Quarterly Dividends Are Nice, But These 3 Investments Will Pay You Monthly: Vanguard Natural Resources, LLC (VNR) and More

The company is another good play for those who think natural gas is headed higher, especially since it is a royalty trust. As a royalty trust, there is no CEO or board, and although it is traded on the market like a stock, it is technically a “unit of interest” and the dividends are thus “royalty income”– which is taxed at marginal rates. Being almost directly tied to the commodity it holds interest in, San Juan Basin is more of a financing vehicle that was designed as a way to distribute and pass on profits to unitholders. The company currently yields around 3.5% and pays out monthly.

Conclusion

The above mentioned “stocks” or “units” may be riskier than the traditional high-yielding blue-chip, and can also lead to more complex taxes (as things such as MLPs and royalty trusts are taxed differently than a traditional stock); but they also provide high yield that is paid out monthly. While they can provide a good stream of income, these payments can also swing and fluctuate dramatically. The biggest culprit of this in the group is San Juan Basin, where Vanguard Natural Resources and Realty Income Corp (NYSE:O). seem to have more stable (and even increasing) payouts.

If an investor is reinvesting distributions, these “stocks” or “units” can be risky. They do, however, have the potential to compound significantly quicker than a stock that pays out dividends quarterly. Just take into account the added tax complications and/or risk, especially with reality trusts– whose payouts are determined exclusively by the price of the commodity they are tied to. All three companies in their varied forms can make great candidates for those who are a little more risk-tolerant than the average conservative investor and are searching for faster-than-normal compounding yield.

All financial data and company profiles obtained from Yahoo Finance

The article Quarterly Dividends Are Nice, But These 3 Investments Will Pay You Monthly originally appeared on Fool.com and is written by Joseph Harry.

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