3 Monthly Dividend Stocks Yielding Up to 11.5%
May 7, 2018
The Dividend Stocks That Pay Monthly
Have you ever struggled to juggle monthly bills with quarterly dividend payments? The phone company wants their money every 30 days. Our other bills usually arrive on a monthly basis, too.
No big deal for working Joes. But what about retirees? Most dividend stocks pay investors every three months. For those of us who rely on dividends to pay the bills, that creates a challenge.
For bond investors, it gets worse. Most issues only pay coupons every six months. How do you balance monthly bills with such an uneven income stream?
Doable? Yeah, I guess. But it’s not easy.
Thankfully, there’s an answer.
Over the past few years, some companies have started paying dividends more often. We’ve seen a big rise in the number of monthly dividend stocks catering to older investors.
The approach presents a win-win for everybody. Businesses earn a loyal shareholder base, while stock owners can better manage their cash flow.
No, you won’t find a lot of blue-chip stocks in this group. But if you’re willing to do some extra legwork, you can find some wonderful companies.
Of course, no one should buy a stock just for a frequent payment schedule.
Like any investment, you have to do your homework. Still, you’ll find enough quality in this group to build a reliable stream of monthly income.
To help get you started, I have prepared a list of three monthly dividend stocks below. These names represent high-quality businesses with long track records of paying shareholders. Better still, some of these stocks pay out quite high yields.
To be clear, you should not view this table as a list of “buy” recommendations. Some of these stocks look pricey. They might not present you with a good place to put money to work right now.
Still, all three represent great income streams. It should serve as a good jumping-off point for further research.
|
Company |
Market Cap |
Yield |
|
Realty Income Corp |
$14.6 Billion |
5.04% |
|
Pembina Pipeline Corporation |
$17.1 Billion |
5.23% |
|
AGNC Investment Corp |
$7.4 Billion |
11.53% |
(Source: Yahoo! Finance, last accessed May 4, 2018.)
Realty Income Corp
You don’t need an MBA to wrap your head around Realty Income Corp (NYSE:O). Management buys up rentals and collects income from tenants. Today, the company’s empire includes some 5,000 retail properties across the country.
The deals can be quite profitable. Corporate tenants have a lot more in the way of rent money and often sign long-term leases. Renters also have to pay for insurance, maintenance, and property taxes.
As a result, most of the company’s income goes to shareholders. Since going public in 1994, Realty Income has made 573 consecutive monthly payments. Moreover, management has raised its dividend for 82 straight quarters.
And those small hikes add up over time. Today, Realty Income pays a monthly dividend of $0.22 per share. That comes out to an annual yield of 5.04%.
Pembina Pipeline Corporation
Pembina Pipeline Corporation (NYSE:PBA) owns dozens of pipelines across North America. This network transports commodities—like oil and natural gas—from wellheads to refineries.
I often describe these assets as the “interstate highways” of the oil patch. Like a freeway tollbooth, Pembina earns a fee on every barrel shipped through its network. This translates into steady income, with little exposure to commodity prices.
Pembina also owns terminals, storage facilities, and processing plants. To stretch my analogy further, think of these like roadside truck stops and gas stations. Energy companies need these services to run their businesses and will pay quite a markup.
For shareholders, this means steady income. Pembina pays a monthly dividend of CA$0.18 per share. That comes out to an annual yield of 5.23%.
AGNC Investment Corp
AGNC Investment Corp (NASDAQ:AGNC) represents one of the more speculative names on this list. Anytime you see an above-average yield, you know it comes with above-average risk.
The company has organized itself as a mortgage real estate investment trust (mREIT). The business borrows money at a low interest rate from depositors. Management then plows these funds into higher-yielding mortgage loans.
AGNC’s profit comes from the difference between these two rates—called the spread. Management juices its returns further by employing quite a bit of leverage. This translates into quite the income stream, with a yielding topping almost 12%.
The risk? This spread can change in a flash. If short-term interest rates rise, AGNC’s profits could disappear.
In the past, management has navigated these changes quite well. Still, prospective shareholders need to understand the big risks here. But if you can stomach the ups and downs, AGNC presents a nice supplement to a well-balanced portfolio.
