On Oct. 19, 2023, the U.S. 10-year Treasury bond closed with a yield of 4.98%, its highest in 17 years. That wasn’t long ago, yet the interest rate picture has changed dramatically. With inflation slowing, the Federal Reserve has paused its policy of raising rates and — depending on how the economy reacts — may soon start cutting instead. In anticipation of a lower federal funds rate, the market has been driving bond yields lower. The 10-year Treasury yield closed at 3.87% on Dec. 20, down about 22% from its recent high.
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As it becomes more difficult for income-oriented investors to find and lock in high fixed rates, dividend stocks with superior yields are coming back into focus. Most stocks pay dividends quarterly, but a handful of quality public companies — mostly in the real estate, energy and financial sectors — distribute their dividends on a monthly basis.
Monthly dividends are attractive to many investors who, after all, have monthly expenses. Monthly income is more consistent with the typical process of budgeting and expense management. Simply put, those who own monthly dividend stocks have faster access to cash. This is helpful to investors who use dividends to meet living expenses, but it’s also a benefit to those who reinvest income back into the market. Here are seven monthly dividend stocks to buy:
| Stock | Market capitalization | Trailing 12-Month Dividend Yield |
| Realty Income Corp. (ticker: O) | $41.1 billion | 5.4% |
| Ellington Financial Inc. (EFC) | $1 billion | 14.5% |
| SL Green Realty Corp. (SLG) | $3 billion | 7.1% |
| Sabine Royalty Trust (SBR) | $970 million | 9.6% |
| Global Water Resources Inc. (GWRS) | $311.6 million | 2.3% |
| LTC Properties Inc. (LTC) | $1.4 billion | 7.5% |
| Agree Realty Corp. (ADC) | $6.2 billion | 4.7% |
Realty Income Corp. (O)
This real estate income trust, or REIT, tops our list for several reasons. Foremost is its consistency in paying and increasing its monthly dividend.
Realty Income is a member of an exclusive club called the Dividend Aristocrats, meaning it is an S&P 500 company that has increased its dividend every year for at least the last 25 years. Continued dividend growth is not guaranteed, but if historical performance is a guide, not only will investors receive monthly dividends, but they will enjoy higher dividends every year.
The company owns more than 13,200 buildings located near population centers around the U.S. It leases its real estate on a long-term, net-lease basis to creditworthy tenants, such as large drug store chains, convenience stores and big box retailers.
Market cap: $41.1 billion 12-month yield: 5.4%
Ellington Financial Inc. (EFC)
EFC is a REIT based in Old Greenwich, Connecticut. The company has two main divisions: its investment portfolio and Longbridge Financial.
The investment portfolio segment owns and manages a diversified portfolio of residential mortgage-backed securities that are backed by the U.S. government, or by a U.S. government housing or mortgage agency. To a lesser extent, it holds some consumer debt securities as well.
The Longbridge segment markets, originates and services reverse mortgages.
EFC qualifies as a mortgage REIT, or mREIT, which distributes the majority of its after-tax income to shareholders in the form of a monthly dividend. Despite the rising interest rate environment, the stock is basically flat for the year.
Market cap: $1 billion 12-month yield: 14.5%
SL Green Realty Corp. (SLG)
SLG owns and operates more Manhattan office space than any other New York City landlord, boasting an ownership stake in 32 million square feet of rentable space. In addition to buying and managing buildings, SLG is also involved in the construction and development of commercial real estate.
Office property has been a challenging business since the start of the pandemic. High interest rates and soaring inflation have hurt the company’s earnings. But, overall, SLG seems to be weathering the storm. The company is being very deliberate about refinancing terms and is making an effort to cut back on its high debt level.
The investment rationale for SLG, however, has to do with the future, not the past. Rates are moderating and may be heading even lower. Likewise, inflation is down to a much more reasonable rate. In addition, workers are, by degrees, returning to the office. All of which is to say, the worst may be behind SLG and other commercial property investors.
Market cap: $3 billion 12-month yield: 7.1%
Sabine Royalty Trust (SBR)
SBR offers investors a straightforward proposition. The Dallas-based company owns the oil, gas and mineral rights to producing oil and natural gas fields in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas. It collects royalties on energy produced, and it distributes income to shareholders as monthly dividends.
Despite the developed world making a concerted effort to transition away from fossil fuels, traditional energy sources — specifically oil and natural gas — will remain prominent for years to come. In addition to their producing wells, SBR is entitled to future royalties from millions of barrels of proven reserves as well. Investors looking for dependable monthly dividend income should feel good about buying SBR today.
SBR has lost nearly 25% in value so far in 2023. This may be attributable to two factors: the recent precipitous drop in energy prices and high interest rates. Both of these, however, are cyclical phenomena that will eventually reverse.
Market cap: $970 million 12-month yield: 9.6%
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Global Water Resources Inc. (GWRS)
GWRS has been providing water-related utility services to communities in Arizona for 20 years. The stock represents a pure play on water resources in the large and growing cities of Phoenix and Tucson.
Meeting the water needs of the 5 million people who live in and around the metro areas of those two southern Arizona cities is a great challenge. The upside of that challenge is the fact that water demand is always high in this arid area of the country.
GWRS is a relatively small but well-established regulated utility. According to its most recent quarterly earnings report, the company took in $14.5 million in revenue in the third quarter. That is an increase of $2.6 million over the same quarter last year. This improving performance led the company’s board of directors to authorize a 1% increase in the monthly dividend, which now stands at 3 cents a share.
Market cap: $311.6 million 12-month yield: 2.3%
LTC Properties Inc. (LTC)
LTC is a real estate company operating in the senior housing and health care sectors. This REIT can be considered a hybrid REIT, meaning it has qualities of both an mREIT and an equity REIT.
The company has a unique business plan with a sophisticated sale-and-lease-back strategy. It involves buying senior housing and long-term care facilities and then leasing them back to the seller — who is usually also the operator — on a long-term basis. In this way, the firm can secure equity interest in the real estate and generate sustained monthly rental income.
The stock has lost nearly 9% in value so far in 2023, but that may be due more to the rising interest rate environment than its overall financial performance. The aging of the baby boomers and the ever-increasing demand for elder health care services should support demand for LTC and companies like it for many years to come.
Market cap: $1.4 billion 12-month yield: 7.5%
Agree Realty Corp. (ADC)
ADC is a REIT that isn’t giving up on brick-and-mortar retail. Instead, the company is using innovative strategies and unique financing methods to rethink the real estate industry’s approach to retail properties.
ADC has an equity interest in more than 2,000 properties that represent 43 million square feet of rentable space. That accounts for the company’s strong cash flow, which allows it to pay a current dividend of 25 cents per share per month. According to the company’s investor relations site, they’ve achieved a 25.9% shareholder return over the past five years.
The challenges facing the retail class of the commercial property industry are not going away. ADC has decided to take those challenges head on. They are well diversified both geographically and in the retail sectors they own. More than two-thirds of their tenants have investment-grade credit ratings, according to S&P.
Market cap: $6.2 billion 12-month yield: 4.7%
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7 Best Monthly Dividend Stocks to Buy Now originally appeared on usnews.com
Update 12/21/23: This story was previously published at an earlier date and has been updated with new information.
