Updated on March 4th, 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 (along with metrics that matter like dividend yield and payout ratio) 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 firstname.lastname@example.org.
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: EPR Properties (EPR)
#1: Inter Pipeline Ltd. (IPPLF)
- Detailed Analysis on All of The Monthly Dividend Stocks
- Performance Through February 2020
- 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 $1.1 billion market capitalization and produces about $165 million in annual revenue.
Source: Investor Presentation
In late January the company reported fourth-quarter and full year 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 14th consecutive quarter. At the end of the quarter, shareholder equity per common share was estimated to be $20.84, up 2% from the previous quarter.
ARMOUR’s quality metrics have been volatile given the performance of the trust as rates have moved around over the years. Rates declined over the course of 2019 and to start 2020, due to the Federal Reserve’s multiple reductions of the Fed Funds rate.
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 10.6% dividend yield. We expect cash flow per share to decline at a 2% annual rate, with a small positive increase in the valuation multiple of ~0.8% per year over the next five years.
Monthly Dividend Stock #4: Dynex Capital (DX)
- 5-year expected annual returns: 9.4%
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 fourth-quarter and full year results on February 6th. The company reported comprehensive income of $0.37 per common share, comprised of a $(1.87) net loss per common share as well as other comprehensive income of $2.26 per share on available-for-sale securities. Core net operating income came to $0.66 per share for the quarter. Net interest spread increased to 1.1% for the fourth quarter, while book value per share of $18.01 declined by $0.06 from 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 9.4% annual returns over the next five years, due to the 10.0% dividend yield, flat EPS, and a small ~0.6% annual reduction from a declining 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 $9.2 billion.
Source: Investor Presentation
AGNC reported fourth-quarter financial results which included $1.59 of income per common share, comprised of $1.56 of net income per common share and other comprehensive income of $0.03 per share on investments marked-to-market. AGNC reported $17.66 tangible net book value per common share as of September 30th, up 6.7% from the previous quarter. AGNC declared its third-quarter dividend of $0.48 per share, and reported a 9.6% 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 (10.6%), with a flat valuation multiple decline.
Monthly Dividend Stock #2: EPR Properties (EPR)
- 5-year expected annual returns: 13.9%
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 Experiential and Entertainment, properties.
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 $6 billion in investments across 370 locations in 44 states, including over 200 tenants. Total revenue is close to $600 million annually and the stock has a market capitalization of $4.7 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.
EPR reported Q4 and full-year earnings on February 24th and results were largely in line with expectations. Total revenue for the year came to $652 million, up from $640 million in 2018. However, property operating expenses doubled from $30 million to $60 million year-over-year, which crimped earnings. Lower joint venture income caused EPR to post lower operating profits for the year, as that metric fell by about a third. FFO came to $5.44 per share on an adjusted basis, down from $6.10 in 2018, which was a blockbuster year for the trust’s earnings.
EPR issued guidance for 2020 of adjusted FFO-per-share of $5.19 to $5.39, so our initial estimate is for $5.30. The trust expects an anticipated investment of $1 billion in a new gaming venue for 2020 to help boost future growth. The trust said it would fund the investment with cash on hand, and also said it planned almost no dispositions for 2020. In addition, it raised the monthly dividend from $0.375 per share to $0.3825 per share.
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.
EPR trades at a price-to-AFFO ratio of 11.3 for 2020; our fair value estimate is a P/AFFO ratio of 12. An expanding valuation multiple could boost annual returns by 1.2% per year through 2025. In addition, 5% expected annual FFO growth plus the 7.7% dividend yield result in total expected returns of 13.9% per year through 2025.
Monthly Dividend Stock #1: Inter Pipeline Ltd. (IPPLF)
- 5-year expected annual returns: 15.4%
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. Its EBITDA diversification is roughly as follows: 55% Oil Sands Transportation, 20% Natural Gas Liquids Processing, 15% 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, both in terms of its cash flow and its dividends.
Source: Investor Presentation
Inter Pipeline reported its Q4 and full-year 2019 results on 2/20/20. In Q4, Inter Pipeline generated revenue of C$644 million, up 2% versus Q4 2018. Funds from operations (FFO) fell 21% to C$217 million and was down 24% to $0.52 on a per-share basis. Pipeline volumes (including Oil Sands Transportation and Conventional Oil Pipelines) climbed 8%, but natural gas liquids (NGLs) processing volumes fell 11%, and bulk liquid storage utilization rose to 93% compared to 68% a year ago.
The drag on FFO was predominantly attributable to NGL processing FFO falling 58% year over year (YOY) due to depressed frac-spread pricing and planned turnaround activities at multiple major processing facilities during the year.
For 2019, Inter Pipeline generated revenue of C$2.5 billion, down 2% YOY. FFO fell 20% to C$873 million and was down 24% to $2.12 on a per-share basis. Pipeline volumes fell 2%, but NGL processing volumes increased 4%, and bulk liquid storage utilization rose to 87% compared to 77% in 2018. Adjusted EBITDA fell 16% to C$1,051 million.
To date, Inter Pipeline has invested C$2.2 billion in the Heartland Petrochemical Complex, including C$1.2 billion in 2019. The major project is expected to be in service at the end of 2021. We expect FFO to stabilize in 2020 and expect a growth rate of about 5% through 2025
Inter Pipeline stock currently trades for a price-to-FFO ratio of 9.1x, based on expected 2020 FFO-per-share of US$1.65. This is just below our fair value estimate of 10 times FFO. Therefore, we view the stock as slightly undervalued, and an expanding valuation multiple could add 1.9% per year to annual returns.
Inter Pipeline currently distributes a monthly dividend of C$0.1425 per share, or C$1.71 per share annualized. At current exchange rates, this works out to US$1.28 per share, good for a current yield of 8.5%. We expect total annual returns of 15.4% per year through 2025, comprised of the 8.5% dividend yield and annual FFO-per-share growth of 5%, along with valuation expansion of 1.9% per year.
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) | [2/26/20]
- Choice Properties REIT (PPRQF) | [12/30/19]
- Chorus Aviation (CHRRF) [2/18/20]
- Cross Timbers Royalty Trust (CRT) | [12/21/19]
- Dream Global REIT (DUNDF) | [10/8/19]
- Dream Industrial REIT (DREUF) | [11/28/19]
- Dream Office REIT (DRETF) | [11/28/19]
- Dynex Capital (DX) | [11/28/19]
- Eagle Point Credit (ECC) | [11/29/19]
- Enerplus (ERF) | [11/17/19]
- EPR Properties (EPR) | [3/2/20]
- Exchange Income Corporation (EIFZF)
- Gladstone Capital Corporation (GLAD) | [2/19/20]
- Gladstone Commercial Corporation (GOOD) | [2/19/20]
- Gladstone Investment Corporation (GAIN) | [2/7/20]
- Gladstone Land Corporation (LAND) | [2/21/20]
- Granite Real Estate Investment Trust (GRP) | [1/9/20]
- Harvest Capital Credit Corporation (HCAP)
- Horizon Technology Finance (HRZN)
- Inter Pipeline (IPPLF) | [2/21/20]
- LTC Properties (LTC) | [2/24/20]
- Main Street Capital (MAIN) | [11/27/19]
- Orchid Island Capital (ORC) | [11/21/19]
- Oxford Lane Capital (OXLC) | [2/5/20]
- 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) | [2/19/20]
- Realty Income (O) | [2/22/20]
- Sabine Royalty Trust (SBR)
- San Juan Basin Royalty Trust (SJT) – [San Juan recently suspended its dividend]
- Shaw Communications (SJR) | [1/15/20]
- Solar Senior Capital (SUNS)
- Stag Industrial (STAG) | [2/13/20]
- Stellus Capital Investment Corporation (SCM) | [11/16/19]
- Superior Plus (SUUIF) | [2/21/20]
- 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 February 2020
In February 2020, a basket of the 58 monthly dividend stocks above (excluding SJT) generated negative total returns of -9.1%. For comparison, the Russell 2000 ETF (IWM) generated negative total returns of -8.9% 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 slightly underperformed in February, by 0.2 percentage points. We will update our performance section monthly to track future monthly dividend stock returns.
In February 2020, the 3 best-performing monthly dividend stocks (including dividends) were:
- Colony Credit Real Estate (CLNC), up 3.1%
- Dream Office REIT (DRETF) , up 2.2%
- Gladstone Land Corp (LAND), up 1.8%
The 3 worst-performing monthly dividend stocks (including dividends) in January were:
- Pacific Coast Oil Trust (ROYT), down 36.4%
- Vermilion Energy (VET), down 29.3%
- Gold Resource Corp. (GORO), down 26.9%
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.