10 Best Monthly Dividend Stocks With 5+% Yield

Using our data, we have compiled a list of the 10 best monthly dividend stocks with 5+% yield. In fact, there are just over 30 companies that pay monthly dividends. Generally companies pay quarterly dividends, with some paying annual or even biannual dividends. Paying quarterly dividends doesn’t require companies to keep an eye on their cash flow every month, but rather issue dividends alongside their regularly-scheduled financial reports. On the other hand, for companies that pay monthly dividends, such an arrangement is easier, mainly because it is aligned with their business.

Most companies that pay monthly dividends are real estate investment trusts, which conduct their operations (collect rent, mortgage payments, etc.) on a month-by-month basis. Investing in stocks that pay monthly dividends is a simple way to generate cash flow for people who rely on their portfolios for income, such as retirees. In addition, more frequent dividend payouts allows investors to compound their returns more frequently, which results in better returns over the long-run. However, monthly dividend stocks also carry some risks that should not be overlooked.

Since the majority of companies that pay their dividends each month are REITs and MLPs, they also have very high yields, because all or most of their income is paid out as dividends. On the one hand this is a good thing, because monthly dividend payouts suggests that management is shareholder-friendly and is confident that cash flow is strong enough to sustain the dividends.

However, if things go wrong (and the odds of that happening can be high) and the company either skips out on paying monthly dividends or reduces its payments, it suggests trouble ahead and should be interpreted as a major red flag. For example, in recent years, we have witnessed the closure of many malls, which led to the bankruptcy of many mall operator REITs. Currently, as the Fed is increasing interest rates, REITs will face higher borrowing costs, which can also lead to lower profits and smaller dividends.

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In some cases though, a sell-off prompted by changes in a company’s dividend-paying practices can create a good entry point, especially since the company’s issues are temporary. The recent drop in oil prices led to the sell-off of most energy companies, including many MLPs. This led to higher dividend yields for MLPs. However, many MLPs continued to pay dividends, despite registering losses. This creates a good opportunity for investors, because MLPs are likely to either find funds to cover their payouts until the oil market gets stronger, or will restructure their operations until they become profitable again, which could increase the value of the stock itself.

Now, even though there aren’t many companies that pay monthly dividends, we can narrow down the search further and see what the most popular stocks among hedge funds are. This is where our data is useful. We track over 670 hedge funds and analyze their quarterly filings to identify the stocks that they are collectively the most bullish on. We then use the data to identify stocks that are included in our investment strategy, which we share with our premium subscribers. Our strategy has returned over 45% since February 2016.

Without any further ado, let’s take a closer look at the 10 best monthly dividend stocks with 5+% yield.

10. Main Street Capital Corporation (NYSE:MAIN)

Main Street Capital Corporation (NYSE:MAIN) provides customized debt and equity financing to lower middle market companies. The investment company pays a monthly dividend of $0.19 per share, which gives it a forward yield of 5.5%. The payout ratio of Main Street Capital Corporation (NYSE:MAIN) currently stands at 86%. In Main Street Capital Corporation (NYSE:MAIN), nine funds from our database held shares at the end of the first quarter, down by one compared to three months earlier. At the same time, the total value of their holdings declined to $13.82 million from $16.73 million.

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9. Apple Hospitality REIT Inc (NYSE:APLE)

There were nine funds holding shares of Apple Hospitality REIT Inc (NYSE:APLE) on March 31, with a total value of $38.02 million, compared to 12 funds with stakes worth $50 million a quarter earlier. Apple Hospitality REIT Inc (NYSE:APLE) invests in lodging properties in the U.S and currently has over 230 hotels across 33 states. It pays a monthly dividend of $0.10 per share, which gives the stock a yield of 6.6%. However, it should be mentioned that Apple Hospitality REIT Inc (NYSE:APLE)’s payout ratio is at 170%, which means that the company is paying out in dividends much more than it earns. It suggests that the company could be forced to reduce its dividend, although its payments have been consistent over the last couple of years.

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8. Stag Industrial Inc (NYSE:STAG)

Stag Industrial Inc (NYSE:STAG) is a $2.43 billion REIT which owns industrial properties. The company has been paying a monthly dividend of $0.12 per share since the middle of 2015, which gives its stock a yield of 5.11%. However, in 2013 the dividend was cut from $0.30 to $0.10. For the first quarter, Stag Industrial Inc (NYSE:STAG) posted FFO of $0.41 per share (in line with the consensus estimate), which results in a payout ratio of around 86%. During the first three months of 2017, the number of investors tracked by us that were bullish on Stag Industrial Inc (NYSE:STAG) declined by two to ten, while the aggregate value of their positions fell to $81.49 million from $125.39 million.

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7. Prospect Capital Corporation (NASDAQ:PSEC)

In Prospect Capital Corporation (NASDAQ:PSEC), 11 investors in our database held long positions worth $26.11 million heading into the second quarter, up from nine funds and $18.85 million, respectively, a quarter earlier. Its stock has a high yield of 12%, based on the $0.08 dividend that Prospect Capital Corporation (NASDAQ:PSEC) pays out every month. Prospect Capital Corporation (NASDAQ:PSEC) is a financial services company that is engaged in investing and lending to middle-market, privately-held companies. For its fiscal third quarter, it reported net investment income of $0.20 per share and distributions of $0.25, which results in a payout ratio of over 120%.

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6. Vermilion Energy Inc (NYSE:VET)

In Vermilion Energy Inc (NYSE:VET), the number of funds with long positions inched up by one to 12, while the total worth of their holdings appreciated to $17.85 million from $15.58 million. Vermilion Energy Inc (NYSE:VET) is an energy company whose stock has slid by over 30% since the beginning of the year. In turn, this has boosted its dividend yield to 6.50%, based on its monthly dividend of $0.22 per share. Vermilion Energy Inc (NYSE:VET) has maintained the same dividend since 2014, having been undeterred by the decline in oil prices, unlike many of its peers.

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5. Chatham Lodging Trust (NYSE:CLDT)

Next in line on our list of the 10 best monthly dividend stocks with 5+% yield, is another lodging REIT, Chatham Lodging Trust (NYSE:CLDT), which owns upscale and premium-branded hotels. Its portfolio currently includes 38 hotels with over 5,700 rooms. The company pays a dividend of $0.11 per share, which was raised from $0.10 in 2015, which itself was also significantly higher than the $0.07 it paid in 2013. The current dividend gives Chatham Lodging Trust (NYSE:CLDT)’s stock a yield of 6.40%. For the first quarter of 2017, Chatham Lodging Trust (NYSE:CLDT) posted FFO of $0.47 per share, beating estimates by $0.02. While the number of funds bullish on Chatham Lodging Trust (NYSE:CLDT) (among those tracked by Insider Monkey) increased by two to 13 during the first quarter, the value of their positions fell by 16% to $92.22 million.

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4. AGNC Investment Corp (NASDAQ:AGNC)

During the first three months of 2017, the number of investors from our database long AGNC Investment Corp (NASDAQ:AGNC) dropped by six to 13 and, subsequently, the aggregate value of their holdings slid to $50.21 million from $143.71 million. AGNC Investment Corp (NASDAQ:AGNC), a mortgage REIT, currently pays a monthly dividend of $0.18 per share, though that was cut from $0.20 last year. Nevertheless, its stock has a dividend yield of over 10%. However, AGNC Investment Corp (NASDAQ:AGNC) has reported strong FFO for the last three quarters and has a payout ratio of 53%, so a dividend hike might be on the horizon.

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3. Pembina Pipeline Corp (NYSE:PBA)

Pembina Pipeline Corp (NYSE:PBA) is a Canadian provider of energy transportation, owning pipelines and facilities that deliver crude oil and natural gas liquids in Alberta, Saskatchewan, and North Dakota. In April, the company hiked its monthly dividend by 6.25% to $0.17 per share. In this way, Pembina Pipeline Corp (NYSE:PBA)’s stock currently sports a dividend yield of almost 5%. There were 14 funds in our database holding $47.51 million worth of Pembina Pipeline Corp (NYSE:PBA) shares at the end of March, up from ten investors with positions valued at $31.74 million a quarter earlier.

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2. Realty Income Corp (NYSE:O)

The number of funds bullish on Realty Income Corp (NYSE:O) declined by three to 14 during the first quarter, but the total value of their holdings inched up by 2% to $199.78 million. Realty Income Corp (NYSE:O) is an REIT that owns a portfolio of over 4,900 properties located in 49 states and Puerto Rico. In January, it increased its dividend to $0.21 per share and inched it up by another 0.2% in June. This gives Realty Income Corp (NYSE:O)’s stock a yield of slightly below 5%. It’s also worth pointing out that Realty Income Corp (NYSE:O) has a track record of dividend growth, although at different rates (for example, in 2013 it hiked its dividend by over 20%).

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1. EPR Properties (NYSE:EPR)

EPR Properties (NYSE:EPR) is a commercial REIT that owns entertainment, recreational and educational properties. Since 2013, the company has been increasing its monthly dividend every year and is currently paying $0.34 per share, versus $0.32 last year and $0.26 in 2013. EPR Properties (NYSE:EPR)’s stock currently sports a yield of 5.70% and has appreciated by over 66% over the last five years. Even though the total value of the EPR Properties (NYSE:EPR) shares held by the investors in our database advanced by 16% to $113.55 million between January and March, the number of those investors long the stock fell to 17 from 19. Nevertheless it still ranks on top of our list of the 10 best monthly dividend stocks with 5+% yield, based on its popularity among the investors we track.

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