In this article, we will discuss 11 best dividend stocks that pay monthly dividends.
Dividend stocks have long been a favorite among investors, regardless of the payout frequency. Companies, however, are deliberate in determining how often to reward their shareholders. Annual and semi-annual dividends might provide larger payouts, but their unpredictability can be challenging for investors. While major firms opt for quarterly payouts due to practicality, some choose monthly distributions, which many investors find attractive for the steady stream of passive income. In addition, a reduction in monthly payouts would have a smaller immediate impact, and receiving dividends monthly is one of the closest alternatives to a regular paycheck, simplifying the management of day-to-day finances. That said, history suggests that companies offering monthly dividends often boast higher yields but may lack consistent dividend policies.
Regardless of market conditions, dividend stocks can be a useful tool for enhancing income and boosting portfolio growth potential. For instance, investors who are years away from retirement often reinvest their dividends to increase returns. According to an estimate by Charles Schwab, a hypothetical $10,000 investment in a broader market at the end of 1993 would have grown to over $182,000 by the end of 2023 if dividends were reinvested, compared to only $102,000 if they had not been reinvested.
Also read: 10 Biggest Dividend Cuts and Suspensions of 2024
This means that investors looking to reduce their risk while still maintaining growth potential may want to consider high-quality dividend-paying companies. This approach is favored by Ramona Persaud, manager of Fidelity Equity-Income Fund and Fidelity Global Equity Income Fund. She tends to focus on shares of high-quality firms that offer attractive valuations and strong dividends. Persaud pointed out that falling interest rates can create a favorable environment for dividend stocks, as their yields become more appealing compared to declining bond yields. She also mentioned that lower interest rates may lead to gains across a wider range of stocks, a shift from the past two years when market gains were largely driven by a few large-cap growth stocks. Here are some other comments from the analyst:
“I’m excited that really good companies may get more credit from investors than they have during the wave of glamour stocks. And investors stand to gain from the stocks’ dividend payments.”
Persaud prioritizes stocks with strong balance sheets, high potential returns on investment, and predictable cash flows. Additionally, she seeks out stocks with attractive dividend yields relative to similar companies and the broader market. Monthly dividend stocks also focus on high dividend yields, which can be a key draw. While high yields may sometimes indicate the possibility of dividend cuts or weaker balance sheets, many monthly dividend companies have been increasing their payouts for years and also maintain solid financial health. However, investors should exercise caution when investing in these stocks.
High dividend yields are not inherently negative. Stocks with high yields can still uphold strong dividend policies if their business fundamentals are solid. Many companies with above-average yields have consistently paid and even increased their dividends over time. Research indicated that, in the long run, these stocks often provide superior returns. For instance, a University of Nevada study found that portfolios consisting of the top 10 highest dividend yield stocks from the Dow 30 index outperformed those with medium and low dividend yields between 1987 and 2012. The study also highlighted that investing in high dividend yield stocks can be profitable over the long term, despite potential short-term fluctuations in returns. In view of this, we will take a look at some of the best dividend stocks that pay monthly dividends.
Our Methodology:
For this list, we reviewed a list of companies providing monthly dividends to their shareholders. Among these, we specifically chose businesses with robust dividend practices, consistently maintaining their payouts across multiple years. The majority of these selected companies operate within the Real Estate Investment Trust (REIT) sector, as they are required to allocate 90% of their income towards dividends. From that list, we picked 11 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q3 2024 database of 900 hedge funds and their holdings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
11. Gladstone Land Corporation (NASDAQ:LAND)
Number of Hedge Fund Holders: 5
Gladstone Land Corporation (NASDAQ:LAND) is an American real estate investment trust company that owns and acquires farmlands and farm-related properties. Over the past year, the company faced challenges stemming from lower crop prices, which impacted some of its tenants. As a result, it had to reclaim 20 farms, either leaving them vacant or taking over their operations directly. In addition, the company renegotiated certain leases, agreeing to lower initial rental rates in exchange for a greater share of future crop revenue. In the past year, the stock has declined by nearly 28%.
However, Gladstone Land Corporation (NASDAQ:LAND) anticipates resolving these issues by the year-end and expects higher revenue in the latter half of 2025, coinciding with the harvest season. This improvement should support the REIT’s ability to sustain its dividend growth moving forward.
In the third quarter of 2024, Gladstone Land Corporation (NASDAQ:LAND)’s annual row crop farms in California and Florida continued to perform well, demonstrating both value appreciation and rent growth. However, many permanent crop farms in the western regions have faced challenges due to declining crop prices, rising input costs, and concerns about water availability. In response, the company has adopted a different leasing strategy for some of these farms. Under this approach, tenants receive a cash allowance to help offset their costs in exchange for the company receiving a larger share of the gross crop proceeds. While intended as a temporary measure, this arrangement is seen as the most profitable option for these particular farms, given their history of high yields, strong crop insurance, and an upward trend in crop prices.
Gladstone Land Corporation (NASDAQ:LAND) reported revenue of $22.5 million in the third quarter of 2024, which fell by over 4% from the same period last year. However, the revenue beat analysts’ estimates by $1.14 million. It is one of the best dividend stocks as the company has paid consecutive 141 monthly dividends to shareholders. In addition, it has increased its payouts 35 times over the past 39 quarters. Currently, it pays a monthly dividend of $0.0467 per share and has a dividend yield of 5.27%, as of December 28.
At the end of Q3 2024, 5 hedge funds tracked by Insider Monkey held stakes in Gladstone Land Corporation (NASDAQ:LAND), down from 9 in the previous quarter. These stakes have a total value of more than $6.5 million.
10. Main Street Capital Corporation (NYSE:MAIN)
Number of Hedge Fund Holders: 7
Main Street Capital Corporation (NYSE:MAIN) is an American business development company, headquartered in Texas. The company provides customized debt and equity financing to lower-middle-market companies and debt capital to middle-market companies. It holds a top spot in cost efficiency, boasting an Operating Expenses to Assets Ratio of 1.3% on an annualized basis. This metric, which reflects total non-interest operating expenses as a percentage of quarterly average total assets, was consistent for both the quarter and the trailing twelve-month period ending September 30, 2024. The stock has delivered strong returns in 2024, surging by over 32% in the past 12 months.
In the third quarter of 2024, Main Street Capital Corporation (NYSE:MAIN) reported a total investment income of $136.8 million, which showed an 11% growth from the same period last year. The company finalized $51.6 million in total investments within its lower middle market (LMM) portfolio, which included an $11.2 million investment in a newly added LMM portfolio company. Its cash position also remained strong. The company ended the quarter with $84.4 million available in cash and cash equivalents, up from $60 million at the end of December 2023.
Main Street Capital Corporation (NYSE:MAIN) is a solid dividend payer as the company has a history of paying supplemental dividends over the years. On November 7, the company declared a 2% hike in its monthly dividend to $0.25 per share. In addition, it also announced an additional dividend of $0.30 per share. This was the company’s 13th consecutive quarter of paying supplemental dividends to shareholders, which makes MAIN one of the best dividend stocks that pay monthly dividends. As of December 28, the stock has a dividend yield of 5.18%.
As of the end of Q3 2024, 7 hedge funds tracked by Insider Monkey held stakes in Main Street Capital Corporation (NYSE:MAIN), compared with 8 in the previous quarter. These stakes are worth over $21 million in total. Among these hedge funds, Balyasny Asset Management was the company’s leading stakeholder in Q3.
9. LTC Properties Inc. (NYSE:LTC)
Number of Hedge Fund Holders: 13
LTC Properties Inc. (NYSE:LTC) is a California-based real estate investment trust company that invests in senior housing and healthcare facilities through sale-leasebacks. According to analysts, the company appears well-positioned for growth, as the aging US population is expected to sustain strong demand for its services. Management predicts that approximately 4.1 million Americans will reach the age of 65 each year until 2027, with the population aged 85 and older potentially climbing to 11 million by 2035. In the past 12 months, the stock has surged by over 5%.
In the third quarter of 2024, LTC Properties Inc. (NYSE:LTC) reported revenue of $55.7 million, which saw a 13% growth from the same period last year. The company’s revenue grew due to income from previously transitioned portfolios, increased income from loan originations, construction loan funding during 2024, and higher rental income, though partially offset by reduced revenue from property sales. As disclosed earlier, the company committed $26.1 million for a mortgage loan to finance the construction of a 116-unit senior living community in Illinois, covering independent living, assisted living, and memory care. The borrower has already contributed $12.3 million in equity to start construction, which is expected to be fully utilized by early 2025, at which point LTC will begin funding its loan commitment.
LTC Properties Inc. (NYSE:LTC) had a solid quarter from a cash point of view. At the end of September, it had over $35 million available in cash and cash equivalents, growing from $20.2 million at the end of 2023. This cash position has allowed the company to pay regular monthly dividends to shareholders since 2005. Before that, it had quarterly payouts dating back to 1992. Currently, it offers a monthly dividend of $0.19 per share and has a dividend yield of 6.62%, as of December 28.
LTC Properties Inc. (NYSE:LTC) was a part of 13 hedge fund portfolios at the end of Q3 2024, up from 12 in the preceding quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of more than $75 million. Among these funds, Balyasny Asset Management was the company’s leading stakeholder in Q3.