The only type of investment that income investors like more than equities that deliver a steady flow of quarterly dividend distributions are monthly dividend stocks, suggests Ned Piplovic, income specialist and editor of DividendInvestor.
While the ultimate goal of income investing is a portfolio that delivers a constant flow of income payments, even the most ardent income investor will not invest blindly into equities based solely on a high dividend yield.
Share price movements occur on much larger orders of magnitude than dividend hikes or even dividend cuts. Even a rapidly rising dividend payout can rarely compensate for a fast share price decline.
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Therefore, every investment portfolio — whether income-based, or asset-appreciation-based — should include a core of equities that offer reliable long-term capital growth, as well as a steady income flow.
The list below is not just a list of equities with the highest yields. Only one company has a one-year record of annual dividend hikes. All other equities have at least three years and as much as 19 consecutive annual dividend boosts.
Further, to make this list, every equity had to offer sufficient asset appreciation to deliver positive total returns over the past one, three and five years.
Without further delay, below is the list of seven monthly dividend stocks to buy now, presented in ascending order by their current dividend yield.
STAG Industrial, Inc. (STAG)
Dividend Yield: 4.88%
Headquartered in Boston and incorporated in 2011, STAG Industrial, Inc. is an industrial real estate operating company focused on the acquisition, ownership and operation of single-tenant, industrial properties throughout the United States.
The company boosted its annual dividend payout amount every year since its formation in 2011. The current $0.119 monthly distribution is equivalent to a $1.428 annual payout and currently yields nearly 5%.
In addition to a steady dividend income, the company also enhanced its share price nearly 10% in the last year.
Furthermore, the share price nearly doubled since its five-year low in February 2016.
The total return from the combined benefit of rising dividends and asset appreciation exceeded 12%. Over the last three and five years, the total returns were 35% and 75%, respectively.
Solar Senior Capital Ltd (SUNS)
Dividend Yield: 8.03%
Solar Senior Capital Ltd. is a business development company that provides investments to leveraged middle-market companies in the United States.
The company offers investments in the form of senior secured loans, including first and second lien debt instruments. Solar Senior Capital does not invest in start-up companies or companies having speculative business plans.
The company raised its monthly dividend distribution amount seven times during the first 18 months after its formation in mid-2011 and has paid a steady $1.42 annual dividend over the past seven years.
In addition to its steady dividend distributions, the company’s share price contributed supplemental gains amid moderate volatility. Just over the past 12 months, the company delivered a 13.6% combined total return. Over the last three years, the total return was 35% and the total return exceeded 57% for the current five-year period.
Gladstone Investment Corporation (GAIN)
Dividend Yield: 6.59%
Headquartered in McLean, Virginia, and founded in 2005, the Gladstone Investment Corporation is a private equity fund specializing in lower middle market, acquisitions, buyouts, recapitalizations and debt refinancing.
After losing nearly 85% of its value during the 2008 financial crisis, the company advanced more than five-fold and regained more than 90% of its losses since the all-time low in March 2009.
The company’s current $0.068 monthly payout corresponds to a $0.82 annualized payout and has a yield of nearly 6.6%. Over the last nine years, GAIN enhanced its total annual distribution 70%, which is equivalent to an average growth rate of 6.1% per year.
In addition to its regular monthly distributions, Gladstone also distributed three extra dividends in 2017, two in 2018 and one year-to-date in 2019. Additionally, the company supplemented its rising dividend income with steady asset appreciation for a 17% total one-year return, as well as 70% total return over the last three years and a 130% total return over the last five years.
EPR Properties (EPR)
Dividend Yield: 5.86%
Headquartered in Kansas City, Missouri, and founded in 1997, EPR Properties is a specialty REIT that invests in commercial properties primarily in the entertainment, recreation and education segments.
While experiencing a pullback like the rest of the markets in December, EPR’s share price dip reversed direction while still nearly 20% above its low from April 2018. The share price recovered its December losses before the end of January 2019 and continues rising.
With just one dividend cut from $0.84 to $0.65 in 2008 and flat dividend payouts for the entire 2009, the company has hiked its annual dividend amount 18 times at an average annual growth rate oh 6.3% over the last two decades.
Furthermore, the relatively steady asset appreciation and rising dividend income combined for a 20% total return over the past 12 months and a total return of nearly 90% over the last five years.
Main Street Capital Corporation (MAIN)
Dividend Yield: 5.66%
Based in Houston and incorporated in 2007, the Main Street Capital Corporation is a business development company specializing in long-term equity and debt investments in small and lower middle market companies.
Main Street Capital had the misfortune of incorporating right before the 2008 financial crisis and its share price lost more than 40% of its Initial Public Offering (IPO) level by early 2009. However, the share price more than quadrupled since reversing trend in March 2009.
The share price recovered from the overall market pullback in December 2018 and has gained more than 30% since the 52-week low on Christmas Eve. The company boosted its monthly dividend payout 5.1% from $0.195 last year to the current $0.205 payout amount,
Over the past 12 years, MAIN hiked its annual dividend amount 11 times and nearly doubled the total payout over period, for a 5.3% average annual growth rate. Shareholders enjoyed combined total returns of 20% over the trailing 12-month period, 54% over the past three years and nearly 85% over the last five years.
LTC Properties, Inc. (LTC)
Dividend Yield: 4.44%
Headquartered in Westlake Village, California, this REIT invests in senior housing and health care properties primarily through sale-leasebacks, mortgage financing, joint-ventures and structured finance solutions.
With more than 200 investments in 28 states and 30 operating partners, approximately 50% of its portfolio in comprised of senior housing, while another 50% is skilled nursing properties.
Unlike many other equities that slashed their dividends drastically in the aftermath of the 2008 crisis, LTC merely paid a flat annual dividend in 2009 and resumed its annual dividend hikes the following year. Since suspending dividend payouts in 2001, LTC has advanced its annual payout 440%, which corresponds to an average annual growth rate of 10.4%.
The $0.18 current distribution is nearly 6% above the $0.17 payout amount from last year. This current monthly payout converts to a $2.16 annual payout.
LTC Properties supported its rising dividend distributions with steady capital gains as well. Just over the past 12 months, shareholders enjoyed a combined total return of 23%. The total returns were more than 67% over the last five years.
Realty Income Corporation (O)
Dividend Yield: 3.58%
Headquartered in San Diego and listed on the New York Stock Exchange (NYSE) since 1994, the Realty Income Corporation operates as a REIT in the commercial real estate market. The company has delivered nearly 600 consecutive monthly dividend payouts in its 50-year history.
Additionally, since converting to a REIT in 1994, the company has enhanced its annual payout every year by delivering nearly 100 annual dividend boosts — an average of nearly four dividend increases per year.
The current $0.227 monthly payout is 2.7% higher than the $0.221 payout from the same period last year. Over the last two decades the company managed to maintain an average dividend growth rate of nearly 5% per year.
In addition to the steady supply of dividend income, the REIT also delivered strong asset appreciation. Just over the past 12 months, the company delivered a combined total return of nearly 40% and a total return of more than 116% over the last five years.
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