Best Monthly Dividend Stocks - Student Transportation Inc.
Dividend Yield: 8.4%
Finally, for an off-the-wall pick, consider picking up shares of Student Transportation (STB), North America’s third-largest operator of school buses. Student Transportation doesn’t just operate more than 10,000 school buses and transport more than a million students daily across the United States and Canada. It’s a monthly dividend stock with a solid yield.
STB stock currently yields about 8.4%. But this is a riskier play than the other monthly dividend stocks on this list for a couple reasons. First, because the company has been aggressively expanding in recent years and has all of the expenses associated with rapid expansion, Student Transportation has been paying a decent chunk of its dividend from new debt issuance. This puts the dividend at risk if the capital markets tighten up or if expected growth fails to materialize.
And secondly, a decent chunk of the company’s sales come from Canada, where it is headquartered, so currency risk is also an issue. I believe there is a good chance that the dollar will rally as the Fed scales back its quantitative easing. This could cause Student Transport’s dividend to fall slightly in U.S. dollar terms.
Still, while a little riskier than some of the other monthly dividend stocks, I like STB stock as a portfolio diversifier and I believe that its dividend is safe for at least the next several quarters.
Charles Lewis Sizemore, CFA, is the editor of Macro Trend Investor and chief investment officer of the investment firm Sizemore Capital Management. As of this writing, he was long O, ARCP and WMT. Click here to receive his FREE weekly e-letter covering market insights, global trends, and the best stocks and ETFs to profit from today’s exciting megatrends.
This piece was updated from Dec. 12, 2013.