While most dividend-paying equities distribute their payouts in quarterly increments, some investors covert the more frequent income distributions that are offered by monthly dividend-paying stocks and ETFs.

In addition to more frequent payments and a more consistent cash inflow, monthly dividend stocks and exchange-traded funds (ETFs) have a few additional advantages over their counterparts that offer quarterly payouts. The most significant advantage of monthly dividend distributions is that the assets grow faster because of the compounding effect.

Instead of waiting full three months to receive the dividend distribution, monthly dividend distributions offer investors the opportunity to collect a portion of that income every month and reinvest the money immediately. While some investors might be satisfied with reinvesting their dividend distributions quarterly, people who rely on dividend income for living expenses, such as retirees, need more frequent payouts to cover their monthly bills and expenses.

Obviously, investors could create an income stream from their own portfolio that generates monthly payouts. For this strategy, investors would have to select three different equities that pay staggered quarterly dividends. However, that approach is more difficult than just investing in monthly dividend stocks and ETFs. Many equities align their dividend distributions with their quarterly financial results reports. Therefore, an attempt to create a monthly income stream from equities that have quarterly dividend distributions with staggered distribution months would limit the number of equities that meet the desired investment criteria. This strategy could potentially lead to a less-than optimal portfolio strategy and, more likely, would reduce total returns. Furthermore, even if investors could find equities that have the desired distribution timing, creating a portfolio that delivers a steady amount every month would not be easy.

Alternatively, monthly dividend stocks and ETFs are easy to find. Most investment advisory sites and brokerages have search tools and options that can identify equities with a monthly dividend distribution. The main Dividend Screener tool available at DividendInvestor.com, offers the option to filter out all equities with 12 or more dividend distributions over the trailing one-year. Additionally, Dividend Investor also offers a separate Monthly Dividend Directory that contains just the equities that have monthly dividend distributions.

While some monthly-dividend equities have higher dividend yields or longer records of dividend payouts, the equities listed below offer a good balance of asset appreciation and rising dividend income. The monthly dividend stocks and ETFs are listed below in ascending order by their current dividend yield.

The 5 High Monthly Dividend Stocks and ETFs: #5

VanEck Vectors Fallen Angel High Yield Bond ETF (NYSE:ANGL)

Dividend Yield: 5.43%

This fund attempts to replicate the price and yield performance of the ICE BofA ML U.S. Fallen Angel High Yield Index. This index is comprised of below-investment grade corporate bonds that are denominated in U.S. dollars, issued in the U.S. domestic market and were rated as investment grade at the time of issuance.

The fund’s 197 holdings combine for nearly $1.2 billion in total assets. Among the holdings, nearly 75% are U.S. securities. Most of the remaining holdings comprise investments in Italy (6.52%) and the United Kingdom (6.27%). Japan (5%), Germany (3%) and Canada (1.34%) are the only other countries with a substantial share of assets. Equities from Sweden, China, Finland and Ireland contribute less than 1% each.

A recent share price uptick of nearly 10% suppressed the fund’s current 5.43% yield 5% below the fund’s own 5.73% average yield over the last five years. While pushing the yield down, the share price advancement has contributed to a combined total return of nearly 12% over the past 12 months. However, the three-year total returns were nearly 18%. Furthermore, the fund has delivered a 34% total return over the past five years.

The 5 High Monthly Dividend Stocks and ETFs: #4

iShares 0-5 Year High Yield Corporate Bond ETF (NYSEARCA:SHYG)

Dividend Yield: 5.50%

This bond ETF seeks to track the investment results of the Markit iBoxx USD Liquid High Yield 0-5 Index, which is comprised of U.S. dollar-denominated, high yield corporate bonds with remaining maturities of less than five years. As of November 1, 2019, the fund had 636 individual holdings representing aggregate total assets of more than $3.3 billion.

Equities from the Consumer Goods (26%), Communications (20%) and Energy (12%) sectors account for more than half of total assets. The fund’s current dividend yield of 5.50% has combined with capital gains to deliver a total return of nearly 7% over the trailing 12-month period. Total returns over the last three years were 14.4% and five-year total returns were more than 18%.

The 5 High Monthly Dividend Stocks and ETFs: #3

iShares Preferred & Income Securities ETF (NASDAQ:PFF)

Dividend Yield: 5.61%

 This ETF seeks to track the investment results of an index composed of U.S. dollar-denominated preferred and hybrid securities. As of November 2019, this ETF holds nearly $17 billion in assets under management spread across 480 individual holdings from eight countries. The vast majority of holdings, 96%, were from U.S.-based equities. Assets from the United Kingdom and the Netherlands account for slightly more than 1% each.

The remaining assets are spread across equities from Canada, China, Spain, the Marshall Islands and Bermuda. Bank holdings and other diversified financial securities account for nearly half of funds securities. The fund’s current dividend payouts yield 5.6% and have combined with asset appreciation for a total return of 11% over the last year and 20% over the last five years.

The 5 High Monthly Dividend Stocks and ETFs: #2

Main Street Capital Corporation (NYSE:MAIN)

Dividend Yield: 5.86%

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. As Main Street Capital had the misfortune of incorporating right before the 2008 financial crisis, its share price lost more than 40% of its Initial Public Offering (IPO) price by early 2009. However, the share price has more than quadrupled since reversing this trend in March 2009.

The share price recovered from the overall market pullback in December 2018 and has gained more than 30% since the 52-week low on Christmas Eve. The company boosted its monthly dividend payout 5.1% from $0.195 last year to the current $0.205 payout amount.

Over the past 12 years, MAIN has hiked its annual dividend amount 11 times and nearly doubled the total payout over this period to produce a 5.3% average annual growth rate. Shareholders have enjoyed a combined total return of 21% over the trailing 12-month period, 44% over the past three years and nearly 77% over the last five years.

The 5 High Monthly Dividend Stocks and ETFs: #1

EPR Properties (NYSE:EPR)                                           

Dividend Yield: 6.26%

Headquartered in Kansas City, Missouri, and founded in 1997, EPR Properties is a specialty real estate investment trust (REIT) that primarily invests in commercial properties in the entertainment, recreation and education sectors. Despite a share price pullback that was driven by the overall market correction in late 2018, EPR Properties’ share price only dipped slightly and resumed its uptrend while still remaining nearly 20% above its low from April 2018. The share price recovered its December losses before the end of January 2019 and continued its uptrend towards its two-year high in August 2019.

Despite a dividend cut in the aftermath of the 2008 financial crisis and flat dividend distribution payouts for the entirety of 2009, the company has offered its investors 18 annual dividend hikes and has enhanced its annual dividend payout amount by 150% over the past two decades. In addition to rising dividend payouts, steady capital gains have provided a total one-year return of nearly 8%. The total return over the last three years was nearly 22% and has exceeded 35% over the past five years.

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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.