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My Top Monthly Dividend Stocks

Summary

This article presents lists of monthly dividend payers, including REITs, BDCs, ETFs and ETNs.

I analyze the primary reasons why an investor might want to choose an investment that distributes cash flow to investors on a monthly basis.

I list my own top ten monthly dividend picks and discuss some of their merits and issues.

Background

I write primarily about REITs and ETFs. The common denominator is that they are income stocks, meaning they pay regular distributions to shareholders. Thus, my focus always is on what will provide a good and reliable income stream.

The vast majority of stock pay dividends quarterly. However, many investors are interested in monthly distributions, and it can be difficult to sift through thousands of stocks to isolate the best ones that pay monthly. So, to address that need and perhaps save you some research, I will go through the top stocks, ETFs and ETNs that I have found which pay monthly distributions to shareholders. I then will choose ten that I think are the most attractive, and discuss some of their pros and cons.

Why Choose Monthly Distributions?

The threshold question to address is whether monthly dividends make sense. The answer to that will vary from investor to investor.

Some investors don't like dividends at all. To gain income, they would rather sell a portion of their stock holdings whenever they need the cash. That strategy is certainly feasible, but it also requires a lot of planning, transaction costs, different tax consequences, investment choices about what to sell and when, and exposure to market volatility. This article obviously is not intended for those investors.

The choice between quarterly and monthly dividends is mostly, but not entirely, about convenience. Bills come in monthly, and an easy strategy for some income investors is to create an income stream that matches the monthly rhythm of their expenses.

Another reason to choose monthly dividend payers is the enhancement to returns that derives from compounding. You get a definite boost to your returns, though the benefit is actually -- in my opinion at least -- fairly minimal.

There is no "answer" to the basic question of whether monthly dividend payers make sense for you. Everyone needs to choose the type of investment that suits their particular situation and goals. Others have gone through this analysis, so no need to repeat it here. However, my personal conclusion is that the advantage of monthly dividend payers is primarily convenience and personal preference, with compounding effects distinctly secondary.

I will go through the various choices as I see them, and conclude with my own personal top ten list of monthly dividend stocks. These lists are not meant to be exhaustive, and instead represent stocks in each area that have wide followings and, in my judgment, good performance characteristics.

Top REITs

Relative to the entire stock universe, REITs have a high proportion of monthly dividend payers. Before I go through those stocks, I want to caution that REITs don't have to maintain the same payout scheme, and they sometimes change it without a lot of warning.

For instance, equity REIT Vereit Inc. (NYSE:VER), formerly known as American Realty Capital, paid monthly dividends through 2014, then suspended its dividend for two quarters. It now pays quarterly. On the flip side, mortgage REIT American Capital Agency Corp. (NASDAQ:AGNC) paid quarterly until late 2014. It then changed to monthly distributions.

So, if you are choosing monthly dividend payers to match your income and expenses, it pays to keep an eye on them. A dividend change can happen quickly and is easy to overlook.

Aside from AGNC, widely followed REITs that currently pay monthly dividends include the following, in no particular order:

  • Realty Income (NYSE:O)
  • Apple Hospitality REIT, Inc. (NYSE:APLE)
  • STAG Industrial, Inc. (NYSE:STAG)
  • Chambers Street Properties (NYSE:CSG)
  • Gladstone Commercial Corporation (NASDAQ:GOOD)
  • Whitestone REIT (NYSE:WSR)
  • Wheeler Real Estate Investment Trust (NASDAQ:WHLR)
  • Independence Realty Trust (NYSEMKT:IRT)
  • Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG)
  • New York REIT (NYSE:NYRT)
  • Chatham Lodging Trust (NYSE:CLDT)
  • LTC Properties Inc. (NYSE:LTC)
  • EPR Properties (NYSE:EPR)
  • Inland Real Estate Corporation (NYSE:IRC)
  • Orchid Island Capital (NYSE:ORC)
  • Javelin Mortgage Investment (NYSE:JMI)
  • Five Oaks Investment (NYSE:OAKS)
  • ARMOUR Residential REIT, Inc. (NYSE:ARR)

Some of these stocks already have announced their distributions through the end of the year.

GOOD bears special mention because it is but one of a family of different entities run by Gladstone Management that pay monthly...


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