The total return of a stock investment has two components. The first is share price appreciation. The second is income from dividend payments.
Not all stocks pay regular dividends. Some declare dividends annually, quarterly or even, on rarer occasions, arbitrarily, whenever a company’s board of directors feels it’s appropriate and the company can afford it. Some types of companies, such as real estate investment trusts, or REITs, master limited partnerships, or MLPs, and business development companies, called BDCs, are required by law to distribute the lion’s share of taxable income to investors as dividends.
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Among stocks that pay regular dividends, most make distributions quarterly, but there are relatively few — less than 100 — that pay monthly. Monthly dividends are attractive to income investors for several reasons.
The first reason is fairly obvious: All else equal it’s simply better to be paid sooner rather than later. Once a dividend is paid, that cash goes right into the shareholder’s pocket. It can be used to pay bills, saved for the future or reinvested back into the market where it can grow and produce more income.
Combating inflation is another reason monthly dividends are preferable to dividends paid at longer intervals. For the last several years, the U.S. economy has battled unusually high inflation. At the peak of the inflationary cycle — in June of 2022 — prices as measured by the consumer price index (CPI) were rising at an annual rate of 9.1%. Thankfully, inflation has been largely tamed, but, even so, the CPI is still running at 2.6%. When inflation is hot, consumer prices are going up constantly. Investors who have to wait three months between dividend payments are losing purchasing power compared to investors who receive monthly dividends.
A third benefit of monthly dividends is simply convenience. Most people and businesses work on a monthly budget and pay their bills monthly. In that sense, monthly dividend stocks work well with the financial calendar people are comfortable with.
Not all monthly dividend stocks, however, are created equal. If monthly income is something you’re interested in, you’re going to want to pick stocks with sound financials and a solid payment history. Begin your research with this list of seven of the best monthly dividend stocks to buy today:
| Stock | Forward Dividend Yield* |
| Agree Realty Corp. (ticker: ADC) | 4.1% |
| Gladstone Investment Corp. (GAIN) | 7.0% |
| LTC Properties Inc. (LTC) | 6.0% |
| Permian Basin Royalty Trust (PBT) | 6.0% |
| Orchid Island Capital Inc. (ORC) | 18.2% |
| SL Green Realty Corp. (SLG) | 4.0% |
| Realty Income Corp. (O) | 5.6% |
*As of Dec. 6 close.
Agree Realty Corp. (ADC)
ADC is an $8 billion REIT founded in 1971 by real estate entrepreneur Richard Agree who remains the company’s executive chairman. ADC is a great example of stability and success in a very challenging industry.
ADC specializes in high-quality retail real estate. This REIT buys existing shopping centers but will also develop them from the ground up when the right opportunity presents itself.
The company’s innovative approach to brick-and-mortar retail real estate involves choosing strong tenants and buying or building in prime locations. Careful execution over the years has allowed ADC to build a portfolio of more than 2,000 properties in 48 states. Each property is anchored by a well-known retailer, such as TJ Maxx and Marshall’s parent TJX Cos Inc. (TJX), Burlington Stores Inc. (BURL) and Hobby Lobby, to name a few.
In 2021 ADC changed its income distribution schedule from quarterly to monthly, allowing shareholders to benefit from more frequent dividend payments. The stock is currently yielding 4.1%.
Gladstone Investment Corp. (GAIN)
GAIN is a specialty finance company that’s incorporated as a business development company, or BDC. A BDC is an investment company that receives favorable tax treatment because it invests in American small businesses and distributes at least 90% of its taxable income to shareholders as dividend income.
GAIN makes loans and equity investments in small but established private U.S. companies. It focuses on firms with strong management teams and a demonstrated ability to execute a growth-oriented business plan. The company’s average investment is about $75 million and its capital mix is roughly 75% debt and 25% equity.
GAIN has a market cap of $500 million. It is not a venture capital firm and does not invest in startups or companies that haven’t reached the growth stage. Still, GAIN and all BDCs should be considered aggressive investments. Due largely to the higher-risk nature of the debt that Gladstone traffics in, the current dividend yield of the stock is quite high, at 7%.
LTC Properties Inc. (LTC)
Burdensome medical regulations, a complex health insurance regime and the recent rising interest rate environment have made the health care real estate industry very challenging over the last few years. The $1.7 billion health care REIT LTC has risen to those challenges and delivered for its shareholders.
This REIT owns long-term care facilities and assisted living centers in the U.S. It operates more than 200 facilities and is expected to show $187 million in revenue when it reports its full year financials for 2024.
LTC leases to experienced professional nursing home operators who know both the medical and the administrative side of the health care business. The company signs long-term leases on a triple-net (NNN) basis. That means the tenants are responsible for virtually all the landlord responsibilities such as taxes, maintenance and insurance. LTC focuses on collecting rent and finding new acquisitions to add to its portfolio of properties.
This stock currently offers a solid dividend yield of 6%.
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Permian Basin Royalty Trust (PBT)
Geologists estimate there are more than 74 billion barrels of oil beneath the ground in the Permian Basin region, which spans parts of Texas and New Mexico. PBT is a unique type of company called a royalty trust that holds income royalty interests in several productive and promising oil fields in that region.
Essentially, the company’s only mandated function is to collect oil revenue from its claims and distribute that income to shareholders. PBT has elected to distribute dividends monthly.
PBT pays a respectable monthly income but the stock has the potential to provide capital appreciation as well. That’s because its share price is closely tied to oil prices. Oil is, of course, a cyclical commodity and no one can predict exactly when prices will rise, but when they do, investors can reasonably expect PBT, to an extent, to rise with them.
The dividend fluctuates depending on the price of oil and how much is produced on its claims, but the current forward dividend yield for PBT is 6%.
Orchid Island Capital Inc. (ORC)
ORC is organized as a REIT. Unlike the previous REITs on this list, however, ORC does not own or operate real estate directly. ORC is a mortgage REIT, or mREIT. It invests in real estate through financial instruments that only indirectly impart an equity interest.
Florida-based ORC buys and holds residential mortgage-backed securities (RMBS) from U.S. issuers. An RMBS is a special type of bond that’s made up of millions of dollars worth of home mortgages that have been collateralized and issued as debt securities for purchase by institutional investors.
ORC invests exclusively in agency RMBS, which means that the mortgage bonds in its portfolio have the backing of one or more U.S. housing agencies such as the Federal National Mortgage Corporation (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).
Because the company is organized as a REIT, investors can expect a regular dividend. The yield for this $630 million company stands at 18.2%.
SL Green Realty Corp. (SLG)
SLG has an equity interest in more than 32 million square feet of office space in greater Manhattan, making this $5.6 billion REIT the biggest commercial landlord in New York City.
The company acquires and operates Class A office space in and around the city. Class A represents the highest-quality real estate in regards to quality of construction, location, amenities and management. In short, SLG concentrates on premier properties and caters to prestigious tenants. It is also a real estate development firm, meaning SLG will build new modern office buildings from the ground up.
While interest rates were rising over the last three years, SLG was cautious about refinancing and taking on new debt. It was very careful about the rates it locked in and the terms it agreed to. All of its financing activity was done with an eye toward an improving rate environment. Today, as inflation has moderated and rates are beginning to fall, the company’s prudence is paying off. Including dividends, the stock is up more than 42% over the six months ending Dec. 6.
SLG stock currently offers a 4% dividend yield.
Realty Income Corp. (O)
No list of the best monthly income stocks would be complete without the $50 billion REIT Realty Income Corp. The company describes itself as “The Monthly Dividend Company” and has even registered that phrase as a service mark.
O has, in fact, declared 653 consecutive monthly dividends over the last 54 years. The company is also a senior member of the S&P 500 Dividend Aristocrats Index, having increased — not just paid — its dividend every year for 30 years. The average annual dividend growth rate is just under 3%.
Realty Income is a retail REIT with a focus on big-box outlets and warehouse stores, national chain drug stores and convenience stores. Its target lease is long-term — 15 years or more — and it prefers to rent to tenants with an investment-grade credit rating. O currently yields 5.6%.
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7 Best Monthly Dividend Stocks to Buy Today originally appeared on usnews.com
Update 12/09/24: This story was previously published at an earlier date and has been updated with new information.
