Monthly dividend stocks provide a unique opportunity for income investors to receive regular payouts, with only a few dozen publicly traded stocks offering this option. These stocks, typically with market caps in the hundreds of millions, offer an alternative to the more common quarterly dividend payments from blue-chip companies. By spreading a $500,000 portfolio across five monthly dividend payers, investors can simplify their retirement planning and potentially increase their yields.
Among the monthly dividend payers are high-yield assets such as real estate investment trusts (REITs) and business development companies (BDCs), which often offer payouts ranging from 5.8% to 15.6%. Companies like Apple Hospitality REIT, which operates select-service hotels, Realty Income, a net-lease real estate firm with properties in the US and Europe, Main Street Capital, a BDC providing capital solutions to lower-middle-market companies, and AGNC Investment Corp., specializing in the mortgage space, are all examples of monthly dividend payers with varying yields and risks.
Apple Hospitality REIT, despite its struggles with soft RevPAR trends and economic headwinds, offers a 6.2% dividend yield and a well-positioned portfolio for growth. Realty Income, one of the largest REITs, has been actively acquiring properties, but its shares are trading at a premium and may not offer a bargain for investors. AGNC Investment Corp., dealing in agency residential mortgage-backed securities, faces challenges with high leverage and a difficult market environment, leading to uncertainty around its high dividend yield of 15.6%.
Main Street Capital, a top-tier BDC, offers a 6% dividend yield with the potential for even higher yields through special payouts. Despite its strong operational performance, the company’s stock is trading at a significant premium, making it expensive for investors. PennantPark Floating Rate Capital, another BDC with a 10% dividend yield, is trading close to its net asset value and has shown strong growth in its portfolio, but its rate sensitivity and high amount of floating-rate debt pose risks for investors.
Overall, monthly dividend stocks offer income investors a unique way to receive regular payouts and potentially higher yields compared to quarterly dividend payers. While these stocks come with their own set of risks and challenges, they can be valuable additions to a diversified income portfolio. Investors should carefully consider the risk-reward profile of each monthly dividend payer and assess their suitability for their investment goals and risk tolerance.
