Top 7 Stocks to Earn Monthly Dividends in 2017
7 Best Companies to Earn Monthly Dividends
One of the main motivations for income investors is to earn monthly dividends by investing in companies which provide a stable and predictable dividend income.
Buying a stock with monthly dividend rather than a quarterly payout has an added advantage: you can multiply your income faster by more frequently reinvesting in the company’s stock. It works exactly the same way as compounding works in an interest-paying bank account, where you can multiply your income by reinvesting your profit.
But most of the blue-chip companies included in the S&P-500 index pay quarterly dividends. Investors seeking a monthly dividend income are usually left with real estate income trusts (REITs) or business development companies with a basket of risky portfolios.
Though there isn’t much logic to buying a stock just because it pays a monthly dividend, many investors seeking to match their monthly expenses with a dividend paycheck may not have any other viable options when interest rates are extremely low and income from bonds and saving accounts is so little.
Still, if you don’t want to expose your investments to relatively less-known companies with risky business models, one potential way out is to buy solid dividend-paying stocks with staggered quarterly payout schedules. For example, you can build your dividend-paying portfolio by picking stocks with payments in January, February, and March. This strategy will definitely require more homework and research, but this will work out just fine for you if you’re a risk-averse and only want to invest in traditional dividend paying companies such as IBM, McDonald’s, or Proctor & Gamble.
If you’re looking for a stable monthly income from your stock investing, here are the seven top monthly dividend stocks.
1. Realty Income Corporation
Realty Income Corporation (NYSE:O) takes pride in calling itself “a monthly dividend company.” With 553 consecutive monthly dividend payments since 1969, this REIT is part of the S&P 500 Dividend Aristocrats Index.
The company has a solid business model, with over 4,600 properties in its portfolio spread across diversified commercial tenants, including Walgreens, Fedex, and Dollar General, in 49 states.
Realty Income is also growling aggressively. In the past six months to June 30, it invested $663 million in 153 new properties in 34 states.
For future earning potential, Real Income estimates funds from operations (FFO), the amount of money usually available for distribution, may increase up to 4.3% in 2016 . In the second-quarter, Realty Income’s profit grew 16% to $69.0 million, coupled with an over six percent increase in the dividend payout, which is currently at 3.65%. (Source: “Realty Income Announces Operating Results For Second Quarter,” Realty Income Corporation, July 27, 2016.)
2. EPR Properties
EPR Properties (NYSE:EPR) is also a REIT with a more focused investment approach, targeting only entertainment, outdoor recreation, and education assets.
This approach makes EPR a unique REIT with not many industry peers to compare with. With an average annual dividend growth rate of seven percent over the past five years, EPR offers a good value to investors who want to buy a stock with a good dividend income and limited risk.
For REITs, one big risk factor is potential fluctuations in interest rates. But EPR stock has performed extremely well despite increasing speculations on the U.S. monetary tightening. On top of returning seven percent in cash, EPR stock surged more than 50% over the past 12 months, with potential for further gains. Analysts’ consensus price target for the stock is $83.33, up from its current price of $78.63. (Source: “EPR Properties (EPR),” Yahoo! Finance, last accessed August 30, 2016.)
3. Shaw Communications Inc.
Shaw Communications Inc., (TSE: SJR) serves 3.2 million customers, mostly in Western Canada. Its customer base includes 1.9 million internet subscribers and more than one million Shaw Home Phone customers, supported by 860,000 kilometers of company-owned fiber line. Through its subsidiary Wind Mobile, Shaw provides mobile services in urban areas of British Columbia, Alberta, and Southern Ontario. (Source: “About Shaw,” Shaw Communications, last accessed August 30, 2016.)
In order to shied itself from competition coming from wireless operators, last year, Shaw Communications bought Canada’s fourth-largest mobile phone operator, Wind Mobile. The CA$1.6 billion acquisition provides Shaw a new growth platform in Canada’s wireless market while strengthening its product mix.
With a dividend yield of 4.5%, it provides a good diversification opportunity for monthly dividend income investors away from real estate.
4. Main Street Capital Corp.
Main Street Capital Corp. (NYSE:MAIN) is a good break from REITs to invest in the financial space.
The Houston-based Main Street provides debt and equity financing to small- and medium-sized companies taking direct long-term ownership for stable returns.
Main Street has a significant diversified investment model with exposure in 199 companies across various industries. This strategy has worked well for dividend investors, who are receiving a 6.5% dividend yield and an 8.1% when supplemental dividends included. (Source: “Summary Fact Sheet As Of June 30, 2016,” StockPR.com, June 30, 2016.)
5. LTC Properties Inc.
LTC Properties Inc. (NYSE:LTC) builds housing and health care properties for seniors. A stable business deriving its revenue from private sources and government departments, LTC Properties is one of the safest stocks to buy and a good alternative for stable monthly dividend income.
LTC stock is probably the one you can hold for the long term as a rapidly increasing elderly population in the U.S. will continue to generate more demand for housing facilities for seniors. Elderly generation is expected to grow to 50 million in 2019 from 30 million in 1988. (Source: “Aging in the U.S.,” U.S. Commerce Department, last accessed August 30, 2016.)
LTC’s dividend yield of 4.3% provides a good value with its 71% fund flows from the operations payout ratio.
6. Stag Industrial Inc.
Stag Industrial Inc. (NYSE:STAG) is another diversification play within the property management space. STAG is a Boston-based real estate investment trust focused on the acquisition and operation of single-tenant, industrial properties throughout the U.S.
This dividend-paying stock offers a good combination of income and growth for investors looking to benefit from a diversified portfolio of industrial spaces. With the portfolio occupancy rate of about 96%, STAG is a solid stock offering about six percent yield annually. Since February 2016, STAG shares have gained about 60%, while in the past five years, the stock has more than doubled in its value.
7. Prospect Capital Corp.
Prospect Capital Corp. (NASDAQ:PSEC) provides private debt and equity capital to middle-market companies in the U.S. and Canada. With extreme volatility in its shares price, Prospect is the most risky bet in our monthly dividend paying portfolio of seven stocks.
Investing in business development companies, which generally offer financing to young and often distressed players with credit ratings in the “junk” category, is a risky preposition. But higher risk potentially brings greater returns.
The stock sports an 11% dividend yield with a 99 months of income distribution history.