10 Ideas for Generating Monthly Dividends

 | Oct 12, 2017 | 4:44 PM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

o

,

amzn

,

epr

,

amc

,

main

,

cldt

,

good

,

gm

,

land

,

evt

,

eto

,

eos

,

SDIV

Although many stocks pay quarterly dividends, a select few issue dividends on a monthly basis. Some investors -- particularly those in retirement -- might prefer an ongoing stream of dividends to more easily manage their bills and living expenses.

We asked eight MoneyShow.com contributors to look at select stocks and funds that offer their shareholders such monthly payouts. Read on (and check out more income-investing ideas at Real Money's sister site, Income Seeker):

Brit Ryle, The Wealth Advisory 

There is only one U.S.-focused bricks-and-mortar retail stock you should own right now -- Realty Income Corp. (O) , which invests mainly in commercial real estate. It's had an occupancy level above 96% for the past 10 years. And it's planning on adding $1.5 billion in new properties to its portfolio. 

Management here is smart. They take advantage of high share prices to sell more shares and drum up cash. They take advantage of low share prices to do buybacks and get some of those new shares off the market. 

And now they're taking advantage of retailers that can't compete with Amazon (AMZN) by buying up their properties at discounted prices. You'd be hard-pressed to find a better management team or a better long-term investment than this one. 

Realty Income is serious about income. Founded to provide investors with rising monthly income, the REIT has paid a dividend every month since coming public in 1994 and has increased the dividend every year since 1996. Today, the REIT yields 4.4%. 

Realty Income owns over 5,000 properties, mostly freestanding commercial buildings leased to non-discretionary retailers like convenience stores, dollar stores and drugstores. 

Because of its strong track record, Realty is one of the largest, most well known and widely held of the monthly dividend payers. The stock has relatively low volatility and is a good choice for any investor looking for monthly income. 

Tim Plaehn, The Dividend Hunter 

EPR Properties (EPR) is a long-term holding; since we first recommended it in 2014, the REIT has generated 18.1% in cash dividend earnings and a 47.3% total return.

EPR Properties owns movie theater complexes, private and charter school properties, and golf and ski recreation facilities. The company is developing a casino and other recreation facilities on a property it owns in New York state's Catskill Mountains. 

Earlier this year, EPR closed the acquisition of CNL Lifestyle Properties. The purchase added 14 mountain ski resorts and 15 other amusement facilities to EPR's holdings. 

EPR operates as a net-lease REIT, with contracted partners operating the facilities and responsible for all expenses. EPR collects payments on long-term leases. 

EPR's largest client, AMC Entertainment Holdings (AMC) reported disappointing second-quarter earnings, and the AMC share price dropped by 25%. 

The AMC troubles caused EPR to drop by 5%. First, I looked at the AMC results and they weren't that bad. Second, EPR is a net-lease REIT so its revenues are secure. 

As a result, the shares of a very high-quality REIT are on sale. EPR yields 5.9% and the dividend will grow by 6% to 8% per year. And EPR is a monthly dividend payer. 

Mark Skousen, Forecasts & Strategies 

Main Street Capital (MAIN) , a Houston-based business-development company, seeks to partner with entrepreneurs, business owners and management teams. 

Main Street generally provides "one-stop" financing alternatives within its lower-middle-market portfolio (revenues between $10 million and $150 million). Profit margins are in excess of 86%, and both revenues and earnings are growing by double-digit percentages. 

I couldn't be happier with the performance; the stock is up 12% this year, and it has just raised its monthly dividend to 19 cents per share. 

If its business model continues to be successful, it's an ideal investment for those who want monthly income for the rest of their lives -- and to pass on the investment to their heirs. In short, Main Street Capital is a money machine. 

Main Street Capital not only pays monthly dividends, but it is the only publicly traded stock (of the 3,800 currently listed on U.S. exchanges) that pays a monthly dividend plus an additional bonus dividend every six months. 

About 8% of the firm's book value is invested in companies with headquarters or operations in Houston. 

It is too early to tell, but MAIN's special dividend, to be paid in December, could be less than expected. However, I don't expect the monthly dividend to be affected. 

John Dobosz, Forbes Dividend Investor 

Chatham Lodging Trust (CLDT) is a real estate investment trust that is growing its dividend at a double-digit pace. Founded in 2009, the West Palm Beach, Fla.-based REIT invests in upscale, extended-stay hotels and premium-branded, select-service hotels. 

Chatham Lodging owns interests in 133 hotels totaling 18,210 rooms and suites, with 38 wholly owned properties that have 5,712 rooms and suites in 15 states and the District of Columbia. It also has minority stakes in two joint ventures that own 95 hotels with 12,498 rooms. 

Funds from operations have grown at a 66.9% compound annual rate over the past five years, but dipped 3.5% last year. Dividends have grown 13.2% a year over the past five years, and rose 8.3% in 2016. 

Chatham's strong value characteristics (discounts to average historical valuation multiples) make it a compelling buy. The company pays its dividends monthly, offering a current yield of 6.33%. 

Chloe Lutts Jensen, Cabot Dividend Investor 

Monthly dividend stocks are rare, but investors like them for a reason. If you're retired, stocks that pay dividends monthly are a perfect source of regular income you can use to pay bills, rent or buy groceries. Non-retirees also find monthly dividends attractive because they compound faster:

Gladstone Commercial (GOOD) is a REIT that primarily owns office and industrial properties. The company owns 94 properties, and its biggest tenant is General Motors (GM) . It has been public since 2003 and has paid monthly dividends since 2005. 

The dividend is very reliable -- it has held steady at 13 cents per month since 2008. At the current price, Gladstone Commercial yields a generous 6.9%. 

Revenues have increased in each of the last five years, so a dividend increase could be in the future soon. And the stock managed to hit new all-time highs earlier this year, so the future looks bright. 

Gladstone Land  (LAND) is also a REIT. This one, as you might suppose from its symbol, owns and leases farmland. The REIT offers better dividend growth than its commercial sibling; it has already increased its dividend three times in the last 12 months and has paid dividends every month since coming public in 2013. 

The REIT declined for most of 2014 and 2015, but started a new uptrend early in 2016, and is now near 52-week highs after gapping up in August. At the current price, it yields 3.8%. Investors who want diversified real estate exposure can consider adding some Gladstone Land to their portfolios. 

Igor Greenwald, Investing Daily's Income Millionaire 

The Eaton Vance Tax-Advantaged Dividend Income Fund (EVT) is a closed-end fund that invests primarily in blue-chip, dividend-paying U.S. stocks. 

Like many closed-end funds, EVT juices its dividend income and capital gains with a bit of leverage, in its case amounting to 22% of the portfolio's $1.6 billion in net assets. 

EVT pays a regular monthly distribution of 14.5 cents per share, which works out to $1.74 annualized, or 8.1% of the current price. That price is 3% below net asset value. Net asset value increased 11.6% last year and is up 4.5% so far in 2017. The expense ratio is 1.47%, which includes 0.29% in borrowing costs. 

The Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO) is very similar, except that it applies its 26% of leverage to a more diverse set of investments, including a 32% allocation to foreign stocks, and roughly 20% divvied up among preferreds and corporate bonds, investment grade as well as high yield. 

ETO's regular monthly distribution of 18 cents per share adds up to $2.16 annualized, or 9% of the current share price. 

The share price is now marginally above the net asset value. NAV is up 11% year to date while the share price has jumped 18%. The expense ratio is 1.71%, including 0.39% in interest expense. 

Bryan Perry, Cash Machine 

My quest to position our model portfolio heavily in many high-yield assets that pay out monthly has led me to recommend the Eaton Vance Enhanced Equity Income Fund II (EOS)

This closed-end fund with a market cap of $723 million seeks current income with capital appreciation through investment in large and mid-cap common stocks and through using a covered call and options strategy.

The fund is trading at a slight discount to net asset value and sports a current yield of 7% without the use of any leverage.

Heading into the teeth of October, when the markets can trade in an increasingly jittery manner, I find it best to maintain exposure to high-profile institutional favorite stocks that will benefit from broader market volatility.

Looking at the portfolio holdings in Eaton Vance Enhanced Equity, the top 10 positions are like the starting lineup of a Super Bowl championship team that make up about 42% of the entire portfolio. The shares have returned 21.4% year to date, right in line with the 20.7% year-to-date return for the Nasdaq.

Let's put EOS in our conservative high-yield portfolio and let the seasonal volatility of the markets work to our favor in the form of a monthly check. Buy under $15.50. 

Nicholas Vardy, The Global Guru 

U.S. investors often point to currency risk as the reason for avoiding foreign income investments. But there are ways to invest in foreign income investments without exposing yourself to currency risks:

Global X SuperDividend ETF (SDIV) tracks the Solactive Global SuperDividend Index, an equally weighted index consisting of 100 equally weighted companies that rank among the highest-dividend-yielding equity securities in the world. 

Remember that "global" doesn't mean international. SDIV has about one-half of its investments in U.S. stocks. As U.S. dollar-based investments, you are not taking in any currency risk in this section of the portfolio. 

The remainder is invested in high-dividend-yielding companies in Europe, Australia, Asia, Canada and Latin America. In terms of sectors, it's no surprise that SDIV focuses on financial services and consumer cyclicals, which together make up about 60% of its portfolio. 

SDIV yields an impressive 6.77%, pays dividends monthly and charges a fee of 0.58% annually. SDIV has generated a total return of 5.61% year to date. 

(MoneyShow is a global financial-media company, operating the world's leading investment and trading conferences. Each show brings together thousands of investors to attend workshops, presentations and seminars given by the nation's top financial experts. The company also offers exclusive seminars-at-sea, with the investment industry's leading partners. In addition, MoneyShow operates the award-winning multimedia online community MoneyShow.com and publishes free investing and trading newsletters, which provide individual investors and active traders with exclusive ongoing access to the latest investment and trading ideas from the nation's most respected and trusted financial experts.)

Columnist Conversations

View Chart »  View in New Window » BA chart I'm STALKING this one for a buy trigger........
View Chart »  View in New Window »   WEEKLY
BABA is still dancing on key weekly support here.  Wait for a trigger! View Chart »  Vi...
BABA is still dancing on key weekly support here.  Wait for a trigger! View Chart »  Vi...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

COLUMNIST TWEETS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.