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Investing in regular stocks is a good strategy for an investor looking to capitalize on the long-term growth of a company, while dividend stocks also provide a regular source of cash flow. This cash flow can be used to support your cost of living in retirement or reinvested in your portfolio. This article will highlight some of the best monthly dividend stocks to capitalize on both long-term appreciation and short-term cash flow.
| Values | Heart | TL;RD |
|---|---|---|
| AGNC Investment Corp. | AGNC | REITs that buy government-backed mortgages and mortgage-backed securities. |
| Broadmark Realty Capital Inc. | BRMC | Real estate finance company that deploys capital to real estate investors and developers. |
| Ellington Financial Inc. | efc | REITs that invest in residential and commercial loans and securities. |
| Prospect Capital Corp. | PSEC | Business development company that provides capital to middle market companies. |
| RPE properties | RPE | Experiential REIT that invests in long-term leases on properties such as movie theaters, museums, and ski resorts. |
| LTC Properties Inc. | LTC | REIT that finances senior housing and healthcare properties. |
| According to Realty Corp. | ADC | REITs that focus on essential retail properties, such as grocery stores, large retailers, home improvement stores, and pharmacies. |
| Gladstone Trading Corporation | WELL | REITs that invest in industrial and office properties leased net from a single or multiple tenants. |
| Pembina Pipeline Corporation | PBA | Canadian midstream and energy transportation provider that owns pipelines and facilities that process oil and natural gas |
AGNC Investment Corp. (AGNC)
- Current price: $9.81
- 12-month high: $16.03
- 12 month minimum: $7.30
- 1 Year Goal: $8.98
- Market Cap: $5.608 billion
AGNC Investment Corp. is a real estate investment trust or REIT. Many high-dividend stocks are REITs. In exchange for distributing 90% of their taxes to investors, REITs get certain tax benefits. Because they are required to pay dividends, REITs are a trusted and dependable source of cash flow.
AGNC buys mortgage-related securities guaranteed by government-sponsored companies such as Fannie Mae. Government backing makes these securities less risky than other types of financing options. AGNC investors benefit from a 14.37% dividend yield that pays $0.12 per share each month.
>>Related: How to Invest in Dividend Stocks
Broadmark Realty Capital Inc. (BRMK)
- Current price: $4,065
- 12 month high: $9.85
- 12 month minimum: $4.06
- 1 Year Goal: $5.00
- Market Capitalization: $540,328 million
Broadmark Realty Capital Inc. is a real estate finance company that works with real estate investors and developers. They use real estate as collateral to deploy capital to developers and investors working on residential and commercial development and renovation projects. To date, they have invested $4 billion in more than 2,000 real estate transactions in 30 states. Broadmark has a dividend yield of 20.19% that pays $0.07 per share each month.
Ellington Financial Inc. (EFC)
- Current price: $13.82
- 12-month high: $18.13
- 12 month minimum: $10.81
- 1 Year Goal: $15.16
- Market Capitalization: $834,055 million
Ellington Financial Inc. is another mortgage REIT that invests in residential and commercial loans and securities. These include a variety of investments ranging from secured loans to mortgage-backed securities. They have $10.3 billion of assets under management. Ellington has a dividend yield of 12.82% and pays $0.15 per share per month.
Prospect Capital Corp. (PSEC)
- Current price: $7.66
- 12 month high: $8.95
- 12 month minimum: $6.09
- 1 Year Goal: $6.00
- Market Cap: $3.044 billion
Prospect Capital Corp. is a business development company that provides capital to middle market companies. They have invested in assets totaling $7.7 billion with $3.8 billion in declared dividends. Prospect Capital has a dividend yield of 9.21% paying $0.06 per share each month.
>>Related: How to receive a stable income with dividends
EPR Properties (EPR)
- Current price: $40.29
- 12-month high: $56.38
- 12 month minimum: $34.58
- 1-year goal: $47.38
- Market Cap: $3.023 billion
EPR Properties is an experiential REIT. They invest in long-term leases on properties like movie theaters, museums, and ski resorts. Triple net leases mean that tenants are responsible for property upkeep instead of EPR. Instead of paying for things like real estate taxes, insurance, and building maintenance, EPR passes them on to the tenant and the cost savings to the investor. To date, EPR has made investments of $6.6 billion in 356 different properties. EPR has a dividend yield of 8.01% that pays $0.275 per share per month.
LTC Properties Inc. (LTC)
- Current price: $38.04
- 12 month high: $45.49
- 12 month minimum: $31.36
- 1 Year Goal: $40.25
- Market Cap: $1.541 billion
LTC Properties is a REIT that finances senior housing and healthcare properties. Approximately 50% of LTC’s portfolio is senior housing, while the other 50% are skilled nursing facilities. They provide investments through sale-leaseback, mortgages, construction, and joint ventures. LTC has a dividend yield of 5.9% and pays a dividend of $0.19 per share each month.
Agreement Realty Corp. (ADC)
- Current price: $68.43
- 12 month high: $80.44
- 12 month minimum: $61.62
- 1 Year Goal: $75.97
- Market Cap: $6.085 billion
Agree Realty Corp. is a REIT that focuses on essential retail properties, such as grocery stores, large retailers, home improvement stores, and pharmacies. These properties are secured with triple net leases. Agree Realty operates 1,707 properties in the United States. They increased their monthly dividend payment in October 2022. In 2021, Agree switched from quarterly dividend payments to monthly payments. They now pay $0.24 per share each month, up from $0.234 per share paid at the start of 2022. Their dividend yield is currently 4.21%.
Gladstone Trading Corporation (GOOD)
- Current price: $18.38
- 12-month high: $26.13
- 12 month minimum: $15.02
- 1 Year Goal: $19.50
- Market Capitalization: $740,918 million
Gladstone Commercial Corporation is a REIT that invests in office and industrial properties leased net to a single or multi-tenant. With net leased properties, some of the property fees, such as real estate taxes, are passed on to the tenants. Gladstone’s investment strategy prioritizes properties in good locations with strong underlying land values. They currently operate in 27 states. Gladstone pays a monthly dividend of $0.1254 per share and has a yield of 8.004%.
Pembina Pipeline Corporation (PBA)
- Current price: $35.22
- 12-month high: $42.74
- 12 month minimum: $28.89
- 1-year goal: $38.12
- Market Cap: $19.546 billion
Pembina Pipeline Corporation is a Canadian midstream and transportation energy provider. They own pipelines and facilities that process oil and natural gas for distribution in North America. Pembina pays a monthly dividend of $0.2175 CAD per share and has a 5.51% rate of return.
Other Ways to Invest in High-Dividend Stocks
Instead of investing in individual high-dividend stocks, you can invest in a dividend exchange-traded fund, or ETF, such as the Vanguard Real Estate Index Fund ETF (VNQ). This ETF is comprised of a number of REITs in a variety of sectors including residential, healthcare, industrial, and hotels and resorts.
When you buy a share of an ETF, you are buying a basket of different REITs. These ETFs typically pay a quarterly dividend that could be even higher than investing in an individual REIT. However, there is a trade-off: REIT ETFs come with fees. VNQ, for example, has an expense ratio of 0.12%.
Bonds can also be a high dividend yield investment option. Similarly, you can invest in a bond ETF. The Vanguard Total Bond Market (BND) ETF pays a monthly dividend of around $0.16 per share with an expense ratio of 0.03%. If you prefer mutual funds, there is also an equivalent mutual fund for bonds.
Should You Invest in Monthly Dividend Stocks?
Dividend stocks are a great way for investors to generate passive income. REITs in particular are good passive income generators because they are required to pay out a portion of their income to investors. Most of these payments are in the form of monthly dividends that can be reinvested to grow your portfolio faster than other types of dividend stocks.
One downside to investing in monthly dividend stocks is that the stocks with the highest dividends tend to be concentrated in real estate. Thanks to the growth of e-commerce and remote work, there is a shift taking place in commercial real estate right now. While this has not led to a decrease in dividends posted by many of the REITs listed above, that could change in the near future.
Other assets, such as energy infrastructure, are also at risk due to changing consumer and regulatory expectations around fossil fuels. A move to a low carbon economy could result in assets being stranded. While REITs are good for generating monthly income, their long-term viability in certain sectors of the economy is uncertain.
>>Related: List of dividend aristocrats
Bottom line
Stocks that pay high dividends are a good passive income generator. These stocks put your money to work and help you recoup your return on investment much faster than common stocks. The dividends you earn can be used to reinvest or to finance your cost of living.
The best place to find stocks that pay high dividends are REITs. These are real estate companies that are required to pay dividends to their investors. This means that even when the economy hits a downturn, you can still expect to generate income from these stocks.
