Get Paid Every Month From These Three Stocks Yielding Up to 10.7%
3 Monthly Dividend Stocks to Consider
In this article, I would like to show you one of my favorite ways to earn a passive income: By investing in monthly dividend stocks.
But before we start, I want to talk about something that’s often overlooked by income investors. I’m talking about a company’s payout schedule.
You see, when you look up a publicly listed company on any of the financial web sites, such as Google Finance, Yahoo! Finance, or MarketWatch, you are presented with a bunch of statistics. These often include the company’s stock price, market capitalization, price-to-earnings multiple, 52-week highs and lows, daily highs and lows, and maybe the next ex-dividend date.
However, what those web sites won’t tell you is how often the company pays its dividend. In other words, two companies may both yield five percent, but the payout frequencies could be different. One may pay dividends only once a year, while the other follows a quarterly dividend schedule.
And that, my dear reader, could mean a big difference in the budgeting process for an income investor. Think about it: If someone is trying to live off their dividends, it would take a lot of effort to match annual payments with their daily expenses. At the end of the day, most people have bills to pay every month.
That’s why companies that are determined to return cash to investors on a regular basis often pay dividends more frequently than once a year. For instance, Walt Disney Co (NYSE:DIS) paid annual dividends from 2000 to 2014, but in 2015, the company switched to paying semi-annual dividends. Unsurprisingly, it also delivered substantial payout increases since moving on to a more frequent payout schedule. (Source: “Walt Disney Company (The) Dividend Date & History,” Nasdaq, last accessed May 1, 2018.)
Of course, even semi-annual dividends are not enough to quench the thirst of income-seeking investors. That’s why in today’s market, most dividend-paying companies follow a quarterly dividend payment schedule.
But as I said earlier, our bills are due every month. What if you don’t want to wait three months between each dividend check? Well, that’s what monthly dividend stocks are for.
List of Three Monthly Dividend Stocks for 2018
|Company Name||Stock Exchange||Ticker Symbol||Dividend Yield|
|Realty Income Corp||NYSE||O||5.15%|
|Apple Hospitality REIT Inc||NYSE||APLE||6.69%|
|Great Elm Capital Corp||NASDAQ||GECC||10.73%|
One of the sectors known for producing monthly dividend payers is real estate. The reason is simple. Most tenants have to pay rent every month. If a company owns a bunch of properties and rents them out, it can collect a predictable stream of monthly rental income.
Moreover, many real estate companies are structured as real estate investment trusts (REITs). In order to qualify as a REIT, a company must return at least 90% of its profits to shareholders in the form of dividends. In return, REITs pay little to no tax at the corporate level.
With the tax pass-through structure and mandatory distribution requirement, REITs have become some of the highest-yielding names in the stock market.
And thanks to their stable monthly rental income streams, several REITs have established monthly dividend policies.
Realty Income Corp (NYSE:O) is one of them. In fact, the company is probably the most well-known monthly dividend payer in the current stock market. It owns a large and diversified real estate portfolio that includes mostly retail properties.
At the current price, O stock offers investors an annual yield of 5.15%.
Realty Income’s popularity comes from the longevity of its dividend payments. Since the company was founded in 1969, it had paid 573 consecutive monthly dividends. (Source: “Dividend Payment Information,” Realty Income Corp, last accessed May 1, 2018.)
Our economy went through plenty of ups and downs since 1969, but none of that stopped Realty Income from mailing out dividend checks to its shareholders every single month.
The payout has been growing, too. Since the company went public in 1994, it has raised its dividends 96 times, with the last 82 of them being consecutive quarterly increases. In other words, Realty Income investors not only collected stable dividends, but also received a pay raise every three months.
Apple Hospitality REIT Inc (NYSE:APLE) is another real estate investment trust with a monthly dividend policy. But unlike Realty Income, which owns shopping centers, APLE focuses on hotels.
With 241 hotels totaling more than 30,000 guest rooms, Apple Hospitality REIT owns one of the largest portfolios of upscale, select-service hotels in the U.S. These properties are diversified across 88 markets in 34 states. (Source: “Investor Presentation,” Apple Hospitality REIT Inc, last accessed May 1, 2018.)
The hotel industry may not be firing on all cylinders right now, but that doesn’t prevent APLE stock from returning a generous amount of cash to its investors. Paying monthly dividends of $0.10 per share, the REIT has an annual yield of 6.69%.
To round off the list, we have Great Elm Capital Corp (NASDAQ:GECC), which is not a real estate investment trust. Instead, it is a business development company that lends to middle-market businesses in the U.S.
While Great Elm Capital can’t collect rental income like the previous two on the list, it still runs a stable business by earning interest payments from its debt portfolio. To shareholders of GECC stock, that has translated to a steady monthly income stream.
With a monthly dividend rate of $0.083 per share, the company offers a staggering annual yield of 10.73%.
And if you are worried about this high yielder’s dividend safety, note that since Great Elm Capital started paying monthly dividends in 2017, its net investment income has covered its payout every single quarter. (Source: “Investor Presentation,” Great Elm Capital Corp, last accessed May 1, 2018.)