6 Best Monthly Dividend Stocks to Buy Now
By: Olivia Faucher,
There currently are 40 monthly dividend stocks between most major US listings, excluding exchange-traded funds (ETFs).
Given the financial crisis that has ensued due to the COVID-19 pandemic, quite a number of monthly dividend stocks have had to suspend paying their dividend temporarily, or significantly reduce their payout amount. For a complete, updated list of these monthly dividend stocks, please visit our article Stocks that pay Monthly Dividends – The Comprehensive List. Or if you are interested in ETFs and Closed-End Funds as well, then please visit our Monthly Dividend Directory.
Monthly Dividend Stocks are attractive to investors who seek steady and reliable income. While the ultimate goal of income investing is a portfolio that delivers a constant flow of payments, even the most ardent income lover should not invest blindly into equities based solely on a high dividend yield. Investors need to consider, among other things, the safety of the dividend, as well as the stock’s appreciation potential.
Share price movements occur on much larger orders of magnitude than dividend hikes or even dividend cuts. Even a rapidly rising dividend payout can rarely compensate for a fast share price decline. Thus, every investment portfolio — whether income-based, or asset-appreciation-based — should include a core of equities that offer reliable long-term capital growth potential, as well as a steady income flow via dividends
The list below is not just a list of equities with the highest yields. The dividend yield is the most common measure of an equity’s dividend distributions. However, this group of six monthly dividend stocks to buy now had to meet additional criteria.
Given the economic uncertainty that is present in today’s world, these six stocks were selected on the basis that their dividend payouts appear to be safe. It is important that a dividend is not at risk of succumbing to the pandemic’s impacts and getting cut or suspended. Certain industries have been particularly hard hit by the pandemic’s financial implications, causing them to suspend their dividend, and certain companies do not have resilient business models.
Keeping all of this in mind, the following six stocks appear to be able to continue to pay dividends to investors during these unprecedented times, as well as offer capital appreciation potential from stock price increases. Investors should consider that now might be an opportune time to buy monthly dividend stocks, while share prices are relatively depressed, as it gives them the chance to earn a higher yield on their investment.
To do more research and investigate other stocks you may be curious about, use the Dividend Screener tool available at DividendInvestor.com. Below is the list of six monthly dividend stocks to buy now.
All charts are courtesy of StockCharts.com
6 Monthly Dividend Stocks to Buy Now: #6
Global Water Resources, Inc. (NASDAQ:GWRS)
Dividend Yield: 1.70%
Global Water Resources, Inc. is a water resource management company based in Phoenix, Arizona. GWRS manages regulated water, wastewater and recycled water utilities. The company was founded in 2003 and serves approximately 55,000 people in 21,000 houses primarily throughout the metropolitan region surrounding Phoenix.
GWRS began to pay monthly dividends in 2016, and has consistently delivered monthly dividends since then. For the four years that the company has been paying a monthly dividend, its payout has increased each year. GWRS has seen a 3.85% growth rate in its dividend over the last three years. Currently, the company is paying out a monthly dividend of $0.0241, making the annualized payout $.289.
In addition to providing reliable monthly income, GWRS has also provided positive total returns in recent years. The total returns are up 1.6% for the last 12 months and 36.9% over the past three years.
Right now could be a smart time to buy GWRS stock because its share price is currently sitting at $12.38, lower than the stock’s 52-week high of $14.99. GWRS operates in the utilities industry, which has not been particularly impacted by the pandemic.
It is reassuring that GWRS did not suspend its June dividend and that the company has maintained the same dividend payout amount since December 2019, not having to decrease the payout due to the impact of the pandemic. GWRS is set to pay another consistent monthly dividend in July.
The company’s current gross profit margin is reported at 75.1%, which is outstanding compared to the sector average of 66.9%. Its relatively high gross profit margin indicates that GWRS operates more efficiently than most other companies in the industry.
The CEO of GWRS, Ron Fleming, spoke optimistically about his company’s resilience during the current unprecedented economic challenges. In the most recent earnings call on May 7, 2020, Fleming said, “It is worth noting that since our customer base is over 90% residential connections, we may see an increase in water usage due to more people working or staying at home. We do expect some customers to eventually have difficulty paying their utility bills due to COVID-19-related unemployment, but we’re ready to work with them to set up payment plans and offer other options. For example, we recently rolled out an expanded customer assistance program. In the meantime, we voluntarily have suspended disconnections for nonpayment and eliminated late fees. Currently, our state public utility commission is discussing options with the industry to determine how best to track and recover costs related to the pandemic at a future date.”
An investor who buys GWRS now, while the stock price is relatively low, would set him or her up to receive a much more attractive yield on the investment than if they wait for this monthly dividend stock to rebound.
6 Monthly Dividend Stocks to Buy Now: #5
Gladstone Land Corporation (NASDAQ: LAND)
Dividend Yield: 2.84%
Gladstone Land Corporation is a monthly dividend REIT, or real estate investment trust, which acquires and owns farmland located in major agricultural markets throughout the United States. Gladstone Land leases its farm properties to unrelated third-party farmers. The company owns 113 farms, amounting to 88,000 acres of land in 10 different states. Gladstone Land was founded in 1997 and went public in 2013, at which time it began to pay a monthly dividend.
Gladstone Land is currently paying out $0.0447 to its investors on a monthly basis, making an annualized payout of $0.536. The company has paid 86 consecutive monthly dividends since 2013, and has increased its dividend 18 times over the prior 21 quarters. Gladstone Land has seen consistent growth in its dividend over time, boasting a five-year dividend growth rate of 2.3%.
Gladstone Land has achieved significant and consistent asset appreciation over the past five years, with its total returns for the past five years reported at 103.9%. It is apparent that Gladstone Land has not been heavily impacted during the COVID-19 pandemic. LAND’s share price is currently $14.81, which is not far off from the 52-week high of $16.25. This indicates that Gladstone Land is going to continue to be able to deliver its regular dividends to investors.
Gladstone Land is in good financial health, which is a strong selling point for investors. LAND’s year over year revenue growth is 17.66%, which is much better than the sector median of 2.73%. This measurement indicates that Gladstone Land is seeing more increased revenue, relative to its competitors.
Additionally, the company made two recent acquisition announcements. It is a promising sign that the company has still been able to pursue regular business ventures in the midst of this financial crisis. It was announced on May 7, 2020, that LAND acquired 678 gross acres of farmland in Chase County, Nebraska, for $3.5 million. The second announcement came on June 8, 2020, and indicated that LAND has acquired 590 gross acres of farmland in Kern County, California, for approximately $14.2 million.
David J. Gladstone, the CEO of LAND, is confident that his company will do well throughout the current economic crisis. Gladstone spoke in the most recent earnings call on May 9, 2020, noting that the company is “in a good place”, and that “everything is going as if there was no tomorrow in terms of people buying food.” Gladstone also spoke in a press release on May 6, 2020, and explained that some farmers are actually seeing unusually strong sales due to the increase in people purchasing food from grocery stores (including produce).
Since the stock price is not currently depressed, Gladstone Land may not deliver increased yield to an investor who buys now. However, the company will continue to provide steady and reliable dividend payouts throughout this time. Investors can have peace of mind that the dividend they receive from Gladstone Land will not be suspended, despite the current economic turmoil.
6 Monthly Dividend Stocks to Buy Now: #4
Realty Income Corporation (NYSE: O)
Dividend Yield: 4.31%
Headquartered in San Diego and listed on the New York Stock Exchange (NYSE) since 1994, the Realty Income Corporation operates as a REIT in the commercial real estate market. The company has delivered nearly 599 consecutive monthly dividend payouts in its 50-year history. Realty Income Corp. also classifies as a Dividend Aristocrat, meaning the company has a record of boosting its annual dividend distribution amount for at least the last 25 consecutive years.
The current $0.234 monthly payout is 3.08% higher than the $0.227 payout it provided in the same period last year. During the last two decades, the company managed to maintain an average dividend growth rate of nearly 5% per year.
On May 5, 2020, Realty Income Corporation held its first-quarter earnings call. The company’s CEO, Sumit Roy, reassured investors that the company is equipped to handle the economic turmoil by saying, “We’ve completed a very strong quarter and are well positioned from both a balance sheet and portfolio standpoint heading into this period of uncertainty. The COVID-19 pandemic has resulted in an economic environment largely unprecedented, but I’m confident in the resiliency of our tenant credit profile, the quality of our real estate and the talent of our team members to continue generating favorable shareholder value over the long term.”
Sumit Roy also previously spoke about his company’s strong financial standing in a press release on May 4, 2020, in which he said “As of May 1st, we had approximately $1.2 billion of cash on hand and $1.1 billion available on our $3.0 billion revolving credit facility, excluding the $1.0 billion accordion feature, which we believe provides us significant financial flexibility through the duration of the year.”
Sumit Roy has delivered multiple positive statements regarding the company’s performance, which, coupled with the historically great dividend performance, make this stock reliable. The company’s revenue growth year-over-year is reported at 9.25%, which greatly outperformed the sector as a whole, as the sector median stands at 2.73%. Realty Income Corporation is a standout among its competition.
Now is the time to buy Realty Income Corporation stock. The current stock price is $60.80, which is well below the 52-week high of $84.92. Investors who make the move to buy Realty Income Corporation shares right now will put themselves in a prime position to see enticing yield on their investment. Realty Income Corporation is a well established company who is only temporarily going to be impacted by the pandemic, and the company is set to make a full recovery.
6 Monthly Dividend Stocks to Buy Now: #3
STAG Industrial, Inc. (NYSE: STAG)
Dividend Yield: 4.13%
STAG Industrial, Inc. is a real estate investment trust which operates throughout the United States and focuses on the acquisition, ownership and operation of single-tenant, industrial properties. The company currently owns 450 buildings in 38 states with approximately 91.4 million rentable square feet.
STAG is currently paying out a monthly dividend of $0.12, making its annualized payout $1.44. The company has seen robust returns recently, with its total returns over the last five years reported at 97.9%.
STAG has seen income and revenue growth despite the economic crisis, which is a testament to the company’s reliability. For the first quarter of 2020, STAG Produced Cash Net operating income of $93.7 million, an increase of 25.1% compared to the first quarter of 2019 of $74.9 million. The company has a year over year revenue growth of 12%, far surpassing the sector median of 2.73%.
The CEO of STAG, William R. Crooker, emphasized the company’s ability to thrive during this pandemic during a May 1, 2020, earnings call. Crooker stated that its strong balance sheet is a “…testament to the business we have built and the strength of our portfolio that we were able to recently complete the refinancing of $300 million of term loan debt in these market conditions. This refinancing activity effectively extends all our debt maturities until 2022 and beyond. Our company is well positioned to operate in the current environment.”
STAG has fared well throughout the pandemic, and could be a smart investment at the moment. STAG’s current stock price is $29.89, which is close to the 52-week high of $33.48. This is a clear demonstration of the company’s strong business model and ability to reject certain threats.
6 Monthly Dividend Stocks to Buy Now: #2
Shaw Communications, Inc. (NYSE: SJR)
Dividend Yield: 5.1%
Shaw Communications, Inc. operates as a diversified communications company in North America. Shaw provides telephone, internet, television and mobile services all backed by a fibre optic network. The company operates through both wireline and wireless segments, providing a range of services including Wi-Fi, digital phone services and satellite services. Shaw Communications is based in Calgary, Canada, and serves both residential and commercial consumers throughout the United States and Canada.
Shaw has had a dividend yield of Currency Mismatch over the trailing 12 months. Currently, the company is paying a monthly dividend of $0.072, which makes the annualized payout equal to $0.861. Shaw has had two consecutive years of boosting its payouts, and has seen a 10-year dividend growth rate of 1.99%.
SJR is an attractive stock from a valuation perspective. Shaw’s P/E ratio currently sits at 17.69, which is below the sector median P/E ratio of 19.89. SJR’s relatively low P/E ratio signals that the stock is currently undervalued, making right now an opportune time to buy.
Telecommunications is no doubt a safe place to invest during the pandemic because the industry has been largely unaffected by the virus. If anything, the industry has benefited greatly from the increase in people working from home that has spurred an increased need for communication services.
Bradley Shaw, the CEO of Shaw Communications, said the following in an April 9 press release: “Now, more than ever, Canadians and businesses alike, are depending on reliable connectivity services to remain in touch with family, friends, colleagues and customers. As we have seen an increase in network traffic, particularly in Wireline, I am pleased to confirm that our network performance has been exceptional. It is because of the significant facilities-based investments and strong and capable networks that operators, such as Shaw, can continue to provide these critical Wireline and Wireless essential services into homes, businesses and communities across our country and quickly adapt to the changing needs of our customers.”
Shaw further reassured investors of his company’s good standing on July 10, when he said, “Under the most difficult and challenging set of circumstances, our network performance was exceptional, and we delivered better-than-expected results. As the economy begins to reopen, we are confident that our robust broadband and wireless infrastructure will continue to play a vital role and drive our economic recovery.”
6 Monthly Dividend Stocks to Buy Now: #1
Main Street Capital Corporation (NYSE:MAIN)
Dividend Yield: 5.93%
Based in Houston and incorporated in 2007, the Main Street Capital Corporation is a business development company specializing in long-term equity and debt investments in small-and-lower middle market companies. Main Street Capital had the misfortune of incorporating right before the 2008 financial crisis and its share price lost more than 40% of its initial public offering (IPO) level by early 2009. However, the share price more than quadrupled since reversing the trend in March 2009.
The company boosted its monthly dividend payout 5.1% from $0.195 last year to the current $0.205 payout amount.
For the past 12 years, MAIN hiked its annual dividend amount 11 times and nearly doubled the total payout over the period for a 5.3% average annual growth rate. Shareholders enjoyed combined total returns of 20% over the trailing 12-month period, 54% over the past three years and nearly 85% over the last five years.
In the Q1 earnings call on May 9, MAIN’s CEO, Dwayne Hyzak, delivered a confident and optimistic statement regarding the company’s ability to combat the current tumultuous economic climate. Hyzak said, “Fortunately, our intentional strategy of maintaining a conservative capital structure and significant liquidity position has allowed us to manage through the challenges to date, support our existing portfolio companies and continue to execute on new investment opportunities on a highly selective basis. In addition, we continue to believe that our highly diversified and mature investment portfolio will prove to be very beneficial as we work through the current environment.”
MAIN has seen a 26.43% increase in revenue over the past 10 years, signaling that the company is capable of expanding its sales and sustaining an upward growth trend. MAIN’s gross profit margin also indicates that the company is in great financial health, as its gross profit margin is currently reported at 100%. This is much higher than the sector median of 57.67% gross profit margin. Its gross profit margin of 100% is an indication that the company operates extremely efficiently.
MAIN’s stock price currently sits at $31.11, which is relatively low compared to the stock’s 52-week high of $45.10. The slightly depressed stock price could signal that right now is the perfect time to buy, as investors who buy in at a low price will see larger returns as the economy recovers from the implications of the pandemic.
The Bottom Line
The unprecedented challenges that the economy is currently being faced with make it difficult for anyone to predict stock performances and investment outcomes. There is no way to say for sure whether or not the stocks in the list above are going to perform particularly well in the future. Keep in mind that the list is made up of stocks that have demonstrated that they will be able to sustain their dividend, and should be considered by investors who are specifically looking to receive reliable dividends during this financial crisis.
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Olivia Faucher is an investment writer intern at Eagle Financial Publications who writes for www.dividendinvestor.com.