7 Best Monthly Dividend Stocks to Buy Now

After its meeting held on June 11 and 12, the Federal Reserve announced that it would hold the Federal funds rate steady for the time being. This was disappointing news to those who want to see lower rates sooner rather than later, but it was not a surprise to most interest-rate watchers. Inflation has proven to be more stubborn and persistent than anyone would like. Until core inflation falls to the Fed’s target of 2%, rates are likely to remain where they are.

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Still, rates won’t stay at these elevated levels forever. Inflation is showing signs of easing, and members of the Federal Open Market Committee (FOMC) have indicated that at least one rate cut is still expected this year.

Fixed-income investors have been fortunate so far this year, but the fact remains that, in the near future, it’s going to become harder for income investors to find high, guaranteed interest rates on things like bank certificates of deposit and government bonds. As this situation unfolds and the interest-rate environment changes, high-yielding, dividend-paying stocks will return to prominence. Most stocks that pay regular dividends pay them quarterly, but there are a handful of companies that make dividend distributions monthly. Monthly dividends appeal to income investors because most people have monthly expenses and organize their budgets by the month. Monthly income is more convenient because it is consistent with the normal process of expense management and budgeting by households and businesses.

In short, investors who own monthly dividend stocks enjoy faster access to their cash. This can be a benefit to all, but it is especially important to investors who use dividends to supplement their incomes. Here are seven of the best monthly dividend stocks:

Monthly Dividend Stock Market Capitalization Trailing Dividend Yield*
Gladstone Investment Corp. (ticker: GAIN) $508 million 6.9%
San Juan Basin Royalty Trust (SJT) $178 million 9.0%
LTC Properties Inc. (LTC) $1.5 billion 7.3%
SL Green Realty Corp. (SLG) $3.7 billion 5.5%
Gladstone Capital Corp. (GLAD) $492 million 9.5%
Realty Income Corp. (O) $46 billion 5.8%
PennantPark Floating Rate Capital Ltd. (PFLT) $749 million 11.9%

*As of June 18 close.

Gladstone Investment Corp. (GAIN)

GAIN is a publicly traded business development company, or BDC, that makes loans to small- and mid-sized, private equity-funded businesses in the U.S.

GAIN’s investment focus is on lower-middle-market mature firms that need to refinance existing debt or need funds to prepare for a merger or buyout. The company does not invest in startups or early stage growth firms. Gladstone offers various types of debt, including senior loans, credit lines and subordinated loans. GAIN also makes direct-equity and preferred-equity investments along with mezzanine loans, which are hybrid loans that have an equity component.

The company’s ideal loan size is more than $5 million but less than $30 million. Its target equity investment is somewhat smaller, ranging between $3 million and $20 million. On average, the life of Gladstone’s direct investments is about seven years.

In short, GAIN offers investors an attractive monthly income with the real possibility of substantial capital appreciation.

Market cap: $508 million Trailing dividend yield: 6.9%

San Juan Basin Royalty Trust (SJT)

A royalty trust is a unique kind of investment that allows shareholders to participate in the income from sales of natural resources. SJT is a publicly traded royalty trust that owns interests in producing oil and natural gas fields in the rich San Juan Basin, which is located in New Mexico and Colorado. SJT is paid a set percentage of the oil and gas revenues generated from its royalty properties. The trust collects these royalties and then distributes that income to shareholders as a monthly dividend.

Investors who research SJT will find the dividend yield very attractive, but, as with all investments, the risks should be taken into account. Oil and gas prices are heavily influenced by the world economy, energy markets and other factors, including geopolitical events such as wars or strained international relationships.

Furthermore, the energy markets are highly regulated. Unexpected changes to regulations in the oil and gas industry could affect energy prices, which will impact SJT’s income.

In other words, SJT can be an excellent income investment for those who are willing to accept the risks that come with modern energy investing.

Market cap: $178 million Trailing dividend yield: 9%

LTC Properties Inc. (LTC)

Most equity investors are familiar with real estate investment trusts, or REITs. They’re specialty companies that invest in income-producing commercial real estate. Equity REITs own and manage real estate directly. Mortgage REITs, or mREITs, hold an indirect equity stake in real estate by investing in commercial real estate mortgages or secured loans. All REITs are required to distribute 90% of their taxable income back to shareholders as dividends. Most REITs pay quarterly income. LTC is one of the relatively few REITs that pay monthly dividends.

LTC invests in health care properties such as nursing homes, senior housing and assisted living facilities in the U.S. An aging population makes this an exceptionally lucrative field right now.

LTC buys properties using a method called sale and leaseback. Basically, it buys senior health care facilities and then leases them back to the previous owners on a long-term basis. LTC receives a high, ongoing stream of rental income, and the previous owners get an injection of cash to use on management and operations.

About half of LTC’s portfolio is senior housing, and the other half is nursing homes.

Market cap: $1.5 billion Trailing dividend yield: 7.3%

[READ: 7 Best Money Market Funds to Buy for 2024]

SL Green Realty Corp. (SLG)

Despite real and ongoing challenges in the office segment of the commercial real estate industry, New York City remains home to some of the most valuable properties in the world.

SLG is a REIT with a singular focus on office properties in NYC. According to the company, SLG is the largest office landlord in Manhattan. The company is a fully integrated and internally managed REIT, meaning it doesn’t farm out any of its operations or administration; all business functions are managed in-house.

SLG buys and builds office buildings and holds and manages them for the long run. As of March 31, the company reported an equity interest in 57 office buildings encompassing more than 32 million square feet of rentable space. Over 28 million square feet are located in Manhattan. SLG also has an indirect stake in an additional 2.8 million square feet through secured debt and equity investments.

Like all REITs, SLG is required to distribute at least 90% of its taxable income to shareholders. Unlike most REITs, SLG pays that income monthly rather than quarterly.

Market cap: $3.7 billion Trailing dividend yield: 5.5%

Gladstone Capital Corp. (GLAD)

The next entrant on this list is another member of the Gladstone Management Corp. family of companies — for many of the same reasons.

Much like sister company GAIN, GLAD is a BDC that pays monthly income to investors. What sets GLAD apart is that it has a greater focus on debt instruments over equity, and it invests in somewhat smaller companies in the lower mid-market category.

The result of this difference in focus is that GLAD will have a higher and more reliable income stream, but it may offer less potential for capital appreciation.

Market cap: $492 million Trailing dividend yield: 9.5%

Realty Income Corp. (O)

Measured by market cap, O is the largest monthly dividend-paying stock. O is a component of the S&P 500 and is a Dividend Aristocrat — an exclusive group of companies that have raised their dividends for at least 25 consecutive years.

O is a large REIT that controls 334 million square feet of commercial space that, according to the company, commands an annualized base rent of over $4.8 billion. The company specializes in retail properties, and 73% of its facilities are nondiscretionary, low-price-point, service-oriented retail. However, it is making an effort to expand into U.S. data centers and server farms.

The stability and consistency this company has demonstrated over various economic cycles and through a variety of interest-rate environments has been very impressive. O is an excellent choice for investors looking for consistent monthly income and long-term capital growth.

Market cap: $46 billion Trailing dividend yield: 5.8%

PennantPark Floating Rate Capital Ltd. (PFLT)

PFLT is a unique BDC that makes secured floating-rate loans and equity investments in private or thinly traded public small-cap, middle-market companies. The company prefers to lend to firms in the rapid growth or buyout stages of the venture capital lifecycle.

Floating-rate loans don’t have a fixed interest rate. Instead, the rate PFLT charges changes based on an agreed-upon benchmark rate such as the three-month Libor rate. The company believes that floating-rate loans are less susceptible to interest-rate risk and will perform better in volatile rate environments.

PFLT is not a venture capital company, but most of the firms it lends to were funded by venture capital to some extent. Although it’s not a core business function, PFLT also holds income-producing equity securities like preferred stock, common stock, and warrants or options that it sometimes receives as compensation for its direct investments.

Market cap: $749 million Trailing dividend yield: 11.9%

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7 Best Monthly Dividend Stocks to Buy Now originally appeared on usnews.com

Update 06/20/24: This story was previously published at an earlier date and has been updated with new information.

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