Top 9 Stocks That Earn Monthly Dividends
Best Stock for Earning Monthly Dividends
One of the best ways to build consistent, long-term wealth is with stocks that pay dividends. While most American companies pay their dividends quarterly, some pay semi-annually, while others pay their annual dividends monthly.
Many investors like the idea of investing in a company that pays monthly dividends since it provides a more regular income stream. For those who reinvest their dividends, monthly dividend payments allow you to take even further advantage of the power of compounding.
Below, in no particular order, is a list of nine great, financially solid stocks that pay monthly dividends.
Shaw Communications, Inc.
Headquarters: Calgary, Alberta, Canada
Share price: $19.66
Market capitalization: $9.5 billion
Forward P/E: 18.92
Annual sales: $5.5 billion
Dividend yield: 4.65%
Payout Ratio: 70.08%
Shaw Communications, Inc. (NYSE:SJR) is a diversified communications and media company that provides broadband cable television, Internet, digital phone, and telecommunications services; direct-to-home (DTH) satellite services; satellite distribution services; and programming content to 3.2 million residential and business subscribers in Canada and the United States.
The company has a market cap of $9.55 billion, forward price-earnings (P/E) of 19.00, and operating cash flow of $1.26 billion. Shaw also provides an annual dividend of 4.64%, or $0.91 per share, which this translates to $0.098542 per month, and a comfortable payout ratio of 63.2%. Shaw has increased its annual dividend every year since 2009. (Source: “Dividend History,” Shaw Communications, Inc., last accessed September 15, 2016.)
Chatham Lodging Trust
Headquarters: West Palm Beach, Florida
Share price: $19.45
Market capitalization: $743.0 million
Forward P/E: 8.19
Annual sales: $289.5 million
Dividend yield: 6.97%
Payout Ratio: 139.3%
Chatham Lodging Trust (NYSE:CLDT) is a self-advised real estate investment trust (REIT) that invests in upscale extended-stay hotels, including “Residence Inn” by Marriott, “Homewood Suites” by Hilton, and Hyatt House. The company also buys select-service and full-service hotels, such as Courtyard by Marriott and Hampton Inn. (Source: “June 2016 Company Presentation,” Chatham Lodging Trust, June 3, 2016.)
Chatham Lodging currently owns 38 hotels, with interest in about 50 others. Half of the company’s portfolio is located on the West Coast and 24% in the Northeast. Chatham has the second-highest exposure to the West Coast markets of all U.S. lodging REITs.
Chatham Lodging has a market cap of $731 million, forward P/E of 8.07, and $20.0 million of free cash flow after paying dividends.
Because Chatham is a REIT, it has to legally distribute most of its earnings as dividends. Thanks to the company’s strong free cash flow, it provides an attractive and safe dividend yield of 6.97%, or $1.32 per share ($0.11 monthly). (Source: “Dividends,” Chatham Lodging Trust, last accessed September 15, 2016.)
LTC Properties Inc.
Headquarters: Westlake Village, California.
Share price: $51.10
Market capitalization: $2.0 billion
Forward P/E: 15.91
Annual sales: $151.6 million
Dividend yield: 4.29%
Payout Ratio: 100.9%
LTC Properties Inc. (NYSE:LTC) is a REIT specializing in seniors housing and long-term health care properties. The company’s portfolio includes more than 220 assisted living, memory care, post-acute/skilled nursing, and range-of-care properties spanning 30 states. LTC also has four other properties under development. (Source: “Portfolio,” LTC Properties Inc., last accessed September 15, 2016.)
LTC has a market cap of $2.0 billion, forward P/E of 15.75, and operating cash flow of $109.2 million. The company also pays an annual dividend of 4.29%, or $2.16 per share ($0.18 monthly). (Source: “Dividends,” LTC Properties Inc., last accessed September 15, 2016.)
The company’s dividend payout ratio is 100.05%. Typically, if a business has a payout ratio of 70% or higher, you know it isn’t reinvesting very much back into the company, which isn’t a good sign. However, this ratio does not apply to REITs or master limited partnerships (MLPs). As a REIT, LTC Properties is not subject to federal income tax if it distributes at least 90% of net taxable income to its stockholders.
Main Street Capital Corporation
Headquarters: Houston, Texas
Share price: $34.10
Market capitalization: $1.8 billion
Forward P/E: 15.19
Annual sales: $107.1 million
Dividend yield: 6.57%
Payout Ratio: 145.6%
Main Street Capital Corporation (NYSE:MAIN) is a business development company that provides long-term capital to middle-market companies, specifically between $10.0 million and $100 million and earnings before interest, taxes, depreciation, and amortization (EBITDA) between $3.0 million and $20 million for acquisitions, recapitalizations and refinancing. (Source: “Summary Fact Sheet As of June 30, 2016,” Main Street Capital Corporation, last accessed September 15, 2016.)
With $3.0 billion under management, Main Street’s portfolio includes approximately 200 investments in traditional and niche companies in virtually every sector. This provides the company with a steady revenue stream ,which helps cover its 6.5% annual dividend.
Main Street Capital has a market cap of $1.8 billion, forward P/E of 15.17, and levered free cash flow of $24.35 million. The company provides an annual dividend of 6.57%, or $2.22 per share; monthly, this works out to roughly $0.18. (Source: “Dividends,” Main Street Capital Corporation, last accessed September 15, 2016.)
Headquarters: Kansas City, Missouri
Share price: $76.60
Market capitalization: $4.8 billion
Forward P/E: 15.05
Annual sales: $449.1 million
Dividend yield: 5.08%
Payout Ratio: 121.2%
EPR Properties (NYSE:EPR) is fun and educational, being a self-directed REIT that invests in three primary segments: Entertainment, Recreation, and Education. The company’s $4.7 billion portfolio is made up of 250 tenants in 270+ locations spread across 39 states and Ontario, Canada. (Source: “Portfolio Overview,” EPR Properties, last accessed September 15, 2016.)
EPR’s portfolio consists of approximately 140 megaplex theaters, eight entertainment retail centers, and eight family entertainment centers. Many of its theaters are leased to AMC Entertainment (NYSE:AMC). It also owns 11 ski parks, five water parks, 20 golf entertainment complexes, 69 public charter schools, 21 early childhood centers, and three private schools.
The company’s focused properties have yielded superior results. Over the last decade, the REIT has consistently outperformed the Russell 2000 Index and MSCI US REIT Index in total returns. This includes consistent and strong cash dividend yields.
EPR Properties currently provides an annual dividend of 5.08%, or $3.84 per share ($0.32 monthly). The company has raised its annual dividend for each of the last six years. Since 2010, EPR Properties’ dividend yield has increased at an annual rate of seven percent, from $2.60 in 2010 to $2.84 (projected) in 2016. (Source: “Dividends,” EPR Properties, last accessed September 15, 2016.)
Reality Income Corporation
Headquarters: San Diego, California
Share price: $64.95
Market capitalization: $16.8 billion
Forward P/E: 21.39
Annual sales: $1.06 billion
Dividend yield: 3.78%
Payout Ratio: 213.6%
Reality Income Corporation (NYSE:O) is a REIT that sells commercial real estate leases to tenants under long-term agreements, typically 10–20 years. The lease payments are used to support the company’s monthly dividend payments. The firm currently owns over 4,600 properties, diversified with 246 tenants operating in 47 industries located throughout the United States and Puerto Rico. (Source: “Company Facts,” Reality Income Corporation, last accessed September 15, 2016.)
Realty Income has a market cap of $16.6 billion, Forward P/E of 21.14, and Operating Cash Flow of $732.2 million. It also provides an annual dividend of 3.78% or $2.42 per share ($0.202 per share monthly). As a REIT, the company distributes 90% of its taxable income as dividends.
Realty Income has paid 553 consecutive monthly dividends, including 88 dividend increases and 76 consecutive quarterly increases. Since 1994, the firm has reported a compound annual return (CAR) of 18.2%, much higher than the CAR of 11.4% from the Equity REIT Index, Dow Jones Industrial average of 9.8%, S&P 500 average of 9.2%, and NASDAQ Composite average of 8.9%. (Source: “Monthly Dividend Commitment,” Reality Income Corporation, last accessed September 15, 2016.)
Student Transportation Inc.
Headquarters: Barrie, Ontario, Canada
Share price: $6.00
Market capitalization: $580.6 million
Forward P/E: 42.86
Annual sales: $586.4 million
Dividend yield: 7.38%
Payout Ratio: 366.7%
Of the over 500,000 yellow school buses that operate each day in North America, roughly 66% are owned and operated by public school districts; the remaining 34% are owned and operated by public companies. (Source: “Industry Overview,” Student Transportation Inc., last accessed September 15, 2016.)
Operating in a large, stable recession resistant industry, Student Transportation Inc. (NASDAQ:STB) is the largest independent and highest growth provider of school bus transportation in North America. Through its 13,500 vehicles, Student Transportation offers contracted, managed, and special needs transportation, direct-to-parent, and charter services.
Student Transportation Inc. has a market cap of $567.0 million, forward P/E of 41.86, and operating cash flow of $59.0 million. The company also provides an annual dividend of eight percent, or $0.44 per share ($0.03667 monthly). (Source: “Dividends,” Student Transportation Inc., last accessed September 15, 2016.)
STAG Industrial, Inc.
Headquarters: Boston, Massachusetts
Share price: $22.62
Market capitalization: $1.7 billion
Forward P/E: 14.06
Annual sales: $235.9 million
Dividend yield: 5.97%
Payout Ratio: 89.7%
STAG Industrial, Inc. (NYSE:STAG) is an industrial REIT focused on buying and operating single-tenant industrial properties throughout the U.S. Since IPOing in 2011, the company has deployed over $1.8 billion in capital, acquiring 228 buildings, totaling approximately 46 million rentable square feet, or the equivalent of roughly 800 football fields. (Source: “Why Invest in STAG?,” STAG Industrial, Inc., last accessed September 15, 2016.)
STAG has a market cap of $1.65 billion, forward P/E of 13.69, and operating cash flow of $127.55 million. It also provides an annual dividend of 6.07%, or $1.39 per share ($0.1158 monthly). Since IPOing in 2011, the company has reported a total return of 159%. (Source: “Dividends,” STAG Industrial, Inc., last accessed September 15, 2016.)
Apple Hospitality REIT, Inc.
Headquarters: Richmond, Virginia
Share price: $18.42
Market capitalization: $4.11 billion
Forward P/E: 10.07
Annual sales: $935.7 million
Dividend yield: 6.52%
Payout Ratio: 78.2%
Apple Hospitality REIT, Inc. (NYSE:APLE) is a REIT that invests primarily in the lodging industry. The company owns one of the largest portfolios of upscale select service hotels in the U.S. Apple Hospitality’s portfolio consists of 236 Hilton- and Marriott-branded hotels, with more than 30,000 rooms located across 33 states. (Source: “Profile & History,” Apple Hospitality REIT, Inc., last accessed September 15, 2016.)
Apple Hospitality has a market cap of $4.12 billion, forward P/E of 10.09, and operating cash flow of $300.9 million. The company currently pays an annual dividend of 6.56%, or $1.20 per share ($0.10 monthly). (Source: “Dividend History,” Apple Hospitality REIT, Inc., last accessed September 15, 2016.)