6 Monthly Dividend Stocks for Regular Income

Mike Munno

Posted June 9, 2023

Monthly dividend stocks are a type of dividend company whose payment is made out to shareholders on a monthly basis. Typically, dividends are paid on a quarterly or yearly basis. Monthly dividend stocks can be an attractive option for investors who want a more frequent source of income from their investments.

There are a number of reasons why investors may choose to invest in stocks that pay monthly dividends. Today, we’ll go over some of the pros and cons of monthly dividend stocks. We will also discuss the different types there are, in addition to naming some favorites. 

Monthly Dividend Stocks

Before we discuss the best monthly dividend stocks to buy, it’s good to know key information about dividends. You be familiar with the terms: 

  • Dividend yield: This is the amount of money that a company pays out in dividends each year, expressed as a percentage of the stock price. For example, a company with a dividend yield of 5% pays out $5 in dividends for every $100 invested in the stock.
  • Dividend growth: This is the rate at which a company's dividend payments have increased over time. Companies that have a history of increasing their dividends are considered to be good dividend payers.
  • Dividend safety: This is the likelihood that a company will continue to pay its dividends in the future. Companies with strong financial performance and a history of paying dividends are considered to be dividend safe.

Now that you’re familiar with some key terms, let’s dive into monthly dividends. 

Investors increasingly prioritize cash flow and income generation, making monthly dividend stocks a sought-after investment choice. Whether you're a retiree in need of reliable retirement income or an investor looking for steady funds, monthly dividend stocks can boost your portfolio. They provide consistent cash flow and offer budgeting advantages while potentially compounding returns over time.

Discover how these stocks can provide a monthly financial boost and help you achieve long-term investment goals.

The Pros and Cons of Monthly Dividend Stocks

Investing in monthly dividend stocks offers several notable advantages for investors. Let's explore the key benefits:

  • Consistent Cash Flow:

Monthly dividend stocks provide investors with a reliable stream of income. Unlike stocks that pay dividends quarterly or annually, monthly payouts ensure a more frequent and predictable cash flow. This consistent income can be especially valuable for retirees or those relying on investments to cover regular expenses.

  • Budgeting and Financial Planning Advantages:

With monthly dividend stocks, investors can effectively plan and budget their finances. Regular income enables better management of day-to-day expenses, bill payments, and financial obligations. It provides a level of stability and predictability that aligns well with the monthly cycles of most individuals' financial lives.

  • Reinvestment Opportunities:

Monthly dividends offer investors the opportunity to reinvest their earnings more frequently. By promptly reinvesting dividends, investors can potentially take advantage of compound growth. Reinvesting dividends allows for the purchase of additional shares, potentially leading to increased future dividend payments and capital appreciation.

  • Potential Compounding Effects:

The power of compounding is amplified with monthly dividend stocks. By reinvesting dividends on a monthly basis, investors can potentially benefit from compounding returns more frequently compared to stocks with less frequent dividend payments. Over time, the compounding effect can contribute significantly to the growth of an investment portfolio.

These are four very strong reasons why investors are turning to monthly dividend stocks. In today’s market environment, investors want their money and they want it now. Can you blame monthly dividend stocks for growing in popularity? I can’t. 

Now, while monthly dividends can be an amazing tool to grow your wealth, there are some pitfalls. 

Some of the potential pitfalls of monthly dividend stocks can include: 

  • Lower total return: Because monthly dividends are paid out more frequently, the total amount of money that investors receive may be lower than if they invested in stocks that only pay dividends quarterly or yearly.
  • Dividend cuts: If a company's financial performance declines, it may be forced to cut its dividend payments. This can reduce the amount of income that investors receive and can also hurt the stock's price.
  • Taxes: Dividends are taxed as income, which can increase an investor's tax liability. If you’re collecting more dividend checks, you’re increasing your tax liability. 

While these cons of monthly dividend stocks aren’t a dealbreaker, it’s good to be aware of the threat. 

Ultimately, the decision of whether or not to invest in stocks that pay monthly dividends is a personal one. Investors should carefully consider their individual needs and goals before making a decision.

Knowing When a Monthly Dividend Stock is a ‘Buy’

When it comes to which monthly dividend stocks you want to buy, it comes down to personal preference. However, there are some common factors that make a good monthly dividend. One of the most important is strong financial performance. Companies with strong financial performance are more likely to be able to afford to pay monthly dividends.

You also want to make sure you’re not buying into a dividend yield trap. A dividend yield trap is a situation where an investor buys a stock with a high dividend yield, only to find that the company cuts its dividend in the future. This can happen for a number of reasons, such as a decline in the company's earnings or a change in its financial strategy.

A high dividend yield is not always a good thing. In fact, it can sometimes be a sign that the company is in trouble. If a company's dividend yield is too high, it may be paying out more money in dividends than it can afford. This can lead to a dividend cut in the future.

Now, keeping all of that in mind, let’s take a look at Wealth Daily’s favorite dividend stocks…

Wealth Daily’s Favorite Monthly Dividend Stocks: 

  • Main Street Capital Corporation (MAIN) 
  • Gladstone Investment (GAIN)
  • Realty Income Corporation (O)
  • EPR Properties (EPR) 
  • Apple Hospitality REIT, Inc. (APLE) 
  • AGNC Investment Corp. (AGNC) 

Main Street Capital Corporation (MAIN): Last Monthly Dividend Yield – 6.83%

Main Street Capital Corporation (MAIN) is a publicly traded business development company (BDC) that specializes in providing debt and equity capital to lower middle-market companies. Main Street Capital offers flexible financing solutions to support the growth, expansion, and recapitalization needs of its portfolio companies. They provide both debt and equity investments, including first-lien, second-lien, and mezzanine loans, as well as equity co-investments. Their current market cap is around $3.24 billion and their latest dividend payment was 6.83%, or $2.76/share. 

Gladstone Investment (GAIN): Last Monthly Dividend Yield – 7.35% 

Gladstone Investment Corporation (GAIN) is another BDC but instead focuses on providing debt and equity financing to small and mid-sized businesses. Gladstone is a business development company that invests in small and middle-market companies. It was founded in 2004 and is headquartered in New York City. The company has a history of consistently distributing monthly dividends to its shareholders, making it an attractive choice for those looking to generate a steady cash flow. Their current market cap is around $437.33 million and their latest dividend payment was 7.35%, or $0.96/share. 

Realty Income Corporation (O): Last Monthly Dividend Yield – 5.02%

Realty Income Corporation (O) is a prominent real estate investment trust (REIT) that has gained recognition as "The Monthly Dividend Company." The company owns a portfolio of single-tenant retail properties. It was founded in 1969 and is headquartered in San Diego, California. Realty Income primarily focuses on retail properties, including standalone retail buildings and shopping centers. Its real estate portfolio spans across various sectors, including discount stores, convenience stores, pharmacies, and automotive service centers. Their current market cap is around $40.95 billion and their latest dividend payment was 5.02%, or $3.06/share. 

EPR Properties (EPR): Last Monthly Dividend Yield – 7.41%

EPR Properties (EPR) is another REIT that owns a portfolio of entertainment, education, and healthcare properties. It was founded in 1998 and is headquartered in Austin, Texas. EPR Properties typically structures its lease agreements as "triple-net leases." In these leases, tenants are responsible for paying property taxes, insurance, and maintenance expenses, which can provide a more predictable income stream for the company. Their current market cap is around $3.41 billion and their latest dividend payment was 7.41%, or $3.30/share.

Apple Hospitality REIT, Inc. (APLE): Last Monthly Dividend Yield – 6.18%

No, not that Apple. Apple Hospitality REIT, Inc. (APLE) is a real estate investment trust that owns a portfolio of upscale hotels. It was founded in 2006 and is headquartered in Houston, Texas. APLE's hotel properties are strategically located across various states in the United States, targeting major metropolitan areas, business centers, and popular tourist destinations. This geographic diversification helps mitigate risks associated with specific regional economies and provides exposure to different market dynamics. Their market cap is around $3.54 billion and their latest dividend payment was 6.18%, or $0.96/share.

AGNC Investment Corp. (AGNC): Last Monthly Dividend Yield – 14.88%

AGNC Investment Corp. (AGNC) is a mortgage real estate investment trust that invests in agency mortgage-backed securities. It was founded in 1988 and is headquartered in Washington, D.C. AGNC employs hedging strategies to manage interest rate risk. This involves using derivatives such as interest rate swaps and futures contracts to mitigate the potential impact of interest rate fluctuations on the value of its portfolio.  It's important to note that AGNC operates in a market that can be influenced by factors such as changes in interest rates, prepayment risks, and market liquidity. These factors can impact the company's net interest income, book value, and overall financial performance. Their market cap is around $5.80 billion and their latest dividend payment was 6.18%, or $0.96/share.

Final Thoughts – Monthly Dividend Stocks 

In conclusion, investing in monthly dividend stocks can offer several benefits to investors. The regular cash flow provided by these stocks can be particularly appealing to income-focused investors, as it allows for consistent and predictable income generation. Monthly dividends can help cover living expenses, supplement retirement income, or provide a steady source of funds for other financial goals.

By carefully selecting monthly dividend stocks that align with your investment strategy and risk tolerance, you can potentially enhance your investment income and build a more resilient and rewarding investment portfolio. Be sure to check out more of the investment opportunities that we’re actively pursuing here at Wealth Daily. 

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