5 Monthly Dividend Stocks Yielding Up to 10.2%
Monthly Dividend Stocks
Typically, the majority of companies which pay a dividend do so on a quarterly basis. However, there are a rare group of companies which so monthly. Today’s article will take a look at five monthly dividend stocks yielding up to 10.2%.
Not only do monthly dividend stocks pay out income more frequently, but they also benefit various types of investors as well. For instance, if you are a retiree and need supplementary income, receiving a monthly payment instead of a quarterly one would be huge.
If you are not at the retirement stage yet and are in the planning process, the benefit of monthly dividend stocks comes down to the power of compounding. That’s because there are more frequent payments, meaning more money being poured back into the markets for a longer period of time. Simply put, the money is working hard on your behalf.
This article today will focus not only on monthly income stocks, but also low-priced high-dividend stocks and companies which are trading at a cheap valuation. So let’s take a look at five of the best monthly dividend stocks.
5 Monthly Dividend Stocks
|Sr.No||Stock Name||Stock Ticker||Dividend Yield|
|1||AGNC Investment Corp||AGNC||10.20%|
|2||Apple Hospitality REIT Inc.||APLE||6.40%|
|3||Global Net Lease Inc.||GNL||9.90%|
|4||Student Transportation Inc.||STB||7.51%|
|5||Pembina Pipeline Corp.||PBA||4.90%|
#1 AGNC Investment Corp
AGNC Investment Corp (NASDAQ:AGNC) pays a dividend yield of 10.2%, with the monthly payment amounting to $0.18 per share.
A high-dividend stock, AGNC stock features a double-digit return based on its yield. To get a sense of how large this is, the S&P 500’s average yield is 1.9%.
Another reason to be bullish on AGNC stock is its very cheap valuation, also in comparison to its peers. If the shares were to be purchased, a 4.3 trading multiple would be paid for every $1.00 of earnings. This is approximately a third of what would be paid for the industry group, which has a multiple of 13.8 times.
This is important because companies in the same industry tend to trade in the same range because the margin ratios and the economic impacts have an equal effect. The only outliers when it comes to valuation is a company’s tremendous growth or a loss of market share. A growth company would have a trading multiple higher than the rest of the group, whereas a company losing market share would be on the lower end of the spectrum.
AGNC is the latter, which would mean the company is not growing and losing its position in the industry. It seems that investors are giving the company a pass, despite its strong business. Perhaps they are simply unaware?
AGNC has very large margins and its costs are very much in control. One example is its operating margins of 78%, compared to 29% for the industry average. This means that once revenue is accounted for and then used to pay for variable operating expenses, there is $0.78 remaining from each dollar, compared to $0.29 for the overall industry.
Were I to describe AGNC stock in one sentence, I would say it’s a cheap stock that pays monthly dividends.
#2 Apple Hospitality REIT Inc.
One industry known for its cash flow is real estate. The general business model is very simple to understand: you own property, rent it out, and income from tenants. With that in mind, one real estate company you may wish to consider is Apple Hospitality REIT Inc (NYSE:APLE).
Apple Hospitality owns 200 hotels in the U.S., which total more than 30,000 individual hotel rooms. Featured brands include Marriott International Inc. (NASDAQ:MAR) and Hilton Hotels Corporation Common Stock (NYSE:HLT).
APLE stock is structured as a real estate investment trust, which results in paying no income tax. One major clause if this benefit is that at least 90% of all income must be given to investors via the dividend.
For investors, APLE is a very unique investment opportunity because of the industry’s high barriers of entry. Owning a hotel requires previous industry experience and a large sum of capital to begin operations. Since Apple Hospitality has its operations in full swing, it is looking to broaden its scale, which would boost the business’ diversification.
Another benefit of owning APLE stock is the higher turnover of guests, which results in a higher per-square-footage income compared to tradition real estate investments.
Also there is a lot of strength in the balance sheet. Of course, companies in the real estate sector are known for holding debt, and the amount is always a concern. However, Apple Hospitality’s debt is being used strategically and makes up a low amount of its total equity.
#3 Global Net Lease Inc.
Global Net Lease Inc. (NYSE:GNL) stock is a dividend growth stock. In 2016, the dividend per share was $0.059, which then rose to $0.177 in 2017 for an increase of 300%.
The benefit of dividend growth stocks is that as time passes, a higher return of capital comes in. What’s more, holding the shares longer means a greater personal dividend yield, based on the average cost of the shares; GNL stock has a current yield of 9.9%.
Global Net Lease operates, manages, leases, acquires, invests in, disposes of, and owns real estate assets. The company’s headquarters is located in the United States, with properties also located in the U.K., Puerto Rico, and across Europe. In total there are approximately 300 properties owned in the U.S. and Puerto Rico, more than 40 properties in the U.K., and roughly 25 in the rest of Europe.
This adds to the diversification in terms of geography, as well as currency and political risk. Even though Global Net Lease is a global company, there are no tax liabilities that have to be accounted for due to the business structure.
To make the case even more appealing as an investor, GNL stock is trading at price-to-earnings (P/E) ratio that is about a third of the industry group. The current P/E ratio for GNL stock is 35.1 times, while the industry average is 90.9 times.
With higher gross margins and a lower debt load percentage, GNL stock should be trading at a higher valuation. And note that said valuation will not dramatically change overnight; investors will have to wait it out. But while they wait for others to clue in on the cheap valuation, they can enjoy a high, growing dividend.
#4 Student Transportation Inc.
Student Transportation Inc. (NASDAQ:STB) is a low-priced dividend stocks based out of Canada. The company provides school bus transportation services in North America to both public and private schools via contracts, special requests, charter services, and direct-to-home services using more than 13,000 vehicles. Student Transportation also provides a managed transportation service that includes dispatching, routing, scheduling, driver training, and staffing and maintenance. STB stock pays out a monthly dividend of $0.0367 per share.
Another reason to consider STB as a potential investment is the actions of insiders. The most powerful action an executive or director of a company can take is using their personal money to buy shares in their own business. After all, they make decisions that could impact earnings or hold information that can influence the stock price.
Insiders signal to the markets that a company’s senior managers are very bullish on the business and believe that the share price should trade higher in the future. They also indicate to the markets that management believes the shares are cheap based on the current price and valuation, as well as that the investment goals of outside investors and insiders align. Lastly, insiders buying shares means that they will influence any present and future business decisions to be made for the company’s benefit, which should mean capital appreciation and/or dividend hikes.
#5 Pembina Pipeline Corp.
Pembina Pipeline Corp. (NYSE:PBA) is an energy transportation and service provider. The company operates through four segments: Conventional Pipelines, Oil Sands and Heavy Oil, Gas Services, and Midstream. The assets are located in Canada and the United States.
There are three reasons why PBA stock is worth consideration as an investment opportunity. The first would be because of the oligopoly it operates in. Only a small group of companies competing directly with Pembina means that each of those businesses owns a large percentage of the entire market share. And given the amount needed to build out the infrastructure of a business in this industry, as well as acquire land, this likely won’t change anytime soon, protecting earnings.
Second, Pembina sports large margins. Since there is a lot of capital needed upfront, there is very little money required once operations are up and running. There are still costs to the business, of course, but they are more related to employee wages and the maintenance of current assets, amounting to only pennies from every dollar earned. And more earnings retained can mean more growth opportunities and investor rewards.
The last reason to consider PBA stock is its growing dividend, which is reviewed annually to determine if it can support an increase. And it usually can; there has been an annual dividend hike every year since 2010. These increases are possible because the company’s revenue is steady, predictable, and protected from inflation cost.
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