrels and rail terminaling capacity of roughly 145,000 barrels of oil equivalent. As demand for energy continues to rise amid the economic recovery and prices for oil and gas remain firm, PBA is in the right place at the right time. And while dividends can fluctuate from month to month, the annualized yield is enough to make most income investors sit up and take notice.
Current yield: 6.19%
Seven monthly dividend stocks with big yields:
— AGNC Investment Corp. (AGNC)
— Gladstone Capital Corp. (GLAD)
— Horizon Technology Finance Corp. (HRZN)
— LTC Properties Inc. (LTC)
— Main Street Capital Corp. (MAIN)
— PennantPark Floating Rate Capital Ltd. (PFLT)
— Pembina Pipeline Corp. (PBA)
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Update 08/05/21: This story was published at an earlier date and has been updated with new information.