These 7 Stocks Pay the Highest, Most Reliable Monthly Dividends
November 23, 2022
Investors Can Put a Dent in Inflation With Stocks That Pay Monthly Dividends
Inflation remains near 40-year highs and Americans are struggling with rising costs. As of September, a whopping 63% of Americans were living paycheck to paycheck. It’s not just the average person who has been struggling to get by. Almost half of Americans who earn more than $100,000 per year reported living paycheck to paycheck. That’s up significantly from 38% who said the same thing last year. (Source: “63% of Americans Are Living Paycheck to Paycheck — Including Nearly Half of Six-Figure Earners,” CNBC, October 24, 2022.)
While inflation may be plateauing, it isn’t expected to return to target levels any time soon due to ongoing headwinds like the war in Ukraine adding pressure to energy and food prices. For investors, one of the best ways to fight inflation and combat stock market volatility is reliable, high-yield dividend stocks.
Most companies pay their dividends quarterly, but a small number of them pay dividends monthly. That allows stockholders to reinvest their dividends in additional shares at a quicker pace.
Here are seven stocks whose monthly dividends yield up to 21.2%.
| Name | Ticker | Sector | Yield |
| Realty Income Corp | NYSE:O | REIT (Retail) | 4.6% |
| LTC Properties Inc | NYSE:LTC | REIT (Health Care) | 5.8% |
| Cross Timbers Royalty Trust | NYSE:CRT | Oil & Gas | 8.3% |
| SL Green Realty Corp | NYSE:SLG | REIT (Office) | 9.2% |
| Sabine Royalty Trust | NYSE:SBR | Oil & Gas | 9.5% |
| Dynex Capital Inc | NYSE:DX | REIT (Mortgage) | 12.2% |
| ARMOUR Residential REIT, Inc. | NYSE:ARR | REIT (Mortgage) | 21.2% |
Realty Income Corp
Realty Income Corp (NYSE:O) bills itself as “The Monthly Dividend Company,” and it certainly lives up to that title.
The company is the largest triple-net real estate investment trust (REIT) in the U.S. and the sixth–largest global REIT. It owns more than 11,700 commercial properties and leases them to more than 1,100 tenants in more than 79 industries in all 50 U.S. states, Puerto Rico, the U.K., and Spain. (Source: “Portfolio Diversification Overview,” Realty Income Corp, last accessed November 22, 2022.)
Thanks to the company’s diverse portfolio of properties, 94% of its total rent is resilient to economic downturns and/or isolated from competition from e-commerce businesses. At the moment, the portfolio has an occupancy rate of 98.9%; it has never been below 96%.
Five of Realty Income Corp’s top tenants are Dollar General Corp (NYSE:DG), representing 4.2% of the REIT’s annualized rent; Walgreens Boots Alliance Inc (NASDAQ:WBA), 3.9%; 7-Eleven, Inc., 3.8%; Dollar Tree Inc (NASDAQ:DLTR), 3.5%; and FedEx Corporation (NYSE:FDX), 2.8%.
Realty Income Corp’s growing portfolio of properties brings in reliable cash flow, which the company returns to investors via high-yield dividends. On November 11, the REIT declared its 629th consecutive monthly common stock dividend. The payout was $0.248 per share, for a yield of 4.6%. The company has also raised its dividend in each of the last 26 years. (Source: “629th Consecutive Common Stock Monthly Dividend Declared By Realty Income,” Realty Income Corp, November 11, 2022.)
LTC Properties
LTC Properties Inc (NYSE:LTC) is a REIT that invests in seniors housing and health-care facilities primarily through sale-leasebacks, mortgage financing, joint ventures, construction financing, and structured finance solutions. The company’s property portfolio comprises 125 assisted-living facilities (59.5% of its portfolio), skilled nursing (37.1%), and “other” (3.3%). (Source: “Building Long-Term Value,” LTC Properties Inc, last accessed November 22, 2022.)
Because of the high and growing demand for retirement homes and long-term care facilities, LTC Properties Inc also has a number of properties under development and is always hunting for strategic acquisitions.
Why should investors consider a REIT that invests in health-care facilities?
The first wave of baby boomers started to retire in 2011. Now, roughly 10,000 Americans turn 65 each day. By 2030, all baby boomers will be older than 65. (Source: “Americans Are Retiring at an Increasing Pace,” Yahoo! Finance, November 21, 2018.)
That doesn’t mean the number of people retiring will start to decline once the baby boomers have all retired. By 2050, the number of people retiring each day will hit 12,000. This huge demographic could provide LTC Properties Inc with a reliable revenue stream for decades to come. It also helps juice LTC stock’s frothy monthly dividend, which currently stands at $0.19 per share, for a yield of 5.8%.
LTC Properties Inc has raised its monthly distribution numerous times since 2005 but has held it at $0.19 per share since late 2016. If a pandemic and recession can’t derail the company’s dividend, what can?
Cross Timbers Royalty
Cross Timbers Royalty Trust (NYSE:CRT) is an oil and natural gas company that has interests in Texas, Oklahoma, and New Mexico.
Net profit interests are the trust’s only assets (other than cash held for distributions to unitholders and for other expenses). XTO Energy Inc. owns the underlying properties from which Cross Timbers Royalty Trust’s net profit interests were conveyed. Most of the trust’s net profit income comes from long-lived gas properties in the San Juan Basin of northwestern New Mexico. (Source: “About Us,” Cross Timbers Royalty Trust, last accessed November 22, 2022.)
Unlike some energy companies, Cross Timbers doesn’t plow money into developing new wells. Instead, it pays out virtually all of its earnings to CRT stockholders as frothy monthly dividends. The company’s net profit income generally only varies due to changes in sales volume or energy price.
Because Cross Timbers Royalty Trust’s monthly distribution is based on sales volume and energy prices, the dividend amount fluctuates. Cross Timbers Royalty stock currently pays a monthly cash distribution of $0.149149 per unit, for a yield of 6.7%.
SL Green Realty
SL Green Realty Corp (NYSE:SLG) is a fully integrated REIT that primarily acquires and manages commercial properties in New York City, especially Manhattan. In fact, it is New York City’s biggest commercial landlord. (Source: “About Us,” SL Green Realty Corp, last accessed November 22, 2022.)
The company sells and acquires properties fairly regularly. It currently holds interests in 62 buildings totaling 33.6 million square feet. This includes ownership interests in 29.3 million square feet of Manhattan buildings and 3.5 million square feet securing debt and preferred-equity investments.
SL Green Realty Corp switched from paying quarterly dividends to monthly payouts in 2020. Moreover, it has raised its dividend each year since then—from $0.295 per share in 2020 to $0.3108 in 2022. The company currently pays monthly dividends of $0.3108 per share, for an inflation-thumping yield of 9.4%.
SL Green Realty also paid out special dividends in December 2020 ($1.6967 per share) and December 2021 ($2.4392 per share). The special dividends were a result of extraordinary gains on asset dispositions in 2020 and 2021.
Sabine Royalty
Sabine Royalty Trust (NYSE:SBR) is an oil and natural gas company that has royalty and mineral interests in producing and undeveloped oil and gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. (Source: “About Us,” Sabine Royalty Trust, last accessed November 22, 2022.)
As a trust, Sabine Royalty has no capital expenses. It just pumps out oil and gas and passes royalties on to investors. The company isn’t exploring for—nor investing in—new wells. That said, its estimated net proved reserves are approximately 6.3 billion barrels of oil and 39.8 billion cubic feet of gas. Those reserves have a future net value of $229.4 million and a lifespan of nine to 12 years. (Source: “Sabine Royalty Trust Announces Monthly Cash Distribution for April 2021 and 2021 Reserve Quantities,” Cision PR Newswire, April 5, 2021.)
Those numbers will change, but maybe not in the way you think. Sabine Royalty updates its reserves pretty regularly, and interestingly, instead of getting lower, it’s proved developed reserves of oil and gas have been increasing.
As an energy stock, its monthly dividend fluctuates based on supply and demand and pricing. Sabine Royalty stock’s current monthly dividend is $0.58255 per unit, for a yield of 9.5%.
Dynex Capital
Dynex Capital Inc (NYSE:DX) is an internally managed mortgage REIT that primarily invests in residential mortgage-backed securities (RMBSs), commercial mortgage-backed securities (CMBSs), and CMBS interest-only securities. The company also invests in securitized single-family residential and commercial mortgage loans that Dynex originated from 1992 to 1998. (Source: “Third Quarter 2022 Earnings Presentation,” Dynex Capital Inc, October 24, 2022.)
Thanks to the REIT’s seasoned management team and disciplined approach, it has been able to report strong financial results during periods of high interest rates and interest-spread volatility. This has resulted in a large, diverse property portfolio that’s positioned to generate cash flow in excess of its monthly dividends, regardless of where we are in the economic cycle.
Speaking of which, its last monthly dividend (in November) was $0.13 per share, for a yield of 12.2%. (Source: “Dividends,” Dynex Capital Inc, last accessed November 22, 2022.)
ARMOUR Residential
ARMOUR Residential REIT, Inc. (NYSE:ARR) invests in RMBSs that were issued or guaranteed by a U.S. Government-sponsored enterprise. The company’s investments are primarily fixed-rate loans, but it also invests in interest-only securities, U.S. Treasury securities, and money market instruments. (Source: “Company Update,” ARMOUR Residential REIT, Inc., October 26, 2022.)
The REIT essentially raises capital through the issuing of debt, and then it reinvests capital in higher-yielding debt instruments.
ARMOUR Residential REIT, Inc. is good at making money and returning the vast majority of that money to investors in the form of share buybacks and stable, ultra-high-yield monthly dividends. ARR stock’s current monthly dividend is $0.10 per share, for an eyewatering yield of 21.2%.
Since its inception in November 2009, ARMOUR Residential REIT, Inc. has paid out $1.9 billion in dividends. Since 2013, it has returned $273.0 million to common shareholders through share repurchases.
