While income-oriented investors obviously make a point of seeking out reliable dividend stocks, sometimes regular quarterly payouts just won’t cut it. Enter: monthly dividend stocks.
Those who use these dividend payments to help pay monthly bills know a quarterly payout can be more than a little inconvenient at times simply because the incoming and outgoing cash flows aren’t evenly aligned. Luckily, a few companies actually dish out cash every month rather than every three months.
And there’s a lot more of these monthly dividend stocks than you might think.
If you’re looking for a consistent income stream for your portfolio, read on as we look at nine of the top monthly dividend stocks out there.
In no particular order …
Monthly Dividend Stocks: Prospect Capital Corporation (PSEC)
PSEC Dividend Yield: 13.3%
While most names on this list of monthly dividend stocks are going to be real estate investment trusts or at least real estate-related, they’re not the only means to the end.
Several business development companies also share the wealth on a monthly basis, and Prospect Capital Corporation (PSEC) is one of the more interesting names in that sliver of the market.
Those who know the company well will know Prospect Capital is currently being scrutinized by the SEC due to questions regarding the valuations of the company’s collateralized loan obligations. And, even if the commission doesn’t find anything noteworthy, the rumor mill is starting to suggest CLOs are overextended and waiting to collapse as a group this year.
As is so often the case though, the sellers may have overshot even their worst-case downside scenario for the stock, leading to a very attractive yield in the double digits.
Monthly Dividend Stocks: Global Net Lease Inc (GNL)
GNL Dividend Yield: 8.6%
As mentioned before, no list of dividend stocks to buy would be complete without a REIT or two. And no list of monthly dividend stocks would be complete without REIT Global Net Lease (GNL).
Global Net Lease isn’t your typical real estate investment trust. It’s well-diversified within the commercial real estate world, just as apt to rent space to a bank as it is to a technology company. And more than 40% of its properties are outside the U.S., giving its income stream lots of geographic diversity too.
Or, if it helps to illustrate its diversity, GNL’s top five tenants are German utility company RWE (RWEOY), FedEx Corporation (FDX), Family Dollar, the U.S. government’s General Service Administration, and Finland’s airline Finnair.
At first glance, it doesn’t look like GNL has been around for long; it’s trading history only goes back to the middle of last year. Don’t be misled, however. It moved over to the New York Stock Exchange last year (starting the clock over again with its chart) and simultaneously changed its name from American Realty Capital Global Trust.
GNL actually has been around for a long time, and should continue to be around for a longer time still.
Monthly Dividend Stocks: Chatham Lodging Trust (CLDT)
CLDT Dividend Yield: 5.8%
Just as the name would suggest, Chatham Lodging Trust (CLDT) is a hotel REIT. They’re more volatile than apartment REITs or industrial REITs in that hotel visits can really ebb and flow with the economy; its cyclical swings are more extreme.
Then again, Chatham Lodging Trust’s managers sidestep a great deal of that volatility by sticking to upscale extended stay hotels and premium select-service hotels, which don’t experience the typical degree of cyclical ebb and flow other hotel REITs do. The acquisition discipline is quite amazing, actually.
What’s not amazing (at least compared to our first few stocks) is the 6% yield, even if it is paid monthly. Just understand that the lower payout is a reflection of lower risk; CLDT is a very reliable payer.
That said, while the yield may not be super-strong, what CLDT owners can look forward to are sizeable increases in the REIT’s payout. The dividend has been increased every year since 2010, and just this week, Chatham Lodging Trust announced a 10% increase in its monthly dividend payment.
Monthly Dividend Stocks: Gladstone Capital Corporation (GLAD)
GLAD Dividend Yield: 12.1%
Gladstone Capital (GLAD) is another business development company that offers a monthly dividend; the current yield stands at 9.7%. As of February, GLAD had paid 157 consecutive monthly or quarterly cash distributions.
Fanning the bullish flames for GLAD, in January, the company announced its board of directors had authorized a $7.5 million buyback plan for Gladstone Capital shares.
Gladstone Capital Corporation is primarily a debt fund; about 90% of its holdings are bonds or fixed loans like secured first and second lien term loans. It will from time to time take on a stake in common equity, however.
There’s nothing particularly remarkable about it, which is what makes it one of the more interesting monthly dividend stocks out there.
Monthly Dividend Stocks: Stag Industrial Inc (STAG)
STAG Dividend Yield: 7.4%
Stag Industrial (STAG) is a real estate investment trust that owns and leases single-tenant industrial properties in the United States. It has spent more than $1.7 billion on 218 buildings since 2011.
STAG is a reliable earner and a reliable payer, too, dishing out an annualized payment of 8.1% every month. STAG started with quarterly payouts after its 2011 IPO, but switched to a monthly payout in 2013.
More important right now, Stag Industrial was just upgraded from an “Equal-weight” to “Overweight” by Capital One. That upgrade follows a handful of other upgrades of STAG over the course of the past few weeks.
It looks like the market is starting to warm up to Stag Industrial. Investors might be wise to take the hint.
Monthly Dividend Stocks: Nexpoint Credit Strategies Fund (NHF)
NHF Dividend Yield: 15.9%
NexPoint Credit Strategies Fund (NHF) may be the most unique name on this list of monthly dividend stocks. It’s neither a REIT nor a BDC nor a master limited partnership. It’s a fund — a closed-end fund — that seeks current income and capital appreciation by focusing on sub-investment-grade debt (read: “junk bonds) and equity. The fund will also abate risk with hedges, when appropriate.
The model works too. NHF currently sports a dividend yield of 16.1%, and pays it each month like clockwork.
While that in itself is enough to make a speculative buy, Nexpoint Credit Strategies Fund is in the midst of unlocking a great deal of pent-up value. A little less than a year ago, spun off its apartment assets into a separate REIT called NexPoint Residential Trust (NXRT). The “play,” so to speak, was to capitalize on the notion that NHF shares tend to trade below their NAV, and the that apartment REITs tend to trade above their NAV.
The spinoff did indeed start to unlock that value as prescribed, but more value creation from the spinoff could be in the cards.
EDITOR’S NOTE: Corrected timing of NXRT launch to last year. We apologize for the error.
Monthly Dividend Stocks: Oxford Lane Capital Corp. 8.125% Series 2024 Term Preferred Stock (OXLCN)
OXLCN Dividend Yield: 8.125%
The two investments are clearly related; the latter is the name behind the former. But, the instrument that uses the ticker “OXCLN” is a cumulative preferred stock that pays 8.125% of its face value, and could do so through 2024 if it’s not redeemed by the company somewhere between mid-2017 and its scheduled 2024 sunset.
Preferred stock are simply shares that are given priority in regards to dividend payments; those owners are paid first, and common equity owners get what’s left, if anything. Cumulative preferred stock simply means if Oxford Lane can’t pay the preferred dividend at any particular scheduled distribution date, Oxford effectively give those owners an IOU and pay the skipped dividend when it could … again, before common stock owners.
The catch? The company is never going to pay more than the stated 8.125% yield, and there’s no outright guarantee it will make all its payments. The only guarantee is that the preferred stock will make all its dividend payments to the extent it’s possible for the company to do so.
As of the most recent look, OXCLN was still paying its full monthly dividend.
Monthly Dividend Stocks: Clough Global Opportunities Fund (GLO)
GLO Dividend Yield: 12.9%
While Nexpoint Credit Strategies Fund is the oddball of this bunch of dividend stocks, Clough Global Opportunities Fund (GLO) is a close second in that regard. It’s just a plain ol’ mutual fund of quality dividend stocks.
Its top five holdings? Citigroup Inc (C), Bank of America Corp (BAC), Liberty Ventures (LVNTA), Lennar (LEN) and TransDigm (TDG) … familiar stocks. Though they’re all quarterly payers, the fund owns enough different names to pay an annualized dividend of just under 11%. It also buys options on some stocks, leveraging its investment money.
The kicker: While all funds employ some sort of thought process when it comes to making picks, too few employ a consistent approach, instead ending up chasing fads. Not Clough, though. It has a savvy approach to stock-picking it not only applies consistently, but publicly. That discipline in itself is a breath of fresh air.
Monthly Dividend Stocks: LTC Properties Inc (LTC)
LTC Dividend Yield: 4.8%
Last but not least, LTC Properties (LTC) is a worthy REITs that pays monthly dividends.
Another REIT? Yes, but this one is different. LTC specializes in healthcare properties, and senior housing facilities in particular … a total of 224 sites in all. It’s arguably the most recession-resistant way of making any kind of investment in real estate.
LTC shares have been particularly disappointing over the past several months, having fallen from a high near $49 in January of to a low of $38 in September. Since then, though (and for the first time in a long time), we’re starting to see higher highs and higher lows. The market appears to have figured out healthcare REITs like LTC Properties aren’t doomed after all, but LTC itself has yet to make the full recovery.
The current dividend yield, paid monthly, is 4.9%. It’s not a lot, but the reward reflects the risk.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.