Monthly dividends certainly are a nice form of cash flow. When looking at these kinds of investments, it's important to bear in mind that there can be more risk involved, as well as the fact that capital appreciation might be difficult for many of them to attain.
Entities like Real Estate Investment Trusts (REITs) dish out monthly payments, but their structure leads them to not retaining much capital. Below is a list of a few monthly dividend names that span from risky endeavors to relatively stable exchange-traded funds. I would caution you that most of these types of investments struggle to keep up with the broader market in terms of share price appreciation. These are things you want to invest in if you're simply chasing strong dividend yields with more frequent payments.
15 Best Monthly Dividend Stocks
1. Vanguard Total Market Bond ETF (BND)
A fixed-income-focused ETF, BND offers a 2.76% dividend yield, with a very low-risk focus on investment-grade fixed-income securities in the U.S. This includes government, corporate and international bonds, as well as mortgage-backed securities. This ETF tries to track the performance of the Bloomberg Barclay's United States aggregate float-adjusted index. In layman's terms, Vanguard Total Market Bond ETF is an investment in diversified bond markets. Over the past year, the shares have had much less volatility than the S&P 500. However, the fixed-income-focused fund trails the broader market over time. I'm not a fan of making bond funds too big a piece of a portfolio, but it is a fixed-income instrument with a monthly dividend.
2. AGNC Investment Corp. (AGNC)
Quarter to quarter, AGNC Investment Corp. AGNC doesn't always produce consistency on the earnings front. But annually, the company has produced fair net income over the last five years. I consider it a far more risky venture than some of the other names I've included on this list, but that's the price you pay for a whopping 11.25% dividend yield. A real estate investment trust focused on mortgages, AGNC makes most of its investments in involvement with Fannie Mae and Freddie Mac, so there are some protections on their principal and interest payments. I would never suggest this become a large piece of the portfolio, simply like the stock itself does not perform well against the broader market, and there are inconsistencies in their earnings trends. But if you are after a high-yielding monthly payout, AGNC offers it.
3. Global Net Lease Inc (GNL)
There are a lot of REITs in the monthly payout game and Global Net Lease GNL is a small-cap play offering a 10.71% dividend yield. Investing in commercial properties in the U.S., United Kingdom, and over broader Europe, GNL seeks leases to single tenants, on properties it acquires in commercial areas. The bulk of its properties are in the U.S., and total revenue has been expanding quickly over the past five years. The balance sheet is solid, and GNL's revenues have expanded quickly. The problem here is net income. Like many REITs, it's rather inconsistent, therefore making the stock rather expensive compared to earnings. When looking at the stock relative to its balance sheet, it's a more appealing story. Market capital of $1.6 billion is not too extreme concerning the $1.42 billion in total equity it had at the end of the most recent quarter.
4. LTC Properties Inc (LTC)
Another REIT, LTC Properties LTC offers a 4.8% dividend yield and finished 2018 with its highest net income in five years. With continued profitability, positive cash flow (usually), and lots of equity on the books, LTC seems likely to continue its expansion within senior housing and healthcare facilities. The shares are cheap relative to earnings, and it makes for a nice monthly payday right now.
5. Main Street Capital Corp. (MAIN)
Primarily focused on providing financing to middle-market companies, Main Street Capital MAIN has a 5.9% dividend and has succeeded in driving its revenue streams over the last five years. The company is very profitable, and is in an interesting space, as an investment arm in an area of the market where companies aren't quite large enough for raising capital through the use of the stock market, and or they don't want to.
6. Realty Income Corp. (O)
When it comes to monthly dividends, REITs rule the day. Realty Income Corp. O invests its capital in commercial properties for single-tenant leasing. The thing I like about Realty Income Corporation is its consistency. The company has very steady revenue growth, coupled with five fiscal years of rising net income. It's slow growth, and this REIT does not keep up with the S&P 500, but that's kind of one of the drawbacks of buying a stock like this. The nature of a REIT leads them to put their capital into growing assets and distributing 90% of their income in dividends. Because of that, they don't necessarily have the maneuverability of more traditional names. With a 3.74% yield and a balance sheet that has ever-improving equity, Realty Income seems like a nice play for a monthly dividend.
7. Shaw Communications Inc. (SJR)
Getting away from real estate, Shaw Communications SJR is a Canadian telecommunications firm. This industry isn't going away. If anything, it's becoming ever more prevalent in our daily lives (for better or worse). Considered a midcap play, SJR is offering a 4.64% dividend with the fundamentals to keep it going. While revenues have been a bit stagnant, and operating income was a bit slimmer last year, I think SJR seems like a good play so long as they can successfully increase their wireless segment, as that is definitely where the cable is going.
8. BlackRock Limited Duration Income (BLW)
BlackRock Limited Duration Income Trust is a diversified, closed-end management investment company. It's pretty nice to have 6.2% yields. BlackRock's BLW is a closed-end investment company that invests in various classes of bonds, mortgage-related securities, U.S. Government securities, etc. You're not going to get much out of this fund outside of that dividend, as the shares themselves don't do very much.
9. Gladstone Investment Corp. (GAIN)
With a 7.08% dividend yield, Gladstone GAIN is similar in structure to BLW. The management investment company invests in debt securities in what the company views as stable businesses. It also chases capital appreciation through investment inequities. By all accounts, earnings are volatile, but the company remains profitable, with an overall trajectory in the right direction through the last two years. I like the company's annual trends in terms of operating income, net income, and revenue growth. I don't like the volatile nature of cash flow quarter to quarter, but Gladstone is an entity more concerned with growing itself. Equity remains stable, and they seem to do a good job of keeping debt at reasonable levels.
10. Vanguard Long-Term Bond Index Fund ETF (BLV)
Considered high risk for its class, BLV invests in U.S. government, investment-grade corporate, as well as international dollar-denominated bonds, with long term 10+ year maturity dates. Since inception, BLV has averaged about 7.03% market return per year. It pays a dividend yield of 3.34%.
11. Wisdom Tree U.S. High Dividend Fund (DHS)
Another low-risk fund that produces a nice dividend yield of 3.5%, the WisdomTree U.S. High Dividend Fund DHS is a strong play on large value. Tracking the WisdomTree U.S. High Dividend Index, DHS owns equities like AT&T T, Exxon Mobil XOM, Verizon VZ, Coca-Cola KO, and Chevron CVX. The fund has trailed the S&P 500 over the last two and half years, but you're not exactly getting into these types of dividend names if your goal is simply to outperform the market. You buy something like DHS if you're seeking something that can keep relative pace while hedging risk and collecting a nice monthly dividend.
12. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
The SPHD fund chases the returns of the S&P 500 Low Volatility High Dividend Index. In summation, they invest in low-risk dividend plays on the S&P 500. The fund holds names like Ford F, Altria Group MO, IBM IBM, General Mills GIS, and AT&T. The fund offers a 4.26% dividend, and the shares manage to perform relatively close to the S&P 500. If you want to essentially track the market, while collecting monthly payouts, I like SPHD a lot.
13. Invesco Preferred ETF (PGX)
Blending average risk with average returns, the Invesco Preferred ETF PGX tracks a fixed-rate preferred stock index. 97.62% of the fund's holdings reside in the corporate sector. 91.69% of the fund is invested in preferred shares. These investments include positions in PNC Financial Services PNC, Citigroup C, JP Morgan JPM, and Bank of America BAC (yes, there are a lot of banks involved). Offering a solid 5.46% dividend yield, PGX is a great play if you want monthly returns.
14. AAM S&P 500 High Dividend Value ETF (SPDV)
With a 4.43% dividend yield, SPDV attempts to follow the performance of the S&P 500 Div. and FCF yield index. The fund invests in equities within the S&P 500 that offer high dividend yields in a stable form. Think Campbell Soup CPB, General Mills, or Delta Airlines DAL. A relatively young fund, SPDV had tracked the S&P 500 rather well until the start of 2019. Nonetheless, it has an excellent monthly dividend.
15. Proshares S&P 500 Dividend Aristocrats ETF (NOBL)
Essentially a monthly return from exposure to the market's top dividend names, the ProShares S&P 500 Dividend Aristocrats ETF NOBL invests its capital in names like Proctor and Gamble PG, AT&T, and Sherwin Williams SHW. This is a low-risk play and does not create some of the high returns noted by other names on this list. At an annual dividend yield of 2%, you're not going to be making a huge killing in yields, but you have a low-risk monthly payout. Furthermore, the fund tends to produce market returns that slightly trail the S&P 500, therefore, you're essentially gaining a low-risk exposure to tracking the market.
Again, you should pay attention to the different dynamics that tend to occur within these types of plays. The ability to appreciate capital is very different in corporate structures that require a large percentage of distributions of their income. Furthermore, high yielding dividends carry a lot of uncertainty. If they were easy to maintain, everyone would do it.