No matter if you are getting into investing or are looking to diversify your portfolio, you’ve likely discovered that the process can be overwhelming. In the United States alone, there are nearly 4,000 publicly-traded companies. That’s not to mention the almost 15,000 stocks that are traded in the United States, even though major exchanges do not list them.
When determining which companies to invest in, there are numerous criteria that you need to consider. One of those criteria should be whether they have stocks that pay monthly dividends. Dividends can be beneficial for multiple reasons. If you are looking to invest in new shares, our picks of stocks that pay monthly dividends should be able to help.
Why You Should Invest in Dividend Stocks
When you invest in a stock, you are typically investing in the value of a company. So, when you purchase a stock, you are indicating what you feel the company’s value is worth. Although you can assume the stock’s worth as part of your net worth, you don’t receive anything from the stock until you sell the stock.
Dividend stocks are a unique caveat to this. If you invest in stocks that pay monthly dividends, the company who you’ve invested in will pay you a portion of their earnings. The board of directors determines the amount that paid to shareholders. The more money you have in these stocks, the higher your payout will be. There are multiple ways a company can issue dividends, including as:
- Cash Payments
- Additional Shares of Stock
- Other Property or Capital
When investing in dividend stocks, you likely focus on either collecting stocks with fast-growing dividends or stocks that pay a high-dividend yield. Stocks that pay monthly dividends can be used to produce a passive portfolio income stream.
Investing in stocks that pay monthly dividends can be a particularly beneficial strategy for new investors. Research has shown that stocks that pay monthly dividends out-perform the average stock over long periods of time. For this reason, they should be considered an integral part of any investment portfolio.
One of the biggest reasons dividend stocks out-perform the average stock is because they still provide support during bear markets and market crashes. The company will continue to pay dividends even if their stock price is declining. This is an attractive feature for many investors, which could encourage others to invest in the company when they otherwise wouldn’t have, providing support for the stock.
Additionally, those who collect dividends in a down market end up acquiring more shares than those who do not. Over time, the market will stabilize. Dividend investors will see their additional shares increase in value, helping to raise the overall net worth of their portfolio.
Stocks that pay dividends are better for patient investors and not those day-traders or others who are active in their portfolio management. Over time, dividend investors become more focused on their dividend payouts and not the quoted price of the stock. To see the maximum benefits of a dividend stock, you need to accumulate dividends over an extended period.
Dividends can also be attractive to retirees because of the income stream they provide. A one-time expense, or the cost of purchasing the stock, can provide regular income. This benefit could be attractive to retirees because it can help them cover their living expenses without having to touch their original investment. Dividend rates of returns are often higher than bond or certificate of deposit rates.
The Top Four Best Stocks That Pay Monthly Dividends: Quick Comparison Table
NAME OF stocks | Our Rating | Monthly Payout | Details |
|---|---|---|---|
Gladstone Commercial Corporation | $1.5 | ||
Pembina Pipeline Corporation | $1.46 | ||
Shaw Communications Inc | $.89 | ||
Realty Income Corp | $2.39 |
How We Chose Our Ratings
There’s no way around it – your investment portfolio has a considerable bearing on your future. We kept this in mind throughout the entire process of analyzing stocks that pay monthly dividends. We also considered the fact that many interested in dividend stocks are looking to stabilize a volatile portfolio, or are just getting started in the investment process. Being able to choose the correct capital is crucial.
We did not receive anything in exchange for our recommendations. Instead, our ratings are based strictly on objective factors. We considered a stock’s growth and its dividend payout. We also examined the health and reputation of a company to provide safer stocks that could help mitigate your risk.
Do you have a favorite dividend stock that you don’t see listed? We encourage you to comment and share! We are always looking to keep our list up to date, and we may make changes in the future if companies change their payout structure or if we find another company who offers even better dividends.
But perhaps most importantly, we encourage discussion among those in our community. We appreciate your input because we enjoy fostering conversations between our many followers. We’re confident that between the recommendations that we provided and those offered by others, you’ll be able to find dividend stocks that fit your investment strategy.
Top Four Best Stocks That Pay Monthly Dividends
Among dividend stocks, stocks that pay monthly dividends are rarer than stocks that pay quarterly dividends. No matter if you’re looking for a way to grow your portfolio or are looking for a passive income stream to help cover the bills, adding these stocks that pay monthly dividends to your portfolio could be very beneficial.
We should also mention that some of the stocks listed below are real estate investment funds. The entire real estate industry has been struggling of late, with many shares losing nearly a quarter of their value over the past year. However, monthly dividend stocks can help stabilize some of these crashes. You would be getting in at a buy-low opportunity while still being paid residual income.
Experts have predicted that these funds will again improve over the coming years, with many expected to return to beating the market within the next five years. Real estate investments could also be worthwhile from a dividends perspective because they are not taking away from much of their growth earnings by issuing the dividends.
Full Review: Top Four Best Stocks That Pay Monthly Dividends
Gladstone Commercial Corporation
Gladstone Commercial Corporation (GOODO) is a real estate investment trust that focuses on leasing commercial properties. The company has paid monthly dividends for over a decade. They had demonstrated stable distributions until the financial crisis in 2008 but have recovered since then. Their monthly payouts have been steady at $1.5 a month since 2012.
At the time of publication, their stock price was $25.75. The company has seen revenue growth over the past four years, and their income levels have been consistent with revenue levels. Their market cap is currently $487.233 million.
STOCKs | Monthly Payout | Our Rating |
|---|---|---|
NYSE: GOODO | $1.5 |
Pros
Cons
Pembina Pipeline Corporation
Pembina Pipeline Corporation (PBA) is a producer of petroleum and natural gas that has been in existence since 1954. Although the company had paid dividends before, they shifted to a monthly payout structure beginning in April 2012. The company suffered when oil prices collapsed in 2012, but like Gladstone Commercial, they too have recovered and shown steady improvement lately.
The company’s current monthly dividend payout is $1.46. Even with the collapse of oil, the company still managed to grow its dividend over the past five years. At the time of publication, their stock price was $32.35. Investing experts have identified Pembina as an excellent potential stock for long-term growth as well. Their market cap is currently $14.998 billion.
STOCKs | Monthly Payout | Our Rating |
|---|---|---|
NYSE: PBA | $1.46 |
Pros
Cons
Shaw Communications Inc
Shaw Communications (SJR) is one of Canada’s largest diversified communications companies. The company has been operating for more than five decades but did not begin granting dividends until 2005. Since then, they have been able to grow their dividend each year.
The company’s currently monthly dividend payout is $.89. AT the time of this publication, their stock price was about $21. Shaw has a market cap of $9.565 billion. Some investors have indicated that there is room for stock price appreciation with this price.
STOCKs | Monthly Payout | Our Rating |
|---|---|---|
NYSE: SJR | $.89 |
Pros
Cons
Realty Income Corp
Operating since 1970, Realty Income Corp (O) is another commercial real estate investment trust fund that pays monthly dividends. This company focuses their efforts on freestanding retail and on rental-income properties that are under long-term agreements.
One of the most attractive aspects of this stock is how steady dividend growth has been. Although they have not gained Dividend Aristocrat status, they have been consistently growing their dividend payout rates for more than two decades. In fact, the company has made monthly dividend payouts for more than 563 consecutive months.
The company's current monthly dividend is $2.39 per month. Additionally, the company has seen consecutive quarterly increases for 82 periods. Their current stock price is $49.44, and their market cap is $14.93 billion.
STOCKs | Monthly Payout | Our Rating |
|---|---|---|
NYSE: O | $2.39 |
Pros
Cons
Buyer’s Guide
When you are determining which dividend stocks you should invest in, there are a few criteria on which to focus. We do not recommend spending on a whim, but instead doing your research before purchasing the stock. To find the right dividend stocks for you, consider a few of these criteria.
Age of the Company
A company often does not begin to pay dividends until they have become well-established. Younger companies tend not to pay dividends because they would prefer to reinvest their capital into their business operations instead of their investors. That’s not to say that they one day won’t begin paying dividends, but it may not be in their best interest to do so right now.
That’s not to say that younger companies can’t issue dividends. But if a relatively new company is paying profits instead of investing in further growth, this could be cause for concern. It may not necessarily be a deal-breaker, but you should do more research before purchasing their stock. We recommend focusing on established companies whose growth rate has slowed.
Dividend Yield
Many investors fall into the trap of looking at the total amount of dividends produced each month, but you’d be better off looking at the dividend yield. This means that you’d be better off looking at the payout percentage rather than the total amount paid out.
For example, imagine company A pays out $10 on a $100 share. Their dividend yield is 10%. Then, imagine company B that pays out $5 on a $20 stock price. Their dividend yield is 25%. Although you are receiving less up-front, you will likely see more income in the long run. Since you plan on holding dividend stocks for a while, you may be better off investing in the stock with the higher dividend yield.
Please also note that the above was just an example and that many companies don’t offer double-digit dividend yields. Dividend yields typically range between 2% to 5%. But, the overlying principals remain the same in that you may want to focus your efforts on stocks that offer higher percentage yields.
Consistency is Key
When investing in dividend stocks, you want to see stable, consistent growth. Keep an eye out for companies that have been able to keep their payout ratios below 100% while still being able to continue to grow their earnings. Companies that fall into this category should still be able to raise their dividends consistently over time.
Ideally, you would be able to invest in companies that are considered Dividend Aristocrats. These companies are members of the S&P 500 who have been able to raise their dividends for at least 25 years in a row. Dividend Aristocrats have outperformed the S&P 500 Index in the last:
- One-Year Period
- Three-Year Period
- Five-Year Period
- 10-Year Period
There are only 50 companies on this exclusive list, including Coca-Cola, Pepsi, AT&T, and Colgate-Palmolive.
Consistency is particularly important when considering stocks that pay monthly dividends. Some companies declare monthly dividends do so as a way to attract new investors. These companies may not be healthy and could be looking to drive up the value of their stock. Remember that all investing carries risk and that if it seems too good to be true, it probably is.
Instead of trying to catch onto the next “latest and greatest” investment, you should invest focus on companies who have a consistent track record of making monthly dividend payments. These companies should also be able to demonstrate sustainable revenue and income growth.
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