6 Best Monthly Dividend Stocks to Buy Now
By: Jonathan Wolfgram,
There currently are 40 monthly dividend stocks between most major US listings, excluding exchange-traded funds (ETFs).
Given the financial crisis that has ensued due to the COVID-19 pandemic, quite a number of monthly dividend stocks have had to suspend paying their dividend temporarily, or significantly reduce their payout amount. For a complete, updated list of these monthly dividend stocks, please visit our article Stocks that pay Monthly Dividends – The Comprehensive List. Or if you are interested in ETFs and Closed-End Funds as well, then please visit our Monthly Dividend Directory.
Monthly Dividend Stocks are attractive to investors who seek steady and reliable income. While the ultimate goal of income investing is a portfolio that delivers a constant flow of payments, even the most ardent income lover should not invest blindly into equities based solely on a high dividend yield. Investors need to consider, among other things, the safety of the dividend, as well as the stock’s appreciation potential.
Share price movements occur on much larger orders of magnitude than dividend hikes or even dividend cuts. Even a rapidly rising dividend payout can rarely compensate for a fast share price decline. Thus, every investment portfolio — whether income-based, or asset-appreciation-based — should include a core of equities that offer reliable long-term capital growth potential, as well as a steady income flow via dividends
The list below is not just a list of equities with the highest yields. The dividend yield is the most common measure of an equity’s dividend distributions. However, this group of six monthly dividend stocks to buy now had to meet additional criteria.
Given the economic uncertainty that is present in today’s world, these six stocks were selected on the basis that their dividend payouts appear to be safe. It is important that a dividend is not at risk of succumbing to the possible United States recession and getting cut or suspended. Certain industries have been particularly hard hit by the current economy’s financial implications, causing them to suspend their dividend — these companies often do not have resilient business models.
Keeping all of this in mind, the following six stocks appear to be able to continue to pay dividends to investors during these unprecedented times, as well as offer capital appreciation potential from stock price increases. Investors should consider that now might be an opportune time to buy monthly dividend stocks, while share prices are relatively depressed, as it gives them the chance to earn a higher yield on their investment.
To do more research and investigate other stocks you may be curious about, use the Dividend Screener tool available at DividendInvestor.com. Below is the list of six monthly dividend stocks to buy now.
All charts are courtesy of StockRover.com
6 Monthly Dividend Stocks to Buy Now: #6
Dynex Capital Inc (NYSE:DX)
Dividend Yield: 12.47%
Dynex Capital Inc is a real estate investment trust that primarily invests in residential and commercial mortgage-backed securities. Its investments consist principally of Agency mortgage-backed securities including residential MBS and commercial MBS.
Dynex Capital has paid an unbroken dividend since 2008, but only in 2019 did it switch its payment structure from quarterly distributions to monthly. The company currently pays a monthly dividend of $0.13, bringing investors an annual distribution of $1.30 per share. This may not seem like a lot, until we notice the $11.67 price tag on each share of DX. The $0.13 monthly dividend gives the company an annual yield of 13.4%, far above its peers.
This in mind, the high yield numbers are inflated by a recent dip in the company’s share price. The value of DX shares have fallen from $16.00 in August to the current $11.67. While this diminishes the significance of a high dividend yield, it also means the stock is trading at an incredible discount, making now a potentially profitable time to buy.
The payout ratio of the company is a happily sustainable 36.5%, meaning the dividend is unlikely to be decreased for budgetary reasons and has room to grow. This, combined with the dividend yield and payout per share, puts Dynex Capital in the 92nd percentile for best dividend payers in the REIT industry group, ranking 18 out of 362 companies.
6 Monthly Dividend Stocks to Buy Now: #5
Gladstone Land Corporation (NASDAQ: LAND)
Dividend Yield: 4.99%
Gladstone Land Corporation is a monthly dividend REIT, or real estate investment trust, which acquires and owns farmland located in major agricultural markets throughout the United States. Gladstone Land leases its farm properties to unrelated third-party farmers. The company owns 113 farms, amounting to 88,000 acres of land in 10 different states. Gladstone Land was founded in 1997 and went public in 2013, at which time it began to pay a monthly dividend.
Gladstone Land is currently paying out $0.0456 to its investors on a monthly basis, making an annualized payout of $0.5472. The company has paid over 100 consecutive monthly dividends since 2013, and has increased its dividend more than 20 times in the last 25 quarters.
Gladstone Land has achieved significant and consistent asset appreciation over the past five years, with its total returns for the past five years reported at 59.9%. Only in the last few months has the share price of Gladstone Land dropped. Year to date (YTD), LAND’s share price has dropped 44.7%, with 17.2% of this occurring in the last month.
This highly-budgeted share price may mark an optimal time to purchase shares of LAND.
Gladstone Land is in good financial health, which is a strong selling point for investors. LAND’s sales have grown 22.2% in the last year, and in the last 3 years the company has averaged sales growth of 32.8% per year.
David J. Gladstone, the CEO of LAND, is confident that his company will do well throughout the current economic crisis. Gladstone spoke recently, noting that the company is “in a good place”, and that “everything is going as if there was no tomorrow in terms of people buying food.” He later explained that some farmers are actually seeing unusually strong sales due to the increase in people purchasing food from grocery stores (including produce).
Since the stock price is currently depressed, Gladstone Land may deliver increased yield to an investor who buys now. The company will continue to provide steady and reliable dividend payouts. Investors can have peace of mind that the dividend they receive from Gladstone Land will not be suspended, despite the current economic turmoil.
6 Monthly Dividend Stocks to Buy Now: #4
Realty Income Corporation (NYSE: O)
Dividend Yield: 5.65%
Headquartered in San Diego and listed on the New York Stock Exchange (NYSE) since 1994, the Realty Income Corporation operates as a REIT in the commercial real estate market. The company has delivered over 600 consecutive monthly dividend payouts in its 50-year history. Realty Income Corp. also classifies as a Dividend Aristocrat, meaning the company has a record of boosting its annual dividend distribution amount for at least the last 25 consecutive years.
The current $0.25 monthly payout is a continuing increase from the $0.24 it paid monthly at the end of 2021. It’s current monthly rate annualizes to $3.00 and is steadily growing — over the last 10 years, the company has maintained a dividend growth rate of 5.1%.
In a recent earnings call, the company’s CEO, Sumit Roy, reassured investors that the company is equipped to handle the economic turmoil by saying, “We’ve completed a very strong quarter and are well positioned from both a balance sheet and portfolio standpoint heading into this period of uncertainty. The COVID-19 pandemic has resulted in an economic environment largely unprecedented, but I’m confident in the resiliency of our tenant credit profile, the quality of our real estate and the talent of our team members to continue generating favorable shareholder value over the long term.”
Sumit Roy has delivered multiple positive statements regarding the company’s performance, which, coupled with the historically great dividend performance, make this stock reliable. The company’s sales have grown 53.7% in the last 12 months, showing a massive increase in its already high rate of growth.
Now is the time to buy Realty Income Corporation stock. The current stock price is $57.05, which is well below the 52-week high of $75.40. Investors who make the move to buy Realty Income Corporation shares right now will put themselves in a prime position to see enticing yield on their investment. Realty Income Corporation is a well established company who is only temporarily going to be impacted by the pandemic, and the company is set to make a full recovery.
6 Monthly Dividend Stocks to Buy Now: #3
STAG Industrial, Inc. (NYSE: STAG)
Dividend Yield: 4.12%
STAG Industrial, Inc. is a real estate investment trust which operates throughout the United States and focuses on the acquisition, ownership and operation of single-tenant, industrial properties. The company currently owns 450 buildings in 38 states with approximately 91.4 million rentable square feet.
STAG is currently paying out a monthly dividend of $0.12, making its annualized payout $1.46. This corresponds to a high dividend yield of 5.2%, outperforming the industry average of 3.6% and the S&P 500 average of 1.8%.
The CEO of STAG, William R. Crooker, emphasized the company’s ability to thrive during this economic turmoil. Crooker stated that its strong balance sheet is a “…testament to the business we have built and the strength of our portfolio that we were able to recently complete the refinancing of $300 million of term loan debt in these market conditions. This refinancing activity effectively extends all our debt maturities through 2022 and beyond. Our company is well positioned to operate in the current environment.”
STAG has fared well throughout the pandemic, and could be a smart investment at the moment. STAG’s current stock price is $28.07, which is far below the 52-week high of $48.27. This is a clear demonstration of the company’s strong business model and ability to reject certain threats.
6 Monthly Dividend Stocks to Buy Now: #2
Shaw Communications, Inc. (NYSE: SJR)
Dividend Yield: 3.4%
Shaw Communications, Inc. operates as a diversified communications company in North America. Shaw provides telephone, internet, television and mobile services all backed by a fiber optic network. The company operates through both wireline and wireless segments, providing a range of services including Wi-Fi, digital phone services and satellite services. Shaw Communications is based in Calgary, Canada, and serves both residential and commercial consumers throughout the United States and Canada.
Shaw has had a dividend yield of over the trailing 12 months. Currently, the company is paying a monthly dividend of $0.07, which makes the annualized payout equal to $0.86. Shaw has had multiple consecutive years of boosting its payouts, and has seen a 10-year dividend growth rate of 2%.
SJR is an attractive stock from a valuation perspective. Shaw’s P/E ratio currently sits at 20. The relatively low P/E ratio signals that the stock is currently undervalued, making right now an opportune time to buy.
Telecommunications is no doubt a safe place to invest during the pandemic because the industry has been largely unaffected by the virus. If anything, the industry has benefited greatly from the increase in people working from home that has spurred an increased need for communication services.
Bradley Shaw, the CEO of Shaw Communications, said the following: “Now, more than ever, Canadians and businesses alike, are depending on reliable connectivity services to remain in touch with family, friends, colleagues and customers. As we have seen an increase in network traffic, particularly in Wireline, I am pleased to confirm that our network performance has been exceptional. It is because of the significant facilities-based investments and strong and capable networks that operators, such as Shaw, can continue to provide these critical Wireline and Wireless essential services into homes, businesses and communities across our country and quickly adapt to the changing needs of our customers.”
Shaw further reassured investors of his company’s good standing in a later call, when he said, “Under the most difficult and challenging set of circumstances, our network performance was exceptional, and we delivered better-than-expected results. As the economy begins to reopen, we are confident that our robust broadband and wireless infrastructure will continue to play a vital role and drive our economic recovery.”
6 Monthly Dividend Stocks to Buy Now: #1
Main Street Capital Corporation (NYSE:MAIN)
Dividend Yield: 6.75%
Based in Houston and incorporated in 2007, the Main Street Capital Corporation is a business development company specializing in long-term equity and debt investments in small-and-lower middle market companies. Main Street Capital had the misfortune of incorporating right before the 2008 financial crisis and its share price lost more than 40% of its initial public offering (IPO) level by early 2009. However, the share price more than quadrupled since reversing the trend in March 2009.
The company boosted its monthly dividend payout over 10% from its monthly distribution last year of $0.20 to the current payment of $0.22. This means the MAIN will pay investors a total of $2.85 per share in 2022, reflected in its awesome 8% annual dividend yield.
For the past 12 years, MAIN hiked its annual dividend amount every year and nearly doubled the total payout over the period for a 3.9% average annual growth rate. This in additional to the repeated special dividends paid by MAIN make it a consistent source of cashflow for investors.
MAIN’s CEO, Dwayne Hyzak, delivered a confident and optimistic statement regarding the company’s ability to combat the current tumultuous economic climate. Hyzak said, “Fortunately, our intentional strategy of maintaining a conservative capital structure and significant liquidity position has allowed us to manage through the challenges to date, support our existing portfolio companies and continue to execute on new investment opportunities on a highly selective basis. In addition, we continue to believe that our highly diversified and mature investment portfolio will prove to be very beneficial as we work through the current environment.”
Although MAIN released poor sales numbers for this year, showing an 8.2% decline, this is projected to rise again in 2023, where analysts expects sales growth of at least 10.9%.
MAIN’s stock price currently sits at $33.11, which is comfortably below the stock’s 52-week high of $47.13.
The Bottom Line
The unprecedented challenges that the economy is currently being faced with make it difficult for anyone to predict stock performances and investment outcomes. There is no way to say for sure whether or not the stocks in the list above are going to perform particularly well in the future. Keep in mind that the list is made up of stocks that have demonstrated that they will be able to sustain their dividend, and should be considered by investors who are specifically looking to receive reliable dividends during this financial crisis.
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Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
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