5 Best Monthly Dividend Stocks [2022]

Dividend investing is a great strategy if you want to see cash flow right away.

The best part about dividends is that they are entirely passive, meaning no work is required to start earning. Just imagine getting paid month after month with a constant cash flow that you can rely on. While dividends tend to be small starting out, if you keep investing they will add up over time.

Typically, companies pay dividends on a quarterly basis (4 times per year). However; there are some companies that pay dividends on a monthly basis. Receiving monthly payments is very motivating because you are seeing the results of your investment more often.

There are a lot of different holdings in the market, and this article will go over some of the best monthly dividend stocks you can choose today. I am not going to talk about the highest earners, I am going to talk about the best quality monthly dividend stocks because it will provide the most value to you.

Admittedly, many monthly paying dividend companies tend to perform poorly because they are giving away their profits to shareholders and not reinvesting it back into the company. Luckily, there are a few great holdings that not only continue to pay dividends each month, but they also perform well which increases the value of the stock price.

 

1. Realty Income Corporation (O)

Monthly Dividend Payment per Share: $0.234

Dividend Yield: 4.40%

Payout Ratio: 83.63%

Consecutive Years of Dividend Growth: 23

 

Realty Income Corporation is one of the most reliable monthly dividend stocks to invest in which is why they are number 1 on this list. They simply match every characteristic a great company should have and is a favorite of many dividend investors. 

O is a real-estate investment firm (REIT) that rents space to other companies such as Walgreens, 7-Eleven, and Walmart. Typically when we think of real-estate we think of residential, but there is big business in commercial real-estate and Realty Income is at the forefront. Realty Income has over 6,500 properties with an occupancy rate of 98.5%.

What makes O a really great company is its ability to diversify its leases to multiple different industries. With the likes of Amazon dominating the eCommerce industry effectively putting retailers out of business, Realty Incomes mitigates this risk by leasing space to companies not affected by Amazon which in turn allows tenants to keep paying rent.

 

Monthly Payment: $0.234

For every single share of O that you own, you will get just over 23 cents every month. I get it, 23 cents is chump change to a lot of people, but the very principle of getting money from doing nothing should motivate you. Just keep investing every month while reinvesting your dividend will eventually yield you a very satisfying monthly payment. 

Speaking of yield, O has a healthy dividend yield of 4.40% at the time of this article. The stock market average is around 2%, so anything over that is considered a win. This means that if you invest $100,000 in O, you would get $4,400 per year or $366 per month.

 

Dividend Growth: 23 Consecutive Years

It is impressive when a company pays a monthly dividend, but it is substantially better when that dividend increases year after year. In the case of O, the dividend has increased for 23 consecutive years which might be longer than a lot of you have been alive!

Dividend growth is great because your income would increase if you were to not invest anymore. Say you put $1,000 in O and get $3.66 in dividends each month. If you simply keep that investment where it’s at, your dividend will actually continue to grow as long as O keeps increasing its dividend payment each year.

Consecutive growth for Realty Income Corp. is a result of the real estate industry, good management, and good business decisions. As long as tenants keep paying rent and O diversifies, shareholders will continue to get paid dividends that grow yearly.

 

2. STAG Industrial (STAG)

 

Monthly Dividend Payment per Share: $0.12

Dividend Yield: 4.59%

Payout Ratio: 77.58%

Consecutive Years of Dividend Growth: 1

 

STAG Industrial is another REIT that pays a great monthly dividend while continuing to increase the value of the stock price. STAG is another REIT that leases space to companies that require large warehouses. If you have ever driven past an industrial/business park, odds are pretty good that one of those large warehouse-type buildings are owned by STAG.

With a 5-year stock growth rate of over 69%, there is no doubting their capability to grow. STAG has taken a big hit since the Coronavirus pandemic but it has rebounded quickly and is almost at the point it was before the pandemic hit.

Monthly Payment: $0.12

STAG currently pays a dividend of 12 cents per month for owning an entire share which is really good considering a share is around the $31 mark. This equates to a dividend yield of over 4.5% which is substantially better than the market average of 2%. Although the dividend has only grown 2.08% over a 5-year period, you can still rely on STAG to be a constant payment in your account every month. 

 

Payout Ratio: 77.58%

The payout ratio is a really good metric to look at when analyzing stocks because it gives insight into the company’s overall strategy. STAG pays 77.58% of earnings to shareholders while investing the remaining 22+% back into the business to acquire new properties and grow.

REITs typically have very high payout ratios because they get tax advantages for doing so which makes them good dividend payers. For a REIT, 77.58% is a bit lower which gives me great confidence STAG is doing everything they can to grow and continuously pay a nice dividend.

Overall, if you’re looking for a nice REITS to diversify your portfolio and get a nice monthly payment, STAG is a great option.

 

3. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)

Monthly Dividend Payment per Share: $0.1497

Dividend Yield: 5.37%

Payout Ratio: N/A

Consecutive Years of Dividend Growth: 7

Expense Ratio: 0.30%

 

SPHD is a unique holding on this list because it is actually an Exchange Traded Fund (ETF) comprising the 50 highest dividend payers with the lowest volatility on the S&P 500. 

If you are looking for ultimate diversity and monthly paying dividends in stock, SPHD is a really great holding. Utilities lead the way and make up over 18% of the fund with real-estate coming in second at 14.5%.

Since the beginning in 2012, the stock price of SPHD has increased at a linear rate which is to be expected due to the lack of technology holdings in the fund. 

Before the Coronavirus crash in early March of 2020, SPHD was sitting at a stock price of $43 and has crashed rather heavily since then and now hovers around the $33 mark. I think SPHD is a great value right now because when the market gets back on track I only see SPHD increasing in value and dividend payments.

Monthly Dividend Payment: $0.1497

At about 15 cents per month, SPHD pays one of the best dividends around and has increased its dividend for 7 consecutive years. Any time a monthly dividend holding can continue to increase their payment to shareholders I am interested. 

Over the past five years, the dividend itself has grown just under 11%. A 5.37% dividend yield is very good considering once again that the average of the S&P 500 is around 2%. With SPHD, you can count on great dividends each month, and hopefully, they continue to increase on a yearly basis.

 

Expense Ratio: 0.30%

Although SPHD is a good holding, there is a fee that comes along with it. The expense ratio is 0.30% which is below the ETF average of 4.4% according to the Wall Street Journal.

To put this expense ratio into perspective, for every $1,000 you have invested in SPHD, you will pay $3 per year. $1,000 invested will also net you about $4.40 per month which already covers the expense ratio for the year.

 

4. LTC Properties, Inc. (LTC)

Monthly Dividend Payment per Share: $0.19

Dividend Yield: 6.26%

Payout Ratio: 81.11%

Consecutive Years of Dividend Growth: 0

 

LTC is another REIT that invests in senior living and health-care properties. There is always going to be a need for healthcare, especially in the United States where the culture typically entails elderly people receiving care from professionals.

I have to admit, senior living and health-care is a very niche industry to invest in which is partly why I added it to this list. LTC has definitely had up and down moments throughout its inception in 1994, but overall the stock price has seemed to increase. 

The most recent market crash due to Covid-19 has taken a toll on LTC and there was some concern but luckily LTC didn’t cut their dividends. Covid-19 has hit long-term care facilities particularly hard because elderly people are highly susceptible to Covid-19 which ultimately causes higher vacancy rates.

Given the state of Covid-19, it’s hard to say how LTC will perform in the future. But for now, they have been able to pay a great dividend and have been resilient throughout their history.

Monthly Dividend Payment: $0.19

19 cents per share every single month is what you can expect with LTC. This ends up being a dividend yield of 6.26%! 

There is not much to say about this yield other than the fact that it outperforms the market average. This is certainly a case of high risk, high reward because the future of LTC’s dividend becomes more uncertain every day Covid-19 drags on but right now the reward is pretty good.

Dividend Growth: 0 Years

Unfortunately, there hasn’t been much dividend growth recently. The dividend has only grown 2.25% over the past five years and as mentioned, it will most likely remain the same for some time.

While LTC hasn’t increased its dividend, they still boast a great yield and cash payment every month. Until LTC’s yield falls below 4% I am going to hang on to this stock because I love seeing the monthly income. This is certainly a stock you may want to monitor more closely if you do decide to pick it up.

 

5. Main Street Capital (MAIN)

 

Monthly Dividend Payment per Share: $0.205

Dividend Yield: 8.00%

Payout Ratio: 123.00%

Consecutive Years of Dividend Growth: 1

 

Main Street Capital (MAIN) is probably the most interesting holding on this list when it comes to metrics. There are a few red flags to be noted but overall I think this is a decent holding because the historic stock price has increased and the dividend yield is very high.

MAIN provides long-term debt and equity to lower-middle and middle-market companies which are companies that earn smaller revenues than large businesses. This is both good and bad because investing in these entrepreneurial firms has great potential for growth but many have the potential to fail as well.

Since 2007 the stock price has increased in a linear fashion but has taken a serious hit since the Coronavirus crash. Overall I think MAIN has the potential to keep growing its stock price when the market rebounds which will be great for dividends.

Monthly Dividend Payment: $0.205

If you love dividends you will love MAIN because they pay about 20 cents per month for every share owned. This equates to a dividend yield of 8% which is 4 times higher than the market average.

Just imagine seeing 8% of your investment coming in as cash every year. It is a very motivating feeling to see cash flow come in every month and the benefit with MAIN is the potential to reinvest the dividend. 

Even if dividends are cut in the future, you can reap the gains right now and keep reinvesting this dividend into other great companies.

 

Payout Ratio: 123.00%

Bigger doesn’t necessarily mean better which may be the case with MAIN. Although I think it is a good holding in the long-term, the payout ratio is 123%.

A payout ratio over 100% means the company is paying shareholders more than it is earning which is unsustainable in the future. In theory, MAIN is paying out all its earnings to shareholders and isn’t investing any money back into the business to continue to grow.

It’s hard to say where MAIN will be in the future but overall it looks like a decent stock to invest in. Even if they were to cut their dividend in the future I am sure it wouldn’t be by much and still produce a better than market average return.

I personally think there is a lot of promise in MAIN but there is certainly some uncertainty in the future, especially with the payout ratio.

 

Final Say

There is no better feeling than receiving a monthly payment for doing absolutely nothing. Every cent of passive income generated will lead you closer to financial independence and dividends are a great way to start earning.

As you may have noticed, dividends that pay a higher yield tend to be a bit riskier because the payout ratio is generally higher meaning business growth may be a bit slower.

When it comes to investing, dividends are a very great thing to examine when picking holdings, but I wouldn’t advise it being the only indicator in picking a stock. In fact, there are many companies that pay extremely high dividends but the stock prices are crashing heavily.

I emphasized dividends as well as the stock price trends in this article because I think both are equally important in picking a stock. Holdings that pay dividends with an increasing stock price trend is what I believe will provide the most value to you.

 

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