3 High Yield Monthly Dividend Stocks to Buy Now

While quarterly distributions meet most investor income needs, some investors need more frequent distributions to cover their ongoing expenses and high-yield monthly dividend stocks fit their requirements.

In addition to the benefit of receiving more frequent payments and a more consistent cash inflow, monthly dividends can offer investors additional advantages over the quarterly distributions. For investors who use these payouts to cover their ongoing expenses the monthly distribution frequency aligns well with the monthly cash needs.

Even for high-yield monthly dividend stocks, monthly dividend distributions can make the portfolio grow faster because of the higher-frequency compounding effect. Investors who are not looking to use the monthly distribution to cover monthly expenses can reinvest the monthly income payouts right away, instead of receiving dividend distributions only four times per year.

Obviously, seasoned investors could attempt to generate a portfolio that generates monthly dividend income by selecting equities with quarterly dividend distributions that have staggered dividend pay dates. However, that strategy is difficult to execute successfully and might limit the options for some months. Less-than-optimal portfolio strategy most likely would reduce total returns. While most companies decide their dividend payouts in line with their quarterly results, the availability of quarterly dividends with the January, April, July and October payout schedule will be significantly bigger than stocks with a February, May, August and November payout schedule.

Furthermore, with different stock providing the income for different months, the monthly income level would most likely fluctuate and might not meet the monthly expenses. Even with this approach, the monthly income payments still would vary. Obviously, the monthly dividend income can be regulated by buying different amounts of shares based on the dividend per share payout to even out the distributions. However, finding few high-yield monthly dividend stocks is much simpler and significantly easier to manage.

Securities that pay monthly dividends are easy to find. Most investment advisory sites and brokerages have a section that offers a separate list of equities that pay monthly dividends. Within these tools, investors can sort and filter the equities based on their investment portfolio goals and personal preferences.

Some monthly dividend equities have higher dividend yields or longer records of dividend payouts than the equities mentioned in this article. However, the three equities listed below were selected to meet specific criteria. All three high yield monthly dividend stocks below have a dividend yield in excess of 7%. Additionally, to ensure that the total return is not a short-term fluke, all three equities here have  three-year total returns that exceed the 12-month-returns by at least 5%.

3 High Yield Monthly Dividend Stocks to Buy Now: #3

Stellus Capital Investment Corporation (NYSE:SCM)

Dividend Yield: 9.2%

Formed as a spin-off from the D. E. Shaw & Company in 2012, the Stellus Capital Investment Corporation is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company. The firm invests primarily in private middle-market companies — typically those with $5 million to $50 million of EBITDA (earnings before interest, taxes, depreciation and amortization) — through various types of debt financing, often with a corresponding equity investment. Stellus Capital Management serves as SCM’s investment adviser and manages its investment activities.

The company’s current $0.08 monthly dividend payout corresponds to a $1.00 annual dividend payout and a 9.2% forward dividend yield. Like many other monthly dividend stocks, the Stellus Capital Investment Corporation distributes income payouts in the middle of the month. Its ex-dividend date is January 28, 2021, meaning investors may consider buying beforehand to take full advantage of its monthly payout.

SCM lost a total of 16.6% of share value in the trailing 12 months, irreflective of its viability in the long-term. The company has nearly doubled in value in the last five years, having grown 98.9% to meaningfully reward its long-term investors.

3 High Yield Monthly Dividend Stocks to Buy Now: #2

Virtus Global Dividend & Income Fund, Inc. (NYSE:ZTR)

Dividend Yield: *12.4%

Formed by Virtus Investment Partners, Inc. in 1988, Virtus Global Dividend & Income Fund, Inc. is a closed-ended balanced mutual fund. Virtus Investment Advisers, Inc., Kayne Anderson Rudnick Investment Management LLC and Newfleet Asset Management, LLC serve as the fund’s advisers. The fund invests its assets in the public equity and fixed income markets of the United States. Actively managed, the fund’s portfolio of holdings targets to deliver performance benchmarked against a composite index comprised of 60% Russell Developed Large Cap Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index.

The fund temporarily suspended its dividend through February 2021, but has already announced its reinstatement with a March dividend of $0.08 to be paid on March 18, 2021. Its *trailing 12-month yield was 12.4%, corresponding to a $1.09 annual payout. The fund began the year paying an $0.11 distribution per month and decreased it to a more sustainable $0.08 for the second half of 2020.

Virtus Global Dividend & Income Fund has slightly negative total returns for the last 12-month period. It combined asset depreciation with dividend payment to bring a slight loss of 0.7%. In the last five years, however, the fund has grown 57.7%.

3 High Yield Monthly Dividend Stocks to Buy Now: #1

Gladstone Investment Corporation (NASDAQ:GAIN)

Dividend Yield: 7.9%

Headquartered in McLean, Virginia, and founded in 2005, the Gladstone Investment Corporation is a private equity fund specializing in lower middle market, acquisitions, buyouts, recapitalizations and debt refinancing. Its assets are split between several industries, including Conglomerate Services, Home and Office Furnishings, Housewares, Durable Consumer Products, Leisure, Entertainment, Motion Pictures, Manufacturing, Chemicals, Telecommunications, Aerospace and Defense, and several other sectors unlisted.

After dropping almost 85% in the aftermath of the 2008 financial crisis, Gladstone’s share price has recovered nearly 90% of its losses after advancing 470% from its all-time low in March 2009.

Despite a major drop in share price in March 2020, Gladstone Investment Corporation has maintained a steady monthly dividend distribution of $0.07, not including its frequent special dividends. This corresponds to a 7.9% yield and $0.84 annual payout. Although the dip in early 2020 has marred its one-year returns, having lost 13.4%, in the long-term the company is still performing remarkably. Its returns in the last three years 24.7%, and in the last five, 135.4%.

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