Two important components make up the total return of a stock or other investment. The first is price appreciation. If an investor buys stock shares at $100 and the market price goes up to $110 in a given time, say one year, that investor has achieved a 10% return. The second aspect of total return is income. In the case of stock investors, income comes in the form of dividends. Any income dividend distributed to shareholders becomes a factor in calculating total return. So, if the hypothetical investor mentioned above earns $1 in dividends during that same year, it would be added to the $10 they made in capital appreciation for a total return of 11%.
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Another reason to appreciate dividend stocks is that they represent direct participation in the revenue and earnings of a company. Dividends can be spent on everyday expenses, reinvested back into the market, or saved in a money market or other account to be used later.
The management of public companies — specifically the board of directors — makes the decisions regarding dividends. They decide how much to distribute and the payout schedule. Most companies that pay dividends distribute them monthly, but a select group of companies — about 80 in number — pay dividends monthly.
Many investors prefer monthly dividends for the obvious reason that, all else being equal, it’s simply better to be paid sooner rather than later. Retired people and other investors who depend on dividends as a major source of income especially appreciate monthly dividend-paying stocks.
If you’re interested in monthly dividends, here’s a list of seven monthly income stocks you should consider buying today:
| Stock | Monthly Trailing Dividend* |
| Agree Realty Corp. (ticker: ADC) | 4.4% |
| Modiv Industrial Inc. (MDV) | 7.8% |
| PermRock Royalty Trust (PRT) | 11.3% |
| Ellington Financial Inc. (EFC) | 13.6% |
| Gladstone Investment Corp. (GAIN) | 6.9% |
| LTC Properties Inc. (LTC) | 6.1% |
| Realty Income Corp. (O) | 5.4% |
*As of July 24 close.
Agree Realty Corp. (ADC)
When it comes to retail, investors cannot ignore the incredible growth of e-commerce. Online shopping has been a disruptive force in the retail industry, to say the least. But while some companies in the brick-and-mortar retail space have struggled in the face of online competition, the $6.7 billion real estate investment trust, or REIT, ADC has managed to thrive and grow.
This company has a two-pronged approach to owning and managing retail real estate.
First, they are committed to innovative and unique net-lease financing methods. Their net-lease approach allows them to own high-quality retail properties and collect high monthly rent while having virtually no landlord responsibilities. Secondly, is their rigorous tenant and location selection process. They own property in prime locations near population centers and choose only investment-grade, creditworthy tenants.
ADC has a portfolio of more than 2,000 retail properties in 49 U.S. states. It controls well over 44 million square feet of leasable space. According to S&P Global Market Intelligence, this monthly dividend REIT has delivered a compounded average total return of 11.6% since its founding in 1994 through June 30, 2024.
Trailing yield: 4.4%
Modiv Industrial Inc. (MDV)
Modiv is a fully integrated, internally managed REIT, simply meaning that all business and investment decisions are made in-house by MDV management. This means investors can count on high-quality, knowledgeable operational control of the firm.
Modiv concentrates its investment activity on three classes of income-producing real estate. As its name suggests, the first and foremost is industrial buildings. To a somewhat lesser but still significant amount, it also owns properties in the retail and office sectors.
Modiv is a relatively small company with a market cap of $140 million. That said, it has equity interest in over 4.5 million square feet of rentable space and the market value of its properties exceeds $600 million. The current annual forward dividend for MDV is $1.15. That dividend is paid out monthly and equates to a yield of 7.8% based on recent stock price data.
On March 4, the company reported fiscal 2023 revenue and earnings that were substantially in line with Wall Street’s expectations. It reported annual revenue of $46.9 million, which was 7.1% higher than the previous year and earnings per share of $1.33, which exceeded Wall Street’s consensus by 4 cents.
Trailing yield: 7.8%
PermRock Royalty Trust (PRT)
Some of North America’s largest oil and natural gas reserves are located in the Permian Basin in West Texas and Southeastern New Mexico. PRT is a $48 million royalty trust company that holds mineral rights that entitle it to a full 80% of profits that are generated by producing claims in the region owned by Boaz Energy II LLC.
The target properties span just under 23,000 net acres on the Eastern Shelf of the Permian Basin in the Texas Counties of Glasscock, Schleicher, Stonewall and Coke.
Investors considering PRT need to realize that the royalties the trust collects and subsequently distributes to shareholders are very sensitive to the oil and natural gas markets. When energy prices are higher, PRT will earn more and pay higher dividends. Conversely, if energy prices fall, the stock’s dividend will be adversely affected.
That said, the company’s only function is to collect the revenue that its rights generate and distribute the income to shareholders. It has been paying a reliable, steady stream of monthly income since the trust was formed in 2017.
Trailing yield: 11.3%
[READ: The 10 Top Picks of 10 Billionaire Stock Portfolios]
Ellington Financial Inc. (EFC)
EFC is a unique type of REIT called a mortgage REIT, or mREIT. This $1.1 billion real estate firm does not own buildings or property directly. Instead, it holds an equity interest in real property by owning commercial mortgages and originating reverse mortgages.
It buys and holds commercial mortgages through its investment portfolio division. That segment of the company purchases and manages a large portfolio of U.S. government agency mortgage bonds, which are backed by housing agencies such as the Government National Mortgage Association, or Ginnie Mae.
The other main segment of EFC’s business is a subsidiary called Lionbridge Financial. Lionbridge sells and services reverse mortgage loans, which it markets extensively to retired people who own their primary residence but have little, if any, mortgage debt.
The consensus among Wall Street analysts is that EFC will generate $175 million in revenue in 2024 and will increase that number to $198 million for 2025. That’s a year-over-year increase of more than 13%.
Trailing yield: 13.6%
Gladstone Investment Corp. (GAIN)
GAIN is organized and incorporated as a business development company, or BDC, which is a specialty investment company that, by law, must distribute the bulk of its after-tax income to shareholders as a dividend.
GAIN earns money by making loans to mid-market private companies, many of which were originally funded by private equity or venture capital firms. It prefers to make senior loans, which are loans high on the repayment hierarchy. Further, GAIN tends to lend to mature companies rather than startups.
The company’s target loan size is between $5 million and $30 million, and it looks for borrowers that are generating at least $10 million a year in revenue.
In addition to the senior loans, which are the company’s bread and butter, GAIN will sometimes finance mergers and buyouts as well as make preferred-equity loans, which are high-interest loans that give it an equity stake as part of the repayment schedule.
Trailing yield: 6.9%
LTC Properties Inc. (LTC)
LTC is one of the best-known real estate companies in the senior housing and health care sector of the commercial real estate industry. This $1.6 billion REIT is also one of the relatively few REITs that distributes income monthly rather than quarterly.
LTC generates revenue and profit through a sophisticated sale and lease-back process. In practical terms this means it buys senior housing properties, nursing homes and assisted living centers and leases them back to the original owners on a long-term basis. This method proves to be a win-win for all involved. The former owner gets a cash infusion but can still occupy and manage the building. LTC gets a very reliable rental income stream that it can pay to shareholders in the form of a monthly dividend.
Interestingly, LTC is a hybrid rather than an equity REIT, meaning it has direct ownership of real estate and also owns financial instruments and commercial real estate mortgages.
While LTC has been a steady income-paying stock, the company has struggled to increase its share price this year. That should change if and when interest rates fall. Investors can be further encouraged by the long-term strength of the senior health care real estate industry.
Trailing yield: 6.1%
Realty Income Corp. (O)
A $50 billion retail REIT, Realty Income is very likely to be found on any list of the top monthly dividend stocks. That’s because this stock is known for consistently paying a high dividend and increasing that dividend year after year.
In fact, O is a constituent stock of the Dividend Aristocrats index. That famous index is made up exclusively of companies that are members of the S&P 500 and have raised their dividends for at least 25 years in a row. That, of course, is not a guarantee of future dividend increases, but it’s very good historical evidence of the company’s commitment to boosting shareholder income.
Realty Income owns more than 13,000 buildings in cities and large-population towns all over the U.S. It prefers to invest in retail operations such as big-box retailers, convenience stores and national chain drugstores. It only leases to creditworthy tenants, and their leases are generally long term, meaning 15 years or more.
Realty Income is expected to take in $5 billion in revenue in 2024 and $5.3 billion in 2025.
Trailing yield: 5.4%
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7 Best Monthly Dividend Stocks to Buy Now originally appeared on usnews.com
Update 07/25/24: This story was previously published at an earlier date and has been updated with new information.
