In December, I compiled a list of Monthly Dividend Stocks to Snag in 2014, which has proven to be one of my most popular articles of the past year.
It’s not hard to see the appeal of monthly dividend stocks, particularly if you are retired and living off your investments. Your expenses — including everything from house and car payments to your utilities and mobile phone bill — are almost always on a monthly cycle, whereas most income-producing investments pay quarterly or semiannually. A monthly dividend makes basic budgeting and planning a whole lot easier.
But let’s say that you’re still years from retirement. A monthly dividend is still preferable because, if you reinvest your dividends in new shares, your share count will grow faster, speeding up the process of compounding. This matters very little over the course of a single month, but over an investing lifetime, it can have an outsized effect on your returns.
I’ll point out that my list from December is a great set of monthly payers that are all positive for the year and beating the S&P 500. But today, I’m going to give you five new monthly dividend stocks.
Monthly Dividend Stocks – LTC Properties (LTC)
I’ll start with LTC Properties, Inc. (LTC), a real estate investment trust that invests primarily in the long-term care sector of the healthcare industry, including long-term care provider properties, skilled nursing properties, assisted living properties, independent living properties and memory care properties. LTC also invests in first-lien mortgages secured by long-term care properties.
A little more than 80% of LTC’s portfolio is invested in properties with the remainder in mortgages. And among properties, skilled nursing is the biggest single segment, at 55%. Assisted living comes in second at 37%.
LTC is backed by absolutely fantastic macro trends. As baby boomers age, there will be unprecedented demand for long-term services — and thus unprecedented demand for long-term care facilities.
The elephant in the room when discussion long-term care is, of course, Medicare. It’s no secret that the U.S. government is short of funds these days, and Medicare cutbacks have been an unfortunate outcome. But that is what makes LTC such an attractive way to play the trend of boomer aging. LTC is a landlord, not a care provider, so Medicare cutbacks will have little impact on revenues. And even better, as with Realty Income (O) and American Realty Capital Properties (ACRP), most of LTC’s properties are leased under triple-net leases, meaning the tenant covers taxes, insurance and maintenance.
LTC’s monthly dividend works out to a current yield of 5.2%.
Monthly Dividend Stocks – Corus Entertainment (CJREF)
Next on the list of monthly dividend stocks is Canadian entertainment and media company Corus Entertainment (CJREF).
Corus has an extensive presence in both TV and radio. Corus’ television operations include the children’s brands YTV, Treehouse, Nickelodeon (Canada), TeleToon, Cartoon Network (Canada). They also include networks geared towards women, including W Network, Cosmopolitan TV, OWN: Oprah Winfrey Network (Canada) and W Movies. Additional assets include Quebec’s French-language channels Historia and Séries+, HBO Canada and three local over-the-air television stations. Corus also owns 39 radio stations that are among the most popular in Canada.
Corus recently reported earnings that were a little less than the Street expected, sending shares down sharply. But revenues were up a not-too-shabby 14% for the quarter, and earnings per share were up 20% in the quarter.
If you buy Corus’s U.S.-traded ADR, be careful. While Corus has a $2 billion market cap, the ADR is traded over the counter and has low trading volume. Be sure to use a limit order to avoid moving the market.
Monthly Dividend Stocks – Shaw Communications (SJR)
Next on the list is another Canadian stock, Shaw Communications (SJR). Shaw can be thought of as Canada’s Comcast (CMCSA). It’s one of Canada’s largest cable companies and is particularly dominant in western Canada. Shaw provides Internet service, cable TV and home phone service to more than 3 million Canadian households.
Paid TV is no longer a growth business, of course. Cord cutting is a long-term problem that won’t be going away any time soon. But a home Internet connection is more important than ever in the age of streaming media, and Shaw’s overall business looks to remain stable for the foreseeable future.
Unlike Corus, Shaw’s ADR trades on the New York Stock Exchange and is far more liquid, with average volume of more than 200,000 shares per day.
Moreover, SJR’s monthly dividend has increased from 7 cents in 2011 to more than 9 cents currently.
The Tortoise Power & Energy Infrastructure Fund (TPZ)
Investor who have grown to love MLPs over the years should also love this next monthly dividend payer: The Tortoise Power & Energy Infrastructure Fund (TPZ). TPZ is a closed-end fund, which means that, unlike ETFs or mutual funds, its share price can vary wildly from the value of its underlying holdings. As of this writing, TPZ traded at a discount to its net asset value of 10%.
TPZ’s portfolio is an interesting mix. It’s currently invested about 50% in stocks and 68% in bonds. And yes, I realize that this adds up to well over 100%. TPZ, like many closed-end funds, can use leverage to juice returns.
At current prices, TPZ’s monthly dividend works out to a yield of 5.3%.
Monthly Dividend Stocks – Pimco Global StockPLUS & Income Fund (PGP)
Most of my recommendations in this article and in the previous article on monthly dividends have been pretty conservative. If you want to add something with a little sizzle to your portfolio, consider the Pimco Global StockPLUS & Income Fund (PGP), managed by Bill Gross protégé Dan Ivascyn.
Like TPZ, this Pimco fund is a closed-end fund, meaning it can trade for above or below its net asset value. PGP currently trades at a massive premium to NAV of about 73%, though this is within normal ranges for this fund. Part of the reason for the inflated premium is Ivascyn’s use of derivatives, but a big factor as well has been the consistently high income that the fund throws off.
At current prices, PGP’s monthly dividend yields 8.5%.
If you decide to buy PGP, be prepared for a wild ride. Its share price is known to fluctuate wildly. But investors have been more than compensated for the volatility by the fund’s returns of recent years. PGP has enjoyed annualized returns of 29.5% over the past five years.
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 ARCP, EPD, KMR and O. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.