The 5 High Monthly Dividend Stocks and ETFs

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:

The 5 High Monthly Dividend Stocks and ETFs: #5

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

Dividend Yield: 4.7%

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 327 holdings combine for nearly $4.3 billion in total assets. Among the holdings, nearly 84% are U.S. securities. Most of the remaining holdings comprise investments in Canada (3.36%), Italy (3.04%). the United Kingdom (2.62%), Germany (1.91%), France (1.61%), Luxembourg (1.57%) and Australia (1.05%). All remaining countries represent less than 1% of total assets each.

Considerable share price growth in the trailing 12 months make the 4.7% appear more insignificant than it is. ANGL rewarded investors with total returns of 17% in the last year — capital appreciation reached 25.1% and 78.5% in the last three and five years, respectively.

The 5 High Monthly Dividend Stocks and ETFs: #4

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

Dividend Yield: 5.0%

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 January 25, 2021, the fund had 718 individual holdings representing aggregate total assets of more than $5 billion.

Equities from the Consumer Cyclical (21.28%), Communications (13.33%) and Energy (13.21%) sectors account for nearly half of total assets. The fund’s current dividend yield of 5.0% has combined with capital gains to deliver a total return of nearly 8% over the trailing 12-month period. Total returns over the last three years were 13.1% and five-year total returns were more than 36.1%.

The 5 High Monthly Dividend Stocks and ETFs: #3

iShares Preferred & Income Securities ETF (NASDAQ:PFF)

Dividend Yield: 1.9%

 This ETF seeks to track the investment results of an index composed of U.S. dollar-denominated preferred and hybrid securities. As of January, 2021, this ETF holds nearly $20 billion in assets under management spread across 512 individual holdings from eight countries. The vast majority of holdings, 94.39%, were from U.S.-based equities. Assets from Canada account for the remaining 5.61%.

The fund is primarily exposed to the financial institutions sector, making up 60.46% of total assets. Industrial and Utility make up 22.12% and 14.71%, and the remaining sectors each comprise less than 3% each. The fund’s current dividend payouts yield 1.9% and have combined with asset appreciation for a total return of nearly 9% over the last year and 32.4% over the last five years.

The 5 High Monthly Dividend Stocks and ETFs: #2

Main Street Capital Corporation (NYSE:MAIN)

Dividend Yield: 7.4%

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 has suffered in the trailing 12 months, having lost 19.9% of value and bringing investors total returns of a 12.5% loss. Long-term investing has been much more successful, however, where the company has returned 74% in the trailing 5 years.

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 5.1% average annual growth rate. Its dividend distribution is currently level at $0.20 per month, making its annual payout rate $2.46.

The 5 High Monthly Dividend Stocks and ETFs: #1

EPR Properties (NYSE:EPR)                                           

Dividend Yield: –

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. Due to a major price shock that caused the stock price to plummet 58.46% in March 2020 due to the financial crisis, the company is still recovering. While its 1-year returns are gradually improving at a loss of 41.9%, long-term investors have largely broken even over the last five years.

Once again, due to the financial crisis of March 2020, EPR Properties was forced to cut its dividend and has yet to resume payments. The company has trended upward and continues to recover, growing as much as 51.09% in November 2020. This price-pullback allows investors to purchase EPR at a significant discount in anticipation of the company restarting its dividend payments.

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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.