Income-oriented equity investors know that most stocks that pay regular dividends distribute those dividends quarterly. There are, however, about 80 companies that pay monthly. For retired people or others who depend on investment income for monthly expenses, there are several distinct advantages to monthly dividend stocks.
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A Steady Income Stream
It’s an obvious fact that monthly dividends provide a more frequent and, in that respect, a more consistent income. This makes them ideal for individuals who need a regular and predictable cash flow.
Because most people organize their budget and pay bills monthly, the consistency and familiarity of a monthly rather than quarterly income can help them better manage their living expenses.
Compounding
The sooner you receive your dividend, the sooner you can reinvest it back into the market. Faster reinvestment will accelerate the power of compounding.
When you’re compounding, you’re not just earning dividends and capital appreciation on your initial investment, but also on the additional shares you buy when you reinvest. Over time, this can create a significant snowball effect because every new share can grow and will pay you additional dividends.
Basically, compounding is a way to leverage both the growth and the income your holdings produce, and monthly dividend stocks allow you to compound faster.
Risk Reduction
By owning monthly dividend stocks, investors receive their income in 12 installments instead of four. This has the effect of reducing market timing risk in a small but real way.
A dividend represents a tangible share of the revenue and profits a company generates. Once that dividend is distributed, it can be considered banked, or locked in, by the investor; it can’t be taken back and it can’t fall in value. An investor can spend it, put it in the bank to earn interest or — as mentioned above — reinvest it.
All of these options can help smooth out the inevitable fluctuations of the market and lessen the damage done by inflation.
Seven Monthly Dividend Stocks to Consider
If you are one of the many investors who understands and appreciates the benefits of monthly dividends, or you just enjoy the psychological satisfaction of being paid sooner rather than later, here are seven monthly dividend-paying stocks you should add to your portfolio today:
| Monthly Dividend Stock | Trailing-12-month Dividend Yield* |
| Gladstone Capital Corp. (ticker: GLAD) | 8.8% |
| Dynex Capital Inc. (DX) | 10.8% |
| Horizon Technology Finance Corp. (HRZN) | 12% |
| Realty Income Corp. (O) | 5% |
| LTC Properties Inc. (LTC) | 6.3% |
| PennantPark Floating Rate Capital Ltd. (PFLT) | 11% |
| SL Green Realty Corp. (SLG) | 5% |
*As of Aug. 29 close.
Gladstone Capital Corp. (GLAD)
GLAD is organized as a specialty financial company that’s known as a business development corporation, or BDC. The company has a market cap of about $500 million and generates its revenue and profit by lending money — at high interest rates — to small and medium private companies in the U.S.
Although the analogy is not perfect, one way to think about GLAD is to consider it a small, publicly traded closed-end investment company — something akin to a closed-end mutual fund or exchange-traded fund but not exactly the same thing.
Because of its relatively small size and the nature of the investments it makes, this stock — like most BDCs — should be considered an aggressive investment. Still, Wall Street is looking for good revenue growth from GLAD. The company is projected to generate $96 million in revenue in 2024 and grow that to just under $100 million in 2025. That would represent revenue growth of over 4%, year over year.
Trailing-12-month yield: 8.8%
Dynex Capital Inc. (DX)
DX is an internally managed mortgage REIT, also known as an mREIT, with a market cap of $942 million. DX buys and holds commercial and residential mortgage bonds for the benefit of its shareholders.
The broad category of bonds in the portfolio are called mortgage-backed securities, or MBS. The company’s residential real estate-backed bonds are called RMBS, which means residential mortgage-backed securities. Its commercial real estate bonds are called CMBS or, as you may have guessed, commercial real estate-backed securities. All MBS represent large pools of mortgages that have been originated by banks and sold to Wall Street investment bankers who collateralized them and turned them into bonds.
DX buys agency bonds, which are MBS that are backed by a government housing agency, and non-agency bonds, which carry no government backing. Investors should also know that DX uses leverage to buy securities. This means that the company will borrow money on margin to buy bonds. Stocks that employ leverage carry more risk than those that don’t.
Trailing-12-month yield: 10.8%
Horizon Technology Finance Corp. (HRZN)
Like GLAD, mentioned above, HRZN is a high-yielding BDC. HRZN, however, makes its loans almost exclusively to venture-capital-funded companies in the high-risk fields of technology, life sciences and health care information science.
This is an aggressive stock, but the management team at HRZN has extensive experience in finance, investing and technology. All of its C-suite executives previously held leadership positions at other tech firms, and they have a strong background in managing investments.
On top of the solid forward annual dividend of $1.32 per share, HRZN offers investors good geographic diversification. About 38% of the companies they invest in are in California or other Western states. Another 29% are located in the Midwest, 28% can be found on the Eastern Seaboard and 8% make their headquarters in Canada.
HRZN has a market cap of $397 million.
Trailing-12-month yield: 12%
[READ: 10 Best-Performing Stocks of the Past 30 Years]
Realty Income Corp. (O)
O has a formidable market cap of over $53 billion, and is expected to generate over $5 billion in revenue in 2024 and $5.4 billion in 2025. This stock is one of the best-known monthly dividend-paying real estate investment trusts, or REITs, on the market. No list of top monthly dividend payers is complete unless O is on it.
O has an equity interest in more than 13,000 properties in the U.S. Most of its holdings are in the retail space. It rents to several prominent players in the big box retail segment, as well as to well-known convenience stores and national drugstore chains. The large majority of leases it holds are for 15 years or more and it will not rent space to tenants that are not creditworthy.
Realty Income is a member of the exclusive Dividend Aristocrats Index. To be a Dividend Aristocrat, a company must be a member of the S&P 500 and have increased its annual dividend for a minimum of 25 years in a row.
Trailing-12-month yield: 5%
LTC Properties Inc. (LTC)
With its high cost structure, regulatory complexity and demanding consumer expectations, the health care segment of the commercial real estate business is a very challenging industry. LTC, however, is one company that has been successfully navigating the difficulties of that sector for more than 30 years.
LTC is a $1.6 billion REIT that owns senior housing properties, assisted living facilities and nursing homes in the U.S. But, although LTC owns the facilities, it doesn’t have any traditional landlord responsibilities. The properties are operated by tenants who are usually large medical practices, doctors’ groups or other health care real estate investors.
LTC currently owns 201 properties that will generate an estimated $201 million in revenue in 2024 and $203 million in 2025. Facilities are spread over 26 states, which offers investors excellent geographic diversification.
Trailing-12-month yield: 6.3%
PennantPark Floating Rate Capital Ltd. (PFLT)
PFLT is a BDC that differs from others on this list in the fact that its investment activity consists of originating floating-rate loans. More specifically, PFLT makes first position, secured loans to mid-sized domestic and international companies.
Whenever possible, PFLT issues floating rather than fixed-rate loans. This means that the interest rate it charges is not fixed for the life of the loan. Instead, the rate adjusts, or floats, based on a predetermined interest rate benchmark. Revenue streams from floating-rate loans are considered less volatile than fixed-rate loans. Because they can adjust to the interest rate environment, they tend to fluctuate considerably less than their fixed-rate counterparts.
PFLT looks for borrowers who are in or are approaching the buyout stage of their growth cycle. The company tries to make loans in the $2 million to $20 million range. In some cases, in addition to interest, it receives equity — an ownership interest — as part of its compensation.
According to the company’s investor relations department, a big benefit to investing in PFLT is its cohesive and experienced management team, which, it claims, has an impressive track record of success.
Trailing-12-month yield: 11%
SL Green Realty Corp. (SLG)
The commercial real estate sector in New York City has seen its share of challenges over the years, especially in the wake of the COVID-19 pandemic, which thoroughly disrupted the industry. Still, despite the very real difficulties of owning, developing and operating real estate in that city, it is still one of the most valuable real estate markets in the world.
SLG is a $4.3 billion office REIT with a focus on Manhattan. The company is internally managed and fully integrated, which means all its business functions are conducted in-house. This continuity is important to shareholders who appreciate a consistent management philosophy.
The company owns or holds a significant interest in 59 office properties that include iconic New York addresses like One Madison Avenue and 100 Park Avenue. In total, it controls over 32 million square feet of rentable space. SLG is expected to generate $546 million in revenue in 2024 and grow that by 6.7% to $577 million in 2025.
Trailing-12-month yield: 5%
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Update 08/30/24: This story was previously published at an earlier date and has been updated with new information.
