Whether you’re an income investor in retirement seeking a steady source of income or a younger investor who is looking to build a strong portfolio and reinvest your dividend payouts, you should really consider monthly dividend stocks.
These stocks have a lot of benefits. They provide the appeal of regular income with a steady cash flow that can supplement your retirement income and help pay for living expenses.
Or the frequent payouts are a steady source that can be reinvested into the market to compound your investments and accelerate portfolio growth.
While not every dividend stock offers a monthly dividend, it pays to look for those that make it a regular practice.
There are several types of companies, such as real estate investment trusts and business development corporations, that have unique tax structures that make it advantageous for them to offer a monthly dividend.
Other companies do it because it Companies opt to pay monthly dividends for several reasons. Firstly, it attracts a broader base of investors, which can improve stock liquidity and stability.
We’ll use the Dividend Grader to look for the best monthly dividend stocks that you can buy, based on factors such as dividend yield and consistency, earnings performance, growth and analyst sentiment.
If you want to see a regular flow of income into your portfolio, these are the monthly dividend stocks to consider.
Modiv Industrial (MDV)
Real estate investment trust Modiv Industrial (NYSE:MDV) invests in industrial manufacturing facilities. Altogether, it has ownership of more than 40 properties in 16 U.S. states.
REITs are one of the most popular monthly dividend stocks because they come with significant tax benefits. Because they distribute at least 90% of their taxable income, REITs aren’t subject to corporate income taxes.
Modiv bought more than $214 million in industrial assets in 2023, and plans to continue buying this year.
Earnings for the first quarter included $11.9 million in rental income, up $1.6 million from a year ago. The most compelling thing about Modiv is its fascinatingly descriptive earnings reports. No other company uses language like this:
“Like a sniper laying prone for a seemingly endless period of time, scanning for the right target and adjusting for the wind, before they find their shot, we too have been ever so patient in our acquisitions process over the past six plus months as we waited to pull the trigger on the right transaction.”
MDV stock has a dividend yield of 7.6% and the stock is up 9% this year. It gets a “B” rating in the Dividend Grader.
Main Street Capital (MAIN)
Main Street Capital (NYSE:MAIN) is an equity firm. With more than 200 investments in its history, the company focuses on putting its money into lower and middle market companies.
It’s an active investor — on May 30, it announced $32.8 million for an unnamed company that provides supply chain management services for federal government agencies.
On June 11, it announced it completed a $36.9 million investment to facilitate the management-led buyout out Nello Industries, which makes utility poles and towers.
Earnings for the first quarter were $131.6 million in investment income, up from $120 million a year ago. The company attributed much of the increase to a boost in interest income from higher interest rates.
MAIN stock is up 13% so far this year and pays a dividend yield of 8.4%. It gets an “A” rating in the Dividend Grader.
PennantPark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital (NYSE:PFLT) is structured as a business development company, or BDC. Like REITs, BDCs distribute 90% of their income to shareholders, making them a prized stock for anyone who wants monthly dividend income.
PennantPark’s primarily invests in middle market companies with first-lien debt, so the debts are guaranteed with collateral that PennantPark can take should a company default on its loan.
The company maintains an investment portfolio of $1.47 billion with net assets of $720 million.
In the first quarter, PennantPark received $19.1 million investment income and paid out 31 cents per share in dividends, versus a year ago when it had $13.7 million in investment income and paid out 28.5 cents per share in dividends.
PFLT stock is down 6% this year but it pays a hefty 10.8% dividend yield, which means it gets a “B” rating in the Dividend Grader.
Oxford Square Capital (OXSQ)
Oxford Square Capital (NASDAQ:OXSQ) is another BDC. This one is headquartered in Greenwich, Connecticut and invests in corporate debt securities and collateralized loan obligation structured investments that own corporate debt securities.
Collateralized loan obligations, or CLOs, are security backed by a pool of debt. Oxford Square gets debt payments from the underlying loans of the CLO and assumes the risk should borrowers default.
Earnings for the first quarter were $10.7 million in investment income, down from $12.3 million in the first quarter of 2023. It made new investments of $12.1 million in the quarter and received $19.3 million from sales and repayments of investments.
Oxford Square is a small company that packs a huge dividend punch. Despite having a market cap of only $180 million, the company pays a dividend yield of nearly 14%.
The stock is up 6% this year and gets a “B” rating in the Dividend Grader.
Gladstone Investment Corp. (GAIN)
Another BDC on our list is Gladstone Investment Corp. (NASDAQ:GAIN). This business development company invests in mature lower middle market companies, targeting businesses with earnings before interest, taxes, depreciation, and amortization of $4 million to $15 million.
The company is currently investing in 24 businesses across the country, including manufacturers, consumer products companies and business services. Its clients include plumbers, education companies, contractors and fabrication companies.
In the fourth quarter of its fiscal 2023 year (ending March 31, 2024), Gladstone earned $23.6 million in total investment income versus $23 million in the same quarter a year ago.
However, expenses increased by nearly $5 million in the quarter, bringing net investment income down to $5.3 million versus $9.7 million a year ago.
The company realized a $14.7 million loss in the quarter in its investment in The Mountain Corp., which liquidated and dissolved.
Despite that setback, the stock is in fine shape. GAIN stock is up 13% this year and it pays a dividend yield of 8.4%. That gives it a “B” rating in the Dividend Grader.
SL Green Realty (SLG)
SL Green Realty (NYSE:SLG) calls itself the largest commercial landlord in New York City.
The company focuses on commercial properties in Manhattan, with interests in 57 buildings that total 32.4 million square feet.
Recent activity includes a 1.4 million square-foot office tower at One Madison Avenue, where three new tenants signed in April for more than 104,000 square feet of space.
The company also announced a refinancing with Vornado Realty Trust (NYSE:VNO) for a $1.07 billion secured mortgage at 280 Park Ave. in Manhattan.
Rental revenue in the first quarter was $128.2 million, down from $174.5 million a year ago. Total revenue was $187.8 million, down from $245 million.
However, the company’s total net income of $13.1 million and 20 cents per share was a vast improvement from a year ago, when SL Green posted a loss of $39.7 million and 63 cents per share.
SLG stock is up 25% this year and pays a dividend yield of 5.8%. It gets a “B” rating in the Dividend Grader.
PermRock Royalty Trust (PRT)
PermRock Royalty Trust (NYSE:PRT) is another type of business structure that can often be found in monthly dividend stocks.
A royalty trust owns natural resource rights, including oil, gas, and minerals. It distributes income from the sale of those resources in the form of dividends to its shareholders.
Permrock has the rights to assets of Boaz Energy, which pays 80% of net profits interest from the company’s oil and gas holdings in the Permian Basin of west Texas.
In its most recent distribution, Permrock sold 26,162 barrels of oil for an average price of $78.88 per barrel in May versus 23,156 barrels in April at an average price of $74.64.
Total payouts for the month were $490,223, or 4.02 cents per trust unit. That doesn’t sound like a lot, but overall the company has a strong payout of 11.3%.
PRT stock is down 14% this year but it gets a “B” rating in the Dividend Grader.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place