5 Top Dividend Stocks That Pay Monthly Distributions
December 2, 2019
These Top Dividend Stocks Yield Up to 12.4%
I love income investing, but most of the top dividend stocks come with one minor problem: infrequent payments.
Typically, companies opt to pay their distributions on a quarterly basis. Bonds can be even worse, given that most fixed-income securities pay coupons on a semi-annual schedule.
None of which is a problem for younger investors, mind you. But for those of us who count on our portfolio income to pay the bills, it can be a hassle.
Sure, it’s possible to juggle monthly expenses with quarterly payouts from top dividend stocks. But easy? Not so much.
But one group of companies may have a solution: monthly dividend stocks.
Over the past few years, dozens of companies have recognized this cash flow conundrum. So in an effort to support their shareholders, some businesses have started paying out dividends on a monthly basis.
This deal presents a win-win scenario. Retirees can better manage their income and expenses. Companies, meanwhile, lock in a loyal base of investors.
Of course, I would never recommend investing in a stock just because of its payout schedule. Prospective shareholders still need to dig into the financials to ensure the company can actually fund its payout.
But you can find some interesting names among monthly dividend stocks. In the table below, I’ve highlighted five of them. To be clear, this list doesn’t constitute a series of “buy” recommendations. It does, however, provide a great starting point for further research.
|
Company |
Market Cap |
Yield |
|
The Cushing Renaissance Fund |
$99.0 Million |
12.9% |
|
Cushing Energy Income |
$14.3 Million |
8.3% |
|
Main Street Capital Corporation |
$2.7 Billion |
5.7% |
|
Gladstone Land Corp |
$262.9 Million |
4.3% |
|
Realty Income Corp |
$25.2 Billion |
3.6% |
(Source: Google Finance and Yahoo! Finance, last accessed November 29, 2019.)
Let’s say a few words about these top dividend stocks.
The Cushing Renaissance Fund (NYSE:SZC) and Cushing Energy Income (NYSE:SRF) both pay out some of the highest yields around. Some investors look down on these closed-end funds because they focus on the energy patch. Low oil prices have slashed industry profits. As a result, this sector has fallen out of favor on Wall Street.
But this situation could have created an opportunity. Both funds trade at a 15% discount to the liquidation values of their portfolios. In other words, investors can scoop up collections of tier-one energy assets for $0.85 on the dollar.
Main Street Capital Corporation (NYSE:MAIN) has carved out a lucrative niche in the financial industry. Management lends money to small and mid-sized businesses, an area of the marketplace that’s often overlooked by big banks.
Because Main Street has little in the way of competition, its executives can charge above-average interest rates on loans. For shareholders, this has translated to outsized returns and a dividend yield in the mid-single digits.
Gladstone Land Corp (NASDAQ:LAND) is pretty easy to wrap your head around. Over the past few years, the firm has quietly bought up some of the most productive cropland in the country. As the world’s population grows and the amount of arable space declines, these properties could become valuable assets in the coming years.
Meanwhile, management rents this land out to farmers in exchange for steady rental income. That has created a tidy dividend stream for unitholders.
Finally, you have a simple story with Realty Income Corp (NYSE:O). It’s a well-run retail landlord with more than 5,900 properties across the United States.
By specializing in recession-proof tenants like gyms, grocery chains, and convenience stores, Realty Income Corp has paid a dividend to unitholders each month since going public in 1994. And through acquisitions, rent hikes, and cost cuts, the partnership has boosted the payout at a five-percent compounded clip over that period.
