The 5 High Monthly Dividend Stocks and ETFs

While most dividend-paying equities distribute their payouts in quarterly increments, some investors covert the more frequent income distributions that are offered by monthly dividend-paying stocks and ETFs.

In addition to more frequent payments and a more consistent cash inflow, monthly dividend stocks and exchange-traded funds (ETFs) have a few additional advantages over their counterparts that offer quarterly payouts. The most significant advantage of monthly dividend distributions is that the assets grow faster because of the compounding effect.

Instead of waiting full three months to receive the dividend distribution, monthly dividend distributions offer investors the opportunity to collect a portion of that income every month and reinvest the money immediately. While some investors might be satisfied with reinvesting their dividend distributions quarterly, people who rely on dividend income for living expenses, such as retirees, need more frequent payouts to cover their monthly bills and expenses.

Obviously, investors could create an income stream from their own portfolio that generates monthly payouts. For this strategy, investors would have to select three different equities that pay staggered quarterly dividends. However, that approach is more difficult than just investing in monthly dividend stocks and ETFs. Many equities align their dividend distributions with their quarterly financial results reports. Therefore, an attempt to create a monthly income stream from equities that have quarterly dividend distributions with staggered distribution months would limit the number of equities that meet the desired investment criteria. This strategy could potentially lead to a less-than optimal portfolio strategy and, more likely, would reduce total returns. Furthermore, even if investors could find equities that have the desired distribution timing, creating a portfolio that delivers a steady amount every month would not be easy.

Alternatively, monthly dividend stocks and ETFs are easy to find. Most investment advisory sites and brokerages have search tools and options that can identify equities with a monthly dividend distribution. The main Dividend Screener tool available at DividendInvestor.com, offers the option to filter out all equities with 12 or more dividend distributions over the trailing one-year. Additionally, Dividend Investor also offers a separate Monthly Dividend Directory that contains just the equities that have monthly dividend distributions.

While some monthly-dividend equities have higher dividend yields or longer records of dividend payouts, the equities listed below offer a good balance of asset appreciation and rising dividend income. The monthly dividend stocks and ETFs are listed below:

The 5 High Monthly Dividend Stocks and ETFs: #5

VanEck Vectors Fallen Angel High Yield Bond ETF (NYSE:ANGL)

Dividend Yield: 4.1%

This fund attempts to replicate the price and yield performance of the ICE BofA ML U.S. Fallen Angel High Yield Index. This index is comprised of below-investment grade corporate bonds that are denominated in U.S. dollars, issued in the U.S. domestic market and were rated as investment grade at the time of issuance.

The fund’s 259 holdings combine for approximately $3.95 billion in total assets. Among the holdings, over 84% are U.S. securities. Most of the remaining holdings comprise investments in Canada (3.26%), the United Kingdom (2.22%) and Luxembourg (2.19%). All remaining countries represent less than 2% of total assets each.

There is a low 0.35% expense ratio and a 27.0% turnover ratio. Although the share price has fallen 9.9% in the  trailing 12 months, this is softened when adjusted for dividend distributions. In the last 5 years — after adjusting for dividends — ANGL has given investors 25.4% returns.

Shown below are the dividend adjusted returns for the last 12 months. Blue circles indicate dividend distributions.

Charts generated using Stock Rover.

The 5 High Monthly Dividend Stocks and ETFs: #4

iShares 0-5 Year High Yield Corporate Bond ETF (NYSEARCA:SHYG)

Dividend Yield: 4.9%

This bond ETF seeks to track the investment results of the Markit iBoxx USD Liquid High Yield 0-5 Index, which is comprised of U.S. dollar-denominated, high yield corporate bonds with remaining maturities of less than five years. The fund had 688 individual holdings representing aggregate total assets of more than $5 billion.

The fund will invest at least 80% of its assets in the component securities of the underlying index, and the fund will invest at least 90% of its assets in fixed income securities of the types included in the underlying index that BFA believes will help the fund track the underlying index

Equities from the Finance (27.30%), Consumer Service (11.69%) and Industrial Service (6.96%) sectors account for nearly half of total assets. The fund’s current dividend yield of 4.9% has combined with capital gains to deliver a slight negative return of -1.7% in the trailing 12-month period.

Charts generated using Stock Rover.

The 5 High Monthly Dividend Stocks and ETFs: #3

iShares Preferred & Income Securities ETF (NASDAQ:PFF)

Dividend Yield: 4.8%

 This ETF seeks to track the investment results of an index composed of U.S. dollar-denominated preferred and hybrid securities. This ETF holds nearly $17 billion in assets under management spread across 201 individual holdings from several countries.

The fund may invest at least 80% of its assets in the component securities of its underlying index and in investments that have economic characteristics that are substantially identical to the component securities of its underlying index. ICE Exchange-Listed Preferred & Hybrid Securities Index.

PFF is primarily exposed to the financial institutions sector, making up 62.93% of total assets. Utility makes up 13.23%, and the remaining sectors each comprise less than 5% each. The fund’s current dividend payouts yield 4.8% and have combined with asset appreciation for a total drop of 8.5% over the last year and total increase of 13.4% over the last five years.

Charts generated using Stock Rover.

The 5 High Monthly Dividend Stocks and ETFs: #2

Main Street Capital Corporation (NYSE:MAIN)

Dividend Yield: 6.4%

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. The investment portfolio of the company is typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors

As Main Street Capital had the misfortune of incorporating right before the 2008 financial crisis, its share price lost more than 40% of its Initial Public Offering (IPO) price by early 2009. However, the share price has more than quadrupled since reversing this trend in March 2009.

After adjusting for dividends, the returns of MAIN have stay mostly level in the last 12 months, with investors seeing a positive annual return of 0.5%. That said, returns have been much higher over the last 5 years, having rewarded investors with 44.2% growth.

Charts generated using Stock Rover.

The 5 High Monthly Dividend Stocks and ETFs: #1

EPR Properties (NYSE:EPR)                                           

Dividend Yield: 6.1%

Headquartered in Kansas City, Missouri, and founded in 1997, EPR Properties is a specialty real estate investment trust (REIT) that primarily invests in commercial properties in the entertainment, recreation and education sectors. The company invests in two property segments: experiential, including theaters, family entertainment centers, ski resorts, and other attractions; and education, including early childhood education centers and private school properties.

Due to a major price shock that caused the stock price to plummet 58.46% in March 2020 due to the financial crisis, the company was forced to suspend its dividend and later reinstated it in mid-2021.

After adjusting for dividends, EPR has grown an impressive 18.7% in the trailing 12-month period, making a nearly full recovery from the March 2020 plummet.

Charts generated using Stock Rover.

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