Updated on August 11th, 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 55 monthly dividend stocks
- Links to detailed stand-alone analysis on all 55 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 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: Main Street Capital (MAIN)
#4: STAG Industrial (STAG)
#3: Shaw Communications (SJR)
#2: TransAlta Renewables (TRSWF)
#1: Realty Income (O)
- Detailed Analysis on All Monthly Dividend Stocks
- Performance Through June 2020
- Why Monthly Dividends Matter
- The Dangers of Investing in Monthly Dividend Stocks
- Final Thoughts
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. Stocks were selected based on their projected total annual returns over the next five years, but also based on a qualitative assessment of business model strength, future growth potential, and dividend sustainability.
Monthly Dividend Stock #5: Main Street Capital (MAIN)
Main Street Capital Corporation is a Business Development Company (BDC) that provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street defines lower middle market companies as generally having annual revenues between $10 million and $150 million. The company’s investments typically support management buyouts, recapitalizations, growth financings, refinancing and acquisitions.
As of the end of the 2020 second quarter, Main Street had an interest in 177 companies, a mix of lower middle market companies, middle market companies and private loan investments. The company also had $4 billion in capital under management at that time.
Main Street has a diversified investment portfolio.
Source: Investor Presentation
In the 2020 second quarter, Main Street’s distributable net investment income fell 19% year-over-year. On a per-share basis, distributable NII fell 22% to $0.52 per share. Net asset value per share of $20.85 at quarter-end compares with $23.91 at the end of 2019. The coronavirus and low interest rates weighed on the company.
Main Street has put together a solid record in the past decade. From 2010 through 2019, Main Street was able to grow net investment income by an average compound rate of 8.9% per year. The company has (for now) maintained its monthly dividend at a rate of $0.205 per share, which works out to $2.46 annually. Main Street has an attractive yield of 7.5%.
In addition, we expect 2% annual distributable net investment income growth. Based on expected NII-per-share of $2, Main Street trades for a price-to-NII ratio of 16.5. This is slightly above our fair value estimate of 13.5. If the stock reaches a price-to-NII ratio of 13.5 in five years, it would result in a negative return over the next five years, although this would be offset by NII-per-share growth as well as dividends.
Overall, we see the potential for 5%-6% annual returns over the next five years for Main Street stock. Over-valuation makes the stock somewhat less appealing at the current price in terms of total return, although the high dividend yield of 7.5% is particularly attractive for income investors.
Monthly Dividend Stock #4: STAG Industrial (STAG)
STAG Industrial is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has ~450 buildings across 38 states in the United States. STAG Industrial went public in 2011 and has a market capitalization of $5 billion. The focus of this REIT on single-tenant properties might create higher risk compared to multi-tenant properties, as the former are either fully occupied or completely vacant.
However, STAG Industrial executes a deep quantitative and qualitative analysis on its tenants. As a result, it has incurred credit losses that have been less than 0.1% of its revenues since its IPO. As per the latest data, 55% of the tenants are publicly rated and 31% of the tenants are rated “investment grade.” The company typically does business with established tenants to reduce risk.
STAG has an added advantage due to the company’s exposure to e-commerce properties, which gives it access to a key growth segment in real estate.
Source: Investor Presentation
In the 2020 second quarter, core FFO-per-share increased 4.4% over last year’s quarter thanks to the strength of the industrial market. Same-store cash NOI increased 2.1% year-over-year. As of July 28th, the company collected 98.0% of second quarter base rental billings. During the quarter, the REIT achieved an occupancy rate of 97.0%.
STAG Industrial is now facing a headwind due to the recession caused by the coronavirus. However, the effect of the pandemic on the REIT has been limited so far thanks to the high credit profile of its tenants. If anything, many of its properties have benefited from the coronavirus due to their exposure to e-commerce activity, which explains how STAG Industrial has continued to generate growth.
STAG Industrial has grown its FFO at a 5.7% average annual rate in the last seven years. We expect 5% annual FFO-per-share growth over the next five years, as it operates in a large and growing market. It still has a market share that is less than 1% of its target market. Therefore, it has ample room to continue to grow in the years to come.
STAG shares trade for a price-to-FFO ratio of 18.5, which is above our fair value estimate of 15. We do not expect meaningful returns from an expanding P/FFO multiple. Still, we expect 5% annual FFO-per-share growth, and the stock has a high yield of 4.3%. Total returns are expected to reach 5%-6% per year through 2025.
Monthly Dividend Stock #3: Shaw Communications (SJR)
Shaw Communications was founded in 1966 as the Capital Cable Television Company. It has since grown to become Western Canada’s leading content and network provider, catering to both consumers and businesses. The company produces about $4.1 billion USD in annual revenue.
Source: Investor Presentation
Shaw reported third-quarter results on July 10th, and reported its consolidated revenue decreased by 0.8% to $1.31 billion CAD. Adjusted EBITDA, however, increased 15.3% year-over-year to $609 million CAD. Due to temporary retail store closures of 90% of Freedom Mobile’s stores, and other government imposed stay at home rules, wireless subscriber activity was exceptionally soft with 2,200 postpaid net additions. But the company maintained its wireless subscriber base at nearly 1.8 million customers.
The slowdown in customer activity caused postpaid churn rate to come in at a record low 0.96%, a 61 basis point reduction from the latest quarter, and 22 bps lower than 3Q 2019. As of June 30th, just about all Freedom Mobile retail stores had reopened. The company successfully continued growing ABPU by 5.7% to $44.27 CAD and ARPU by 2.6% to $38.94 year-over-year.
Free cash flow increased 27% compared to third quarter 2019, up to $221 million CAD. Year-to-date, free cash flow has increased 20.2% to $595 million.This increase was mainly due to higher adjusted EBITDA and lower capital expenditures and interest. Adjusted EBITDA of $609 million was 15.3% higher than last year’s $528 million.
At the end of the third quarter, net debt leverage stood at 2.4x compared to its target leverage range of 2.5x to 3.0x. The company has approximately $650 million (CAD) of cash on hand. Despite dropping previous guidance, the company is now stating that they expect to deliver adjusted EBITDA growth and free cash flow of around $537 million USD, which supports current dividend levels.
Shaw withdrew its full-year guidance after reporting second-quarter earnings, but importantly the company maintained its monthly dividend. The company is raising cash to get it through the coronavirus crisis, including a debt raise of $500 million in Canadian dollars.
Shaw currently pays an annualized dividend payout of $1.182 per share in Canadian dollars; in U.S. dollars, the stock has a current annual dividend payout of $0.89 per share. Shaw has a current yield of 4.7%. Shaw also has a sustainable dividend payout. Shaw has a defensive business model which should continue to generate sufficient cash flow to pay its dividend, even in a recession, as consumers will still use their wireless and cable service.
Monthly Dividend Stock #2: TransAlta Renewables (TRSWF)
TransAlta Renewables trades on the Toronto Stock Exchange (under the ticker RNW) and on the over the counter market (under the ticker TRSWF). Its history in renewable power generation goes back more than 100 years. In 2013, the company was spun off from TransAlta, who remains a major shareholder in the alternative power generation company.
The company has maintained or increased its dividend every year since 2014, by an average of 4% growth per year. As of June 30th, TransAlta Renewables owned 13 hydro facilities, 19 wind farms and one natural gas plant in Canada. It also held economic interests in TransAlta’s Wyoming, Lakeswind, Big Level and Antrim wind farms, as well as Mass Solar solar projects and a collection of Australian assets. In total, the company owned directly or through economic interests, an aggregate of 2,555 megawatts of gross generating capacity in operation.
Source: Investor Presentation
TransAlta earns a place on the list of top monthly dividend stocks, not just because of its high yield, but also because of its future growth potential. TransAlta stands on the forefront of a major growth theme–renewable energy.
2019 was another year of growth for the company. Full year Comparable EBITDA increased $8 million, to $438 million for 2019, mainly due to the inclusion of a full year of results from the Lakeswind wind farm and the Mass Solar facility. Future growth is likely due to the addition of new projects. For example, TransAlta announced that the Big Level and the Antrim wind farms began commercial operation in December 2019.
The company also has performed well to start 2020, especially given the difficult business conditions due to coronavirus. In the 2020 second quarter, comparable EBITDA of $115 million increased 4% year-over-year. Adjusted funds from operation increased 13%, while cash available for distribution increased 14% on a per-share basis compared with the same quarter last year. Renewable energy production increased 27% for the quarter, in terms of gigawatt hours.
TransAlta pays a monthly dividend of $0.0783 per share in Canadian dollars. In terms of U.S. dollars, the annualized dividend payout of $0.67 per share represents a strong yield of 6.0%. TransAlta is therefore an appealing mix of dividend yield and future growth potential. The dividend appears secure, as the company has a strong financial position.
Monthly Dividend Stock #1: Realty Income (O)
Realty Income is a retail-focused REIT that owns more than 6,500 properties. Realty Income owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties. This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment. Realty Income is a large-cap stock with a market capitalization above $21 billion.
Realty Income leaps to the top spot on the list, because of its highly impressive dividend history, which is unmatched among the other monthly dividend stocks. Realty Income has declared over 600 consecutive monthly dividend payments without interruption, and has increased its dividend 107 times since its initial public offering in 1994. Realty Income is a member of the Dividend Aristocrats.
The company’s long history of dividend payments and increases is due to its high-quality business model and diversified property portfolio.
Source: Investor Presentation
In the 2020 second quarter, AFFO per share increased 4.9% to $0.86 year-over-year. Realty Income collected 86.5% of contractual rent across the total portfolio. AFFO growth was due to a combination of rental increases at existing properties, as well as contributions from new properties.
We currently expect Realty Income to generate adjusted FFO-per-share of $3.50 for 2020. Although this forecast may change given the recent closure of many retail locations across the country, the stock trades for a P/FFO ratio of 18.1 based on this. Our fair value estimate is a P/FFO ratio of 18, which means the stock is fairly valued. Therefore, we do not expect a changing valuation multiple to have a meaningful impact on shareholder returns at the current share price.
Expected FFO-per-share growth of 4.0% and the current dividend yield of 4.5% lead to total expected returns of 8.5% per year over the next five years. Realty Income is the top REIT pick, not just because of a high rate of expected return, but also a uniquely high level of dividend safety among the monthly dividend stocks.
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) | [5/20/20]
- Apple Hospitality REIT (APLE) | [6/17/20]
- ARMOUR Residential REIT (ARR) | [6/19/20]
- Chatham Lodging (CLDT) | [6/15/20]
- Choice Properties REIT (PPRQF) | [7/29/20]
- Chorus Aviation (CHRRF) [6/4/20]
- Cross Timbers Royalty Trust (CRT) | [6/2/20]
- Dream Industrial REIT (DREUF) | [6/24/20]
- Dream Office REIT (DRETF) | [6/30/20]
- Dynex Capital (DX) | [6/24/20]
- Enerplus (ERF) | [5/30/20]
- EPR Properties (EPR) | [5/31/20]
- Exchange Income Corporation (EIFZF)
- Great Elm Capital Corporation (GECC)
- Gladstone Capital Corporation (GLAD) | [8/9/20]
- Gladstone Commercial Corporation (GOOD) | [8/4/20]
- Gladstone Investment Corporation (GAIN) | [5/26/20]
- Gladstone Land Corporation (LAND) | [6/4/20]
- Granite Real Estate Investment Trust (GRP.U) | [6/24/20]
- Harvest Capital Credit Corporation (HCAP)
- Horizon Technology Finance (HRZN)
- Inter Pipeline (IPPLF) | [5/22/20]
- LTC Properties (LTC) | [5/22/20]
- Main Street Capital (MAIN) | [3/29/20]
- Orchid Island Capital (ORC) | [7/3/20]
- Pacific Coast Oil Trust (ROYT) | [10/8/19]
- Pembina Pipeline (PBA) | [5/25/20]
- Pennant Park Floating Rate (PFLT)
- PermRock Royalty Trust (PRT) | [4/22/20]
- Prospect Capital Corporation (PSEC) | [5/12/20]
- Realty Income (O) | [5/20/20]
- Sabine Royalty Trust (SBR) [6/2/20]
- San Juan Basin Royalty Trust (SJT) – [San Juan recently suspended its dividend]
- Shaw Communications (SJR) | [7/31/20]
- Solar Senior Capital (SUNS)
- Stag Industrial (STAG) | [5/20/20]
- Superior Plus (SUUIF) | [5/29/20]
- Transalta Renewables (TRSWF) | [7/1/20]
- Vermilion Energy (VET) | [6/10/20]
- Whitestone REIT (WSR) | [6/28/20]
As we do not have coverage of every monthly dividend stock, they are not all included in the list above. Note that most of these businesses are either small- or mid-cap companies. You will not see any S&P 500 stocks in this list – it is predominantly 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 July 2020
In July 2020, a basket of the 55 monthly dividend stocks above (excluding SJT) generated positive total returns of 1.2%. For comparison, the Russell 2000 ETF (IWM) generated positive total returns of 2.9% 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 eliminated (SJT) or changed (GNL) their dividend to quarterly payments.
Monthly dividend stocks underperformed in July, after outperforming in the previous month. We will update our performance section monthly to track future monthly dividend stock returns.
In July 2020, the 3 best-performing monthly dividend stocks (including dividends) were:
- U.S. Global Investors (GROW), up 76.5%
- Granite Real Estate Investment Trust (GRP.U), up 13.1%
- Shaw Communications (SJR), up 12.3%
The 3 worst-performing monthly dividend stocks (including dividends) in July were:
- PermRock Royalty Trust (PRT), down 26.4%
- Chorus Aviation (CHRRF), down 20.8%
- Capitala Finance Corp. (CPTA), down 16.7%
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.