Should Investors Consider These High Yield Dividend Stocks?
There are many high-quality dividend stocks in the stock market, but typically they only pay on a quarterly basis. What’s better than a high yield dividend every quarter, you ask? Getting paid every month, of course. We have bills to pay, and most of those bills come on a monthly basis. And this is where monthly dividend stocks come into play.
If you are looking for some additional cash flow every month, top monthly dividend stocks should be on your radar. Finding companies that have monthly dividends payout is no easy task. However, you’ll see a few similarities across the selection. They tend to be concentrated in real estate investment trusts (REITs), business development companies (BDCs), and closed-end funds (CEFs).
So, say you’ve decided to invest in dividend stocks right now. It’s worth finding stocks that offer a mix of healthy and reasonable dividends from investment areas that could deliver consistently over an extended period of time. Generating consistent yield during the difficult investment climate in the stock market today has been the focus for many investors. After all, if your bills come monthly, why not your dividend checks? Without spending too much time doing research on your own, we are narrowing down a list of monthly dividend stocks for you to check out.
Top Monthly Dividend Stocks To Watch Now
- Realty Income (NYSE: O)
- LTC Properties (NYSE: LTC)
- Pembina Pipeline (NYSE: PBA)
- AGNC Investment (NASDAQ: AGNC)
- Prospect Capital Corporation (NASDAQ: PSEC)
No list of monthly dividend stocks is complete without Realty Income. While several REITs pay monthly dividends, this company’s monthly payout is a crucial part of its identity. In fact, the company actually trademarked “The Monthly Dividend Company” as its official nickname. Look no further if you want a safe and consistent payout for your portfolio. The REIT even boasts on its homepage its 609 consecutive monthly dividends paid and 4.4% annualized dividend growth since 1994.
What’s making Realty Income a compelling investment is its strong portfolio of strong clienteles. After all, it has clients like Walmart (NYSE: WMT) and Dollar General (NYSE: DG) as some of their top tenants. And these tenants should continue to do well and bring in a stable revenue stream for the company. And considering the fact that the economy is slowly reopening, Realty Income’s most affected tenants such as cinema operators and gyms should enjoy a nice recovery. Thus, would you add O stock to your portfolio?
LTC Properties is a healthcare REIT, specializing in senior living properties and skilled nursing facilities. There’s no question that COVID-19 has hit elderly homes especially hard. Considering how susceptible the elderlies are towards the effects of the virus, many are postponing their move into these facilities until the virus is more under control. Naturally, many of the health REITs will cut down their dividend yield during this challenging time, but not LTC. This healthcare REIT is bucking the trend and holding the line on its dividend. You could expect an annual dividend of nearly 6% with LTC.
One of the key reasons why LTC is holding on to its dividend is because of its focus on net-lease properties. A net-lease property is one where the tenant is responsible for most of the operating costs of the asset. Essentially, LTC just sits back and collects rent. Even though the novel coronavirus has presented a great challenge to the industry, the good news is the longer-term demographic trends are here to stay. As the population continues to age, demand for senior living will likely creep up over time. And LTC stock would likely be a beneficiary of that trend.
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Pembina Pipeline is a Canadian company that specializes in transportation and storage infrastructure for the oil and gas sector. The company released its first-quarter 2021 earnings of $320 million and adjusted EBITDA of $835 million, both being consistent with the same period in the prior year. Shares of this dividend stock have climbed more than 30% year to date. The stock is up nearly 40% over the past year. Pembina still offers attractive value relative to its industry peers. The energy company offers around a 4.5% dividend yield to its investors.
Oil and gas prices have enjoyed a rebound on the back of a global economic recovery. This has given energy stocks new life as of late. While it’s not quite as high as the other monthly dividend stocks on this list, it’s arguably less risky. Once the economy fully reopens, people will need crude oil products. And oil prices are reflecting the sentiment of the energy market today. Of course, we don’t know for sure if there are going to be new coronavirus variants that will have a profound impact on our lives. In the meantime, would you be watching PBA stock?
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AGNC Investment Corp is the largest mortgage REIT by market cap. The mREIT has made a strong comeback after an underwhelming 2020. For starters, the company uses its in-house subsidiaries to help package, buy, and sell government-backed mortgages secured by residential real estate. Investors love this mREIT because it primarily invests in mortgage-backed securities instead of physical real estate. More importantly, AGNC Investment has an annualized dividend yield of more than 8%.
In the past year, the company completed $1.4 billion of accretive capital transactions, having a total portfolio of $96.6 billion in agency mortgage-backed securities (MBS) and to-be-announced (TBA) securities. If you’re an investor in the stock market today, you probably know a thing or two about the rising inflation rate. And rising interest rates are among the reasons why stocks are down. While these are bad for stocks in general, rising interest rates actually benefit AGNC. For this reason, some may see AGNC stock as a defensive play in the highly volatile stock market we are having today. With that in mind, would you add AGNC to your watchlist?
Prospect Capital Corporation
Prospect Capital Corporation is a New York-based financial services company that aims to generate both current income and long-term capital appreciation through debt and equity investments in middle-tier companies. Its portfolio is mostly debt-based, with most of it invested in first-lien loans and other senior secured debt. It has a dividend yield of around 9% and it pays out all of its earnings as dividends.
Dividend investors should research PSEC stock and add it to their portfolios if they like what they see. And, with the company’s consistent yield and solid financials, there’s plenty to like when it comes to Prospect Capital. Apart from offering a higher yield, the company also trades at a lower price compared to other dividend stocks on this list. Of course, these favorable metrics also come with higher risks. Considering that some of its clients may have liquidity issues during this difficult economic climate, I would tread cautiously with PSEC stock.