Updated on January 3rd, 2020 by Bob Ciura
Spreadsheet data updated daily
Monthly dividend stocks are securities that pay a dividend every month instead of quarterly or annually.
More frequent dividend payments mean a smoother income stream for investors.
This article includes:
- A free spreadsheet on all 58 monthly dividend stocks
- Links to detailed stand-alone analysis on all 58 monthly dividend stocks
- Several other resources to help you invest in monthly dividend securities for steady income
You can download our full Excel spreadsheet of all monthly dividend stocks by clicking on the link below:
The downloadable Monthly Dividend Stocks Spreadsheet above contains the following for each stock that pays monthly dividends:
- Dividend yield
- Name and ticker
- Market cap
- Payout ratio
Note: We strive to maintain an accurate list of all monthly dividend payers. There’s no universal source we are aware of for monthly dividend stocks; we curate this list manually. If you know of any stocks that pay monthly dividends that are not on our list, please email email@example.com.
This article also includes our top 5 ranked monthly dividend stocks today, according to expected five-year annual returns. Stocks are further screened based on a qualitative assessment of strength of the business model, growth potential, recession performance, and dividend history. Based on this, we have excluded oil and gas royalty trusts, due to their high risks which make them unattractive for income investors, in our view.
Table of Contents
- How to Use the Monthly Dividend Stocks Spreadsheet to Find Dividend Investment Ideas
- The 5 Best Monthly Dividend Stocks
#5: ARMOUR Residential REIT (ARR)
#4: Dynex Capital (DX)
#3: AGNC Investment Corp. (AGNC)
#2: Inter Pipeline Ltd. (IPPLF)
#1: EPR Properties (EPR)
- Detailed Analysis on All of The Monthly Dividend Stocks
- Performance Through December 2019
- Why Monthly Dividends Matter
- The Dangers of Investing in Monthly Dividend Stocks
- Final Thoughts
You can learn more about 5 of our favorite monthly dividend stocks in the following video.
Having the list of monthly dividend stocks along with metrics that matter is a great way to begin creating a monthly passive income stream.
High-yielding monthly dividend payers have a unique mix of characteristics that make them especially suitable for investors seeking current income.
Keep reading this article to learn more about investing in monthly dividend stocks.
How to Use the Monthly Dividend Stocks Sheet to Find Dividend Investment Ideas
For investors that use their dividend stock portfolios to generate passive monthly income, one of the main concerns is the sustainability of the company’s dividend.
A dividend cut indicates one of two things:
- The business isn’t performing well enough to sustain a dividend
- Management is no longer interested in rewarding shareholders with dividends
Either of these should be considered an automatic sign to sell a dividend stock.
Of the two reasons listed above, #1 is more likely to happen. Thus, it is very important to continually measure the financial feasibility of a company’s dividend.
This is best measured by using the payout ratio. The payout ratio is a mathematical expression that shows what percentage of a company’s earnings is distributed to shareholders as dividend payments. A very high payout ratio could indicate that a company’s dividend is in danger of being reduced or eliminated completely.
For readers unfamiliar with Microsoft Excel, this section will show you how to list the stocks in the spreadsheet in order of decreasing payout ratio.
Step 1: Download the monthly dividend stocks excel sheet at the link above.
Step 2: Highlight columns A through H, and go to “Data”, then “Filter”.
Step 3: Click on the ‘filter’ icon at the top of the payout ratio column.
The 5 Best Monthly Dividend Stocks
The following list represents our top 5 monthly dividend stocks right now, based on their projected total annual returns over the next five years. The list is ranked in ascending order from lowest to highest expected 5-year annual returns.
Monthly Dividend Stock #5: ARMOUR Residential REIT (ARR)
- 5-year expected annual returns: 9.4%
ARMOUR Residential (ARR) is a mortgage REIT that was formed in 2008. The trust invests primarily in residential mortgage-backed securities that are guaranteed or issued by a United States government entity including Fannie Mae, Freddie Mac and Ginnie Mae. ARMOUR has a $1 billion market capitalization and produces about $165 million in annual revenue.
Source: Investor Presentation
On October 23rd the company reported quarterly financial results. Core income per share came to $0.55, which beat analyst expectations by $0.02 per share. This also covered ARMOUR’s quarterly dividend of $0.51 per share. Core income exceeded dividends paid for the 13th consecutive quarter. At the end of the quarter, book value per share was estimated to be $19.76, on a GAAP basis.
ARMOUR’s quality metrics have been volatile given the performance of the trust as rates have moved around over the years. Gross margins have moved down since short-term rates began to rise meaningfully a couple of years ago, although it appears most of that damage has been done. Rates have declined once again over the course of 2019, due to the Federal Reserve’s multiple reductions of the Fed Funds rate.
However, we do not forecast significant movement in either direction from this point in terms of rates. Interest coverage has declined with spreads but also appears to have stabilized, so we are somewhat optimistic moving forward, while keeping in mind the significant potential for volatility. The dividend is covered by cash flow and we foresee that continuing indefinitely. ARMOUR is not beholden to recessions so much as it is rates.
We expect annual returns of 9.4% per year through 2025, mainly due to the very high 11.3% dividend yield. We expect cash flow per share to decline at a 2% annual rate which will modestly offset the dividend yield. But a small bump in the valuation multiple of ~0.1% per year brings the total expected return to 9.4% per year over the next five years.
Monthly Dividend Stock #4: Dynex Capital (DX)
- 5-year expected annual returns: 11.0%
Dynex Capital is a mortgage REIT that invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. It invests in agency and non-agency MBS consisting of residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. Agency MBS have a guaranty of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac. Non-Agency MBS have no such guaranty of payment.
Source: Investor Presentation
The trust reported third quarter results on October 31st. The company reported comprehensive income of $0.63 per common share, comprised of a $(1.65) net loss per common share as well as other comprehensive income of $2.28 per share on available-for-sale securities. Net interest spread increased to 0.82% for the third quarter of 2019, while book value per share of $18.07 increased 2.2% since the previous quarter.
Given that interest rates are expected to remain in a narrower and lower range for a longer period than ever seen in recent history, growth will likely suffer substantially. This is because the global economy will continue to be weighed down by large pools of negative yielding debt, forcing central banks to remain accommodative in their monetary policy. That said, Dynex still benefits from several long-term factors.
As the Federal Reserve attempts to reduce its investment in Agency RMBS and GSE reform opens new investment opportunities, demand for private capital in the US housing finance system should grow. Also, the shortage of affordable housing means that there is a need for additional investment into the sector. Taking into account these headwinds and tailwinds along with the trust’s high payout ratio, we do not expect any earnings-per-share growth over the next half decade.
We expect 11% annual returns going forward, due to the 10.6% dividend yield, no EPS growth, and a small ~0.4% annual boost from an expanding valuation multiple.
Monthly Dividend Stock #3: AGNC Investment Corp. (AGNC)
- 5-year expected annual returns: 11.0%
AGNC is a mortgage REIT that invests primarily in agency mortgage-backed securities (or MBS) on a leveraged basis.
Its asset portfolio is comprised of residential mortgage pass-through securities, collateralized mortgage obligations (or CMO), and non-agency MBS. Many of these are guaranteed by government-sponsored enterprises. The majority of American Capital’s investments are fixed-rate agency MBS. Most of these are MBS with a 30-year maturity period.
The counterparties to most of AGNC’s assets are located in North America. Counterparties in Europe also represent a significant percentage of the trust’s total portfolio. AGNC derives nearly all its revenue in the form of interest income. It currently generates about $229 million in annual revenue and trades at a market capitalization of $9 billion.
Source: Investor Presentation
AGNC reported third-quarter financial results which included $0.42 of income per common share, comprised of $(0.03) net loss per common share and other comprehensive income of $0.45 per share on investments marked-to-market. AGNC reported $16.55 tangible net book value per common share as of September 30th, down 0.2% from $16.58 per common share as of the previous quarter. AGNC declared its third-quarter dividend of $0.48 per share, and reported a 2.7% economic return on tangible common equity for the quarter.
Given that it had its IPO in 2008 – in the midst of the financial crisis – it is hard to get an accurate picture of exactly how it can be expected to perform in the next recession. However, the mortgage backed security industry – given its leverage and interest rate sensitivity – is very prone to underperform when the housing market experiences a downturn and mortgage foreclosures rise. As a result, it should not be viewed as a safe defensive stock for a recession.
We expect annual returns of 11% per year over the next five years, comprised of modest EPS growth (0.4%) and dividends (10.8%), partially offset by a 0.2% valuation multiple decline.
Monthly Dividend Stock #2: Inter Pipeline Ltd. (IPPLF)
- 5-year expected annual returns: 12.8%
Inter Pipeline is based in Canada and has traded publicly since 1997. Its energy infrastructure assets transport, process, and store energy products largely in Western Canada and at a much smaller scale in Europe. Inter Pipeline has paid a cash distribution since 1997 and an increasing distribution for 10 consecutive years. It trades on the Toronto Stock Exchange with the ticker TSX:IPL. It also trades over-the-counter in the U.S. under the ticker IPPLF.
The company operates in four segments. The company estimates 2019 EBITDA diversification as follows: 54% Oil Sands Transportation, 24% Natural Gas Liquids Processing, 12% Conventional Oil Pipelines, and 10% Bulk Liquid Storage.
Inter Pipeline’s strong assets and diversified business model have led to impressive growth in the past decade.
Source: Investor Presentation
In the 2019 third quarter, Inter Pipeline generated revenue of $591 million, down 14% versus the same period a year ago. Funds from operations (FFO) fell 32% to $204 million and was down 36% to $0.49 on a per-share basis. Pipeline volumes (including Oil Sands Transportation and Conventional Oil Pipelines) fell 5.1%, natural gas liquids processing volumes increased 1.4%, and bulk liquid storage utilization rose to 92% compared to 74% a year ago.
FFO for NGL processing fell 66% year over year and was the biggest drag on FFO because of planned large-scale turnaround activities at three of its NGL Processing facilities, as well as depressed frac-spread pricing. FFO for conventional oil pipelines also took a hit, and was down 26%. FFO for oil sands transportation increased marginally by 1.5%, while FFO for bulk liquid storage doubled thanks partly to newly acquired storage business in the United Kingdom and the Netherlands as well as additional storage contracts secured in Denmark.
For the quarter, growth capital spending rose 87% to $429 million as the company continued its multi-year investment in the Heartland Petrochemical Complex, which is scheduled to complete by late 2021, for a total investment of $3.5 billion.
Inter Pipeline stock currently trades for a price-to-FFO ratio of 10.0, based on expected 2019 FFO-per-share of US$1.72. This is exactly in-line with our fair value estimate of 10 times FFO. Therefore, we view the stock as fairly valued right now. Still, positive returns are attainable through FFO growth and dividends.
Inter Pipeline currently distributes a monthly dividend of C$0.1425 per share, or C$1.71 per share annualized. At the prevailing currency rates, this works out to US$1.32 per share, good for a current yield of 7.7%. We expect total annual returns of 12.8% per year through 2025, comprised of the 7.7% dividend yield and annual FFO-per-share growth of 5.1%, along with a flat valuation multiple.
Monthly Dividend Stock #1: EPR Properties (EPR)
- 5-year expected annual returns: 13.0%
EPR Properties invests in properties in specific market segments that require industry knowledge to operate effectively. It selects properties it believes have strong return potential in Entertainment, Recreation, and Education.
Source: Investor Presentation
The REIT structures its investments as triple net, a structure that places the operating costs of the property on the tenants, not the REIT. The portfolio includes more than $5 billion in investments across 300+ locations in 41 states, including over 250 tenants. Total revenue is in excess of $600 million annually and the stock is valued at $5.5 billion.
Operating conditions for the commercial real estate industry are challenged. The decline in brick-and-mortar retail in the U.S. has been a significant headwind for REITs with a heavy exposure to malls. Consumers are increasingly shopping online instead of going to stores, and the resulting e-commerce boom has impacted many REITs.
These difficulties are reflected in the company’s financial results to begin 2019. While revenue increased 4.8% in the most recent quarter, adjusted FFO-per-share declined 7.6% in the third quarter and 12% through the first three quarters of 2019.
In response to these trends, EPR has targeted properties that offer consumers an experience. Entertainment properties such as movie theaters, recreation properties such as skiing and resorts, and education properties like public charter schools and private schools are not vulnerable to e-commerce.
It is accelerating divestments in other, less attractive areas to increase exposure to experiential properties. For example, in November 2019 EPR sold charter school portfolio, consisting of 47 charter school related assets, for approximately $454 million. The company will use the proceeds to reinvest in experiential real estate.
There is plenty of opportunity for EPR’s growth to continue in 2020 and beyond. The company has conducted $685 million of property investments in 2019 through the third quarter. This investment will help EPR’s properties appeal to consumers looking for a quality entertainment or educational experience.
The most important catalyst for EPR’s future growth is a growing economy. Consumers tend to cut back spending on entertainment and other recreational activities during a recession. As long as the U.S. economy stays out of a downturn, the economic climate should remain supportive of growth for EPR.
We expect total annual returns of 13.0% through 2025, comprised of the 6.5% dividend yield and 8% annual FFO growth, offset by a ~1.5% annual contraction in the valuation multiple.
Detailed Analysis On All of The Monthly Dividend Stocks
You can see detailed analysis on every monthly dividend security we cover by clicking the links below. We’ve included our most recent Sure Analysis Research Database report update in brackets as well, where applicable.
- AGNC Investment (AGNC) | [11/27/19]
- Alaris Royalty (ALARF)| [11/25/19]
- Apple Hospitality REIT (APLE) | [12/1/19]
- ARMOUR Residential REIT (ARR) | [11/21/19]
- Capitala Finance Corporation (CPTA) | [11/14/19]
- Chatham Lodging (CLDT) | [11/12/19]
- Choice Properties REIT (PPRQF) | [12/30/19]
- Chorus Aviation (CHR.TO)
- Cross Timbers Royalty Trust (CRT) | [12/21/19]
- Dream Global REIT (DUNDF) | [10/8/19]
- Dream Industrial REIT (DREUF) | [10/16/19]
- Dream Office REIT (DRETF) | [10/16/19]
- Dynex Capital (DX) | [10/8/19]
- Eagle Point Credit (ECC) | [10/8/19]
- Enerplus (ERF) | [11/17/19]
- EPR Properties (EPR) | [11/4/19]
- Exchange Income Corporation (EIFZF)
- Gladstone Capital Corporation (GLAD) | [10/26/19]
- Gladstone Commercial Corporation (GOOD) | [11/13/19]
- Gladstone Investment Corporation (GAIN) | [11/7/19]
- Gladstone Land Corporation (LAND) | [11/16/19]
- Granite Real Estate Investment Trust (GRP) | [10/16/19]
- Harvest Capital Credit Corporation (HCAP)
- Horizon Technology Finance (HRZN)
- Inter Pipeline (IPPLF) | [11/11/19]
- LTC Properties (LTC) | [11/14/19]
- Main Street Capital (MAIN) | [11/27/19]
- Orchid Island Capital (ORC) | [11/21/19]
- Oxford Lane Capital (OXLC) | [11/19/19]
- Pacific Coast Oil Trust (ROYT) | [10/8/19]
- Pembina Pipeline (PBA) | [11/11/19]
- Pennant Park Floating Rate (PFLT)
- PermRock Royalty Trust (PRT) | [11/22/19]
- Prospect Capital Corporation (PSEC) | [12/1/19]
- Realty Income (O) | [11/9/19]
- Sabine Royalty Trust (SBR)
- San Juan Basin Royalty Trust (SJT) – [San Juan recently suspended their dividend]
- Shaw Communications (SJR) | [10/29/19]
- Solar Senior Capital (SUNS)
- Stag Industrial (STAG) | [11/8/19]
- Stellus Capital Investment Corporation (SCM) | [11/16/19]
- Superior Plus (SUUIF) | [12/2/19]
- Transalta Renewables (TRSWF) | [10/16/19]
- Vermilion Energy (VET) | [12/24/19]
- Whitestone REIT (WSR) | [11/5/19]
As we do not have coverage of every monthly dividend stock, they are not all included in the list above. Note that all of these businesses are either small- or mid-cap companies. You will not see any S&P 500 stocks in this list – it is instead populated by members of the Russell 2000 Index or various international stock market indices. Based on the list above, the bulk of monthly dividend paying securities are REITs and BDCs.
Note: You can see our list of all publicly traded REITs here.
Performance Through December 2019
In December 2019, a basket of the 58 monthly dividend stocks above (excluding SJT) generated total returns of 0.4%. For comparison, the Russell 2000 ETF (IWM) generated total returns of 2.8% for the month.
Notes: Data for performance is from Ycharts. Canadian company performance may be in the company’s home currency. Year-to-date performance does have survivorship bias as some securities (SJT, GNL) have been excluded as they either eliminate (SJT) or change (GNL) their dividend to quarterly payments.
Monthly dividend stocks underperformed in December 2019, by 2.4 percentage points.
For 2019, the basket of 58 monthly dividend stocks generated total returns of 23.7% versus 25.4% for the Russell 2000 ETF. Overall, monthly dividend stocks performed well, but slightly below the broader Russell 2000. We will update our performance section monthly to track future monthly dividend stock returns.
In 2019, the best 3 performing monthly dividend stocks (including dividends) were:
- Exchange Income Corp., up 67.9%
- Gladstone Investment Corp., up 54.5%
- Gladstone Capital Corp., up 48.6%
The 3 worst-performing monthly dividend stocks (including dividends) in 2019 were:
- Pacific Coast Oil Trust, down 64.6%
- Vermilion Energy, down 13.4%
- Cross Timbers Royalty Trust, down 13.0%
Why Monthly Dividends Matter
Monthly dividend payments are beneficial for one group of investors in particular – retirees who rely on dividend stocks for income.
With that said, monthly dividend stocks are better under all circumstances (everything else being equal), because they allow for returns to be compounded on a more frequent basis. More frequent compounding results in better total returns, particularly over long periods of time.
Consider the following performance comparison:
Over the long run, monthly compounding generates slightly higher returns over quarterly compounding. Every little bit helps.
With that said, it might not be practical to manually re-invest dividend payments on a monthly basis. It is more feasible to combine monthly dividend stocks with a dividend reinvestment plan to dollar cost average into your favorite dividend stocks.
The last benefit of monthly dividend stocks is that they allow investors to have – on average – more cash on hand to make opportunistic purchases. Having cash isn’t often important, but when it is, it is really, really important.
Case-in-point: investors who bought a broad basket of stocks at the bottom of the 2008-2009 financial crisis are likely sitting on triple-digit total returns from those purchases today.
The Dangers of Investing In Monthly Dividend Stocks
Monthly dividend stocks have characteristics that make them appealing to do-it-yourself investors looking for a steady stream of income. Typically, these are retirees and people planning for retirement.
Investors should note many monthly dividend stocks are highly speculative. On average, monthly dividend stocks tend to have elevated payout ratios. An elevated payout ratio means there’s less margin for error to continue paying the dividend if business results suffer a temporary (or permanent) decline.
Because of this, we have real concerns that many monthly dividend payers will not be able to continue paying rising dividends in the event of a recession.
Additionally, a high payout ratio means that a company is retaining little money to invest for future growth. This can lead management teams to aggressively leverage their balance sheet, fueling growth with debt. High debt and a high payout ratio is perhaps the most dangerous combination around for a potential future dividend reduction.
With that said, there are a handful of high quality monthly dividend payers around. Chief among them is Realty Income (O). Realty Income has paid increasing dividends (on an annual basis) every year since 1994.
The Realty Income example shows that there are high quality monthly dividend payers around, but they are the exception rather than the norm. We suggest investors do ample due diligence before buying into any monthly dividend payer.
Financial freedom is achieved when your passive investment income exceeds your expenses. But the sequence and timing of your passive income investment’s payments can matter.
Monthly payments make matching portfolio income with expenses easier. Most expenses recur monthly whereas most dividend stocks pay quarterly. Investing in monthly dividend stocks matches the frequency of portfolio income payments with the normal frequency of personal expenses.
Additionally, many monthly dividend payers offer investors high yields. The combination of a monthly dividend payment and a high yield should be especially appealing to income investors.
Related: The Best High Dividend Stocks Now
But not all monthly dividend payers offer the safety that income investors need. A monthly dividend is better than a quarterly dividend, but not if that monthly dividend is reduced soon after you invest. The high payout ratios and shorter histories of most monthly dividend securities mean they tend to have elevated risk levels.
Because of this, we advise investors to look for high quality monthly dividend payers with reasonable payout ratios, trading at fair or better prices.