One type of investment that many income investors like more than equities that deliver a steady flow of quarterly dividend distributions are monthly dividend stocks, asserts Ned Piplovic, income expert 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. 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. The dividend yield is the most common measure of an equity’s dividend distributions. However, this group of seven monthly dividend stocks to buy now had to meet additional criteria. 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.
Furthermore, 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.
Realty Income Corporation (O)
Dividend Yield: 3.74%
Headquartered in San Diego and listed on the New York Stock Exchange (NYSE) since 1994, the Realty Income Corporation operates as a real estate investment trust (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.
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In addition to the steady supply of dividend income, the REIT also delivered strong share price growth. Just over the past 12 months, the share price advanced more than 40% and nearly doubled over the past five years. The company delivered a combined total return of nearly 46% over the past year and a total return of 110% for the five years.
Gladstone Land Corporation (LAND)
Dividend Yield: 4.21%
Headquartered in McLean, Virginia, and founded in 2005, the Gladstone Land Corporation is a publicly traded REIT that invests in farmland and farm-related properties located in major agricultural markets in the United States, which it leases to unrelated third-party farmer-tenants.
The REIT enhanced its annual dividend payout for the past five consecutive years. Over those five years, the annual dividend amount rose nearly 50%, which corresponds to an average growth rate of 8.1% per year.
LAND’s share price declined for the first three years after its establishment in 2013. However, the share price reversed trend and has advanced nearly 70% since the beginning of 2016. The share price traded sideways over the past 12 months which limited the total returns over that period to 9.2%. Over the past three years, the REIT delivered a total return of 43%, with dividend income contributing more than half of the gains.
STAG Industrial (STAG)
Dividend Yield: 4.84%
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 4.84% forward yield.
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In addition to a steady dividend income, the company also enhanced its share price more than 25% over the trailing 12 months. Furthermore, the share price nearly doubled since its five-year low in February 2016. The combined benefit of rising dividends and capital growth was a 30% total return over one year as well as 67% total return over the past three years.
EPR Properties (EPR)
Dividend Yield: 5.85%
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 to rise.
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 in the past two decades. Furthermore, the relatively steady asset appreciation and rising dividend income combined for a 48% total return over the past 12 months and a total return of more than 81% over the five-year period.
Main Street Capital Corporation (MAIN)
Dividend Yield: 6.38%
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.
While the long-term trend delivered share price appreciation, the overall market pullback in December 2018 pushed MAIN’s stock into a correction as well. However, the share price has recovered all losses and moved ahead of its level from one year earlier. Additionally, the share price gained more than 15% since its 52-week low on Christmas Eve.
The company boosted its annual dividend amount 11 times over the past 12 years and rewarded its shareholders with a total return of almost 11% over the past 12 months, 48% over the past three years and nearly 57% over the past five years.
Gladstone Investment Corporation (GAIN)
Dividend Yield: 6.81%
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’s stock regained its footing and has recovered nearly 90% of its losses after rising nearly 380% from its all-time low in March 2009. The company hiked its monthly payout three times during 2018 and 12 times over the trailing 12 months.
In addition to its regular monthly distributions, Gladstone also distributed three extra dividends in 2017 and two additional payments in 2018. Additionally, the company boosted its annual dividend payout every year since 2010.
The combined benefit of the company’s dividend payouts and capital gains corresponds to a 26% total gain over the past 12 months. The shareholders more than doubled their investment with a 105.6% total return over the past three years.
Great Elm Capital Corporation (GECC)
Dividend Yield: 12.06%
Headquartered in Boston and established in 2016, the Great Elm Capital Corporation is a business development company that specializes in loan and mezzanine, middle-market investments in media, healthcare, telecommunication services and communications equipment.
GECC is managed by Great Elm Capital Management, which is a wholly-owned subsidiary of Great Elm Capital Group, Inc. (GEC). The company’s share price declined more then 20% over the past year, which also helped the company deliver a dividend yield in excess of 12%.
In addition to a steady $0.083 monthly dividend payout, the company also distributed special dividends of $0.166 in January 2017, $0.20 in January 2018 and $0.24 in January 2019. The share price pullback cut the benefit of the 12% dividend yield in half for a 6% total return over the trailing 12 month-period.
However, since bottoming out on December 24, 2018, the Great Elm Capital Corporation’s share price has advanced more than 10% and continues its current uptrend.
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