In this article, we will take a look at some of the best dividend stocks that pay monthly dividends.
Despite common perceptions, 2024 turned out to be a strong year for dividends, even though the Dividend Aristocrats Index underperformed the broader market. Throughout the year, US companies consistently maintained or raised their dividend payouts. In addition, several major tech firms introduced dividends, demonstrating that companies can balance both growth and shareholder returns. By September 30, 2024, around 80% of the companies in the S&P index were paying dividends—a level that has remained relatively stable over the past decade. Notably, the technology sector accounted for nearly 24% of dividend-paying companies, up from 13% a decade ago, while the healthcare and industrial sectors also saw an increase in dividend issuers. This broader adoption of dividends has expanded investment opportunities, allowing equity-income investors to access high-growth and innovative companies. Given these trends, analysts remain optimistic about dividend performance moving into 2025.
Also read: 8 Best Value Dividend Stocks to Invest in According to Warren Buffett
Dividend stocks have long been a popular choice for investors, regardless of how often payouts are distributed. Companies carefully determine their dividend schedules, with annual or semi-annual payments offering larger sums but lacking consistency. While most major firms prefer quarterly payouts for their practicality, some choose monthly distributions, which many investors favor for their steady income stream. Monthly dividends provide immediate cash flow, making financial planning easier and offering a sense of stability, similar to a paycheck. Moreover, a reduction in monthly dividends tends to have a less noticeable short-term impact. However, while companies that pay dividends monthly often offer higher yields, they have historically struggled to maintain consistent payout policies over time.
Dividend stocks have consistently generated strong returns over time, regardless of their payment frequency. Historically, dividends made up about 40% of the market’s total return between 1936 and 2012. However, over the past decade, their contribution dropped to just 16%, according to a research note from BofA Securities published late last year. Looking ahead, Ohsung Kwon, a US equity strategist at BofA Securities, expects dividends to play a larger role in overall returns compared to the previous ten years.
Analysts point out that dividend growth has historically been closely tied to earnings performance. With strong earnings growth in 2024, they expect an even better showing in 2025. Goldman projects an 11% rise in earnings per share this year, up from an estimated 8% last year, which is likely to drive a 7% increase in dividends, compared to a 6% bump in 2024. Meanwhile, Kwon holds an even more bullish view, predicting a 12% jump in dividends this year, driven by accelerating earnings growth.
Analysts reassure investors not to be concerned about the widening gap between dividend stocks and the broader market. Chris O’Keefe, a portfolio manager at Logan Capital Management, views this divergence as an attractive entry point for those looking to invest in dividend stocks. Other analysts echo this sentiment, highlighting a positive outlook for dividend-paying companies. The Dividend Aristocrats Index, which tracks 66 companies with at least 25 years of consecutive dividend growth, has struggled to keep pace with the broader market since 2020. Dividend stocks saw renewed interest in 2022 as fears of a recession led investors toward defensive sectors like utilities and consumer goods. However, the rally was short-lived. By 2023, rising interest rates made bonds and money-market funds more appealing than dividend yields, prompting companies to conserve cash amid economic uncertainty. In 2024, many of the same high-growth stocks that surged during the pandemic have once again driven the market to record levels. That being said, dividend stocks have maintained steady performance over time and continue to be a strong long-term investment option. Given this, we will take a look at some of the best dividend stocks that pay monthly dividends.
Photo by Artem Beliaikin on Unsplash
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 15 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).
15. Gladstone Land Corporation (NASDAQ:LAND)
Number of Hedge Fund Holders: 5
Gladstone Land Corporation (NASDAQ:LAND) is a Virginia-based real estate investment trust company that owns and acquires farmlands and farm-related properties. The stock has struggled over the past year, declining by nearly 25%. This downturn was driven by lower crop prices, which impacted some of the company’s tenants. As a result, the company reclaimed 20 farms, leaving some vacant while taking direct management of others. In addition, it adjusted certain lease agreements, opting for reduced initial rental rates in exchange for a greater share of future crop revenues.
That said, investors may not need to be overly concerned about this issue, as Gladstone Land Corporation (NASDAQ:LAND) expects to resolve it by year-end. The company anticipates stronger revenue in the latter half of 2025, coinciding with the harvest season, which should support continued dividend growth.
Gladstone Land Corporation (NASDAQ:LAND) has maintained a strong track record of rewarding shareholders, having paid 141 consecutive monthly dividends and raising payouts 35 times over the past 39 years. The company currently pays a monthly dividend of $0.0467 per share and has a dividend yield of 5.20%, as of January 29.
Gladstone Land Corporation (NASDAQ:LAND) experienced strong results in the third quarter of 2024, particularly from its annual row crop farms in California and Florida, where both property values and rental income saw an uptick. However, several permanent crop farms in the western regions faced challenges, including declining crop prices, rising input costs, and concerns over water availability. In response, the company introduced a new leasing strategy for some of these farms, offering tenants a cash allowance to help with expenses in exchange for a larger share of the gross crop proceeds. While intended as a short-term measure, this approach is considered the most beneficial for these farms, given their history of strong yields, reliable crop insurance, and improving crop prices.
At the end of Q3 2024, 5 hedge funds tracked by Insider Monkey held stakes in Gladstone Land Corporation (NASDAQ:LAND), compared with 9 in the previous quarter. The consolidated value of these stakes is more than $6.5 billion. Among these hedge funds, Citadel Investment Group was the company’s leading stakeholder in Q3.
14. PennantPark Floating Rate Capital Ltd. (NYSE:PFLT)
Number of Hedge Fund Holders: 7
PennantPark Floating Rate Capital Ltd. (NYSE:PFLT) is an American business development company that provides senior secured first lien notes. On January 3, the company declared a monthly dividend of $0.1025 per share, which was in line with its previous dividend. It is one of the best dividend stocks on our list as the company has been making regular dividend payments since 2011. The stock supports a dividend yield of 11.20%, as of January 29.
A significant portion of PennantPark Floating Rate Capital Ltd. (NYSE:PFLT) loans carry floating interest rates, which aligns with its name. As of September 30, its portfolio totaled $1.98 billion, with around $1.75 billion allocated to first-lien credit across 158 businesses. The remainder of the portfolio comprised other loan types and dividend income from its investment holdings.
In the fourth quarter of 2024, PennantPark Floating Rate Capital Ltd. (NYSE:PFLT) recorded net investment income exceeding $55.5 million, marking a 55.3% increase from the previous year. The company’s investment portfolio approached $2 billion, while net assets surpassed $877 million. It maintained holdings in 158 companies, with an average investment size of $12.6 million and a weighted average yield of 11.5% on debt investments. The portfolio was primarily allocated to first-lien secured debt (88%), with less than 1% in second-lien secured and subordinated debt, and 12% in preferred and common equity. As of September 30, 2024, more than 99% of the investments within PennantPark Senior Secured Loan Fund I LLC (PSSL) were first-lien-secured debt.
As of the close of Q3 2024, 7 hedge funds in Insider Monkey’s database held stakes in PennantPark Floating Rate Capital Ltd. (NYSE:PFLT), compared with 9 in the previous quarter. These stakes are worth over $30.8 million in total. Balyasny Asset Management was the company’s leading stakeholder in Q3.
13. Main Street Capital Corporation (NYSE:MAIN)
Number of Hedge Fund Holders: 7
Main Street Capital Corporation (NYSE:MAIN) ranks thirteenth on our list of the best dividend stocks that pay monthly dividends. The American business development company provides customized debt and equity financing to lower-middle-market companies and debt capital to middle-market companies. In the third quarter of 2024, the company reported a total investment income of $136.8 million, reflecting an 11% increase from the same period last year. The company made investments totaling $51.6 million in its lower middle market (LMM) portfolio, including an $11.2 million investment in a new LMM portfolio company. In addition, Main Street Capital’s cash position remained robust, with cash and cash equivalents rising to $84.4 million by the end of the quarter, up from $60 million at the close of December 2023.
In the past 12 months, Main Street Capital Corporation (NYSE:MAIN) has surged by over 33%, significantly outperforming the broader market. The company demonstrates strong cost efficiency, with an annualized Operating Expenses to Assets Ratio of 1.3%. This ratio, which measures non-interest operating expenses as a percentage of the average total assets for the quarter, remained consistent for both the quarter and the twelve-month period ending September 30, 2024.
Main Street Capital Corporation (NYSE:MAIN) is one of the best dividend stocks on our list as the company has maintained its reputation for paying supplemental dividends to shareholders. In its Q3 earnings report, the company declared a supplemental dividend of $0.30 per share, which marked the company’s thirteenth consecutive quarter of additional dividends, in addition to the eight increases made to its regular monthly dividends since the fourth quarter of 2021. It currently pays a monthly dividend of $0.25 per share and has a dividend yield of 4.95%, as of January 29.
Insider Monkey’s database of Q3 2024 indicated that 7 hedge funds owned stakes in Main Street Capital Corporation (NYSE:MAIN), compared with 8 in the previous quarter. The consolidated value of these stakes is over $21 million.
