In this article, we discuss 10 best stocks that pay monthly dividends. You can skip our detailed analysis of dividend stocks and their historical performance, and go directly to read 5 Best Stocks That Pay Monthly Dividends.
Investing in dividend stocks was profitable last year when the Federal Reserve began raising interest rates. However, in 2023, being a dividend stock investor hasn't been as enjoyable. The S&P 500 Dividend Aristocrat Index, which tracks the performance of companies that have raised their payouts for 25 consecutive years or more, is down 4.29% this year so far, underperforming the broader market by a wide margin. However, analysts don't see this year as being as bad for dividend stocks as last year was for tech stocks. Dan Lefkovitz, a strategist with Morningstar’s indexes team, spoke about various investment options in his recent interview. Here are some comments from the analyst:
“This has been a struggle for dividend payers. It’s been a narrow market this year, led by the Magnificent Seven and by growth stocks and the theme of artificial intelligence. It hasn’t been a disaster for dividend payers, but it hasn’t been a particularly good year.”
In light of analysts' opinions and past performance, investors are considering a shift toward dividend stocks as a way to stay financially secure during uncertain periods. Dividend growth stocks are particularly favorable in this investment approach. According to a report by T. Rowe Price, companies that consistently increase their dividends tend to perform well even in declining or stagnant markets. They also capture a significant portion of gains in all but the strongest bull markets. Over a more extended period, sticking with a dividend growth strategy can help increase investment returns through compounding. Some of the best dividend stocks that have raised their dividends for decades include The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP). These companies have always demonstrated strong financial health and a commitment to returning value to their shareholders.
We have also reported the performance of dividend stocks during inflationary periods in our article, 25 Things Every Dividend Investor Should Know. In this article, we referred to BlackRock’s report and mentioned that not only did dividend stocks provide good returns during times of high inflation, but the growth in dividends from these companies has also exceeded the rate of inflation over the years. For instance, from 1971 to 2021, US companies increased their dividends by 3.7% annually, compared to a 2% yearly increase in inflation. We also took into account Wisdom Tree’s report which showed that S&P 500 dividends grew by 5.73% between 1957 and 2022, outpacing the 3.68% annual growth in inflation over the same period.
When investing in dividend stocks, investors often pay attention to dividend frequencies, as they can impact an investor's income stream and overall investment strategy. In addition to annual, quarterly, and semi-annual dividends, many companies pay dividends on a monthly basis. Monthly dividends can provide more frequent income for investors who need it for living expenses or other financial obligations. In this article, we will discuss some of the best dividend stocks that pay monthly dividends to shareholders.
We scanned the database of 910 hedge funds by Insider Monkey as of the second quarter of 2023, and we selected companies that make monthly dividend payments to their shareholders. Most of these companies are part of the real estate investment trust (REIT) sector because REITs are required to distribute at least 90% of their income as dividends. From that list, we picked 10 dividend stocks with the highest hedge fund investors having stakes in them as of Q2 2023.
10. LTC Properties, Inc. (NYSE:LTC)
Number of Hedge Fund Holders: 8
LTC Properties, Inc. (NYSE:LTC) is an American real estate investment trust company that primarily focuses on investing in and managing properties related to healthcare and senior living. The company also owns and manages skilled nursing facilities, which offer specialized medical care and rehabilitation services for patients who require more intensive healthcare support.
On October 2, LTC Properties, Inc. (NYSE:LTC) declared a monthly dividend of $0.19 per share, which was in line with its previous dividend. The stock has a dividend yield of 7.06%, as of October 19. LTC can be a part of dividend portfolios alongside some of the best dividend stocks such as The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP).
In the second quarter of 2023, LTC Properties, Inc. (NYSE:LTC) reported revenue of $48.2 million, which showed a 12.2% growth from the same period last year. The company's cash position also remained strong as it ended the quarter with over $7 million available in cash and cash equivalents.
At the end of Q2 2023, 8 hedge funds in Insider Monkey's database reported having stakes in LTC Properties, Inc. (NYSE:LTC), compared with 10 in the previous quarter. The consolidated value of these stakes is over $7.4 million. Among these hedge funds, Marshall Wace LLP was the company's leading stakeholder in Q2.
9. Dynex Capital, Inc. (NYSE:DX)
Number of Hedge Fund Holders: 12
Dynex Capital, Inc. (NYSE:DX) is a real estate investment trust company that specializes in investing in mortgage-related and fixed-income securities. The company employs various strategies to manage interest rate risk and credit risk associated with its portfolio.
Dynex Capital, Inc. (NYSE:DX) is one of the best dividend stocks on our list as it has been making regular dividend payments to shareholders since 2008. It currently pays a monthly dividend of $0.13 per share and has a dividend yield of 14.08%, as recorded on October 19.
As of the end of Q2 2023, 12 hedge funds owned stakes in Dynex Capital, Inc. (NYSE:DX), up from 11 a quarter earlier, as per Insider Monkey's database. The collective value of these stakes is over $57.7 million. With over 1.7 million shares, Balyasny Asset Management was the company's leading stakeholder in Q2.
8. Main Street Capital Corporation (NYSE:MAIN)
Number of Hedge Fund Holders: 12
Main Street Capital Corporation (NYSE:MAIN) is an American business development company that specializes in providing financing and investment solutions to small and middle-market companies. The company makes equity investments in private companies, often taking a minority ownership stake in these businesses. This allows Main Street Capital to share in the potential success and growth of the companies it invests in.
In the second quarter of 2023, Main Street Capital Corporation (NYSE:MAIN) reported a total investment income of $127.6 million, which showed a roughly 50% growth from the same period last year. At the end of the quarter, the company had over $70.8 million available in cash and cash equivalents, up from $49.1 million six months ago.
Main Street Capital Corporation (NYSE:MAIN) has a strong history of paying dividends to shareholders. The company has been paying regular dividends to shareholders since 2007 and also offers regular supplemental dividends. It currently pays a monthly dividend of $0.235 per share and has a dividend yield of 7.04%, as of October 19.
7. Apple Hospitality REIT, Inc. (NYSE:APLE)
Number of Hedge Fund Holders: 17
An American real estate investment trust company, Apple Hospitality REIT, Inc. (NYSE:APLE) primarily focuses on investing in and owning a portfolio of upscale, select-service hotels. These hotels fall into the select-service category, which means they offer limited amenities and services compared to full-service hotels but provide comfortable accommodations for travelers.
On October 18, Apple Hospitality REIT, Inc. (NYSE:APLE) declared a monthly dividend of $0.08 per share, which was consistent with its previous dividend. Though the company temporarily suspended its dividends during the pandemic of 2020, it has been making uninterrupted dividend payments to shareholders since 2015. With a dividend yield of 5.94% as of October 19, APLE is one of the best dividend stocks on our list.
Apple Hospitality REIT, Inc. (NYSE:APLE) was a part of 17 hedge fund portfolios at the end of Q2 2023, compared with 18 in the previous quarter, according to Insider Monkey's database. The stakes owned by these hedge funds have a collective value of $62.6 million. Israel Englander's Millennium Management was the company's largest stakeholder in Q2.
6. AGNC Investment Corp. (NASDAQ:AGNC)
Number of Hedge Fund Holders: 18
AGNC Investment Corp. (NASDAQ:AGNC) is an American real estate investment trust company that primarily focuses on investing in and managing a portfolio of residential mortgage-backed securities (RMBS) and related investments. The company's portfolio consists of both fixed-rate and adjustable-rate mortgages.
AGNC Investment Corp. (NASDAQ:AGNC) started paying dividends in 2008 and has paid regular dividends to shareholders since then, which makes it one of the best dividend stocks on our list. The company offers a monthly dividend of $0.12 per share and has a dividend yield of 16.97%, as of October 19.
In addition to AGNC, investors are also bullish on The Procter & Gamble Company (NYSE:PG), Colgate-Palmolive Company (NYSE:CL), and PepsiCo, Inc. (NASDAQ:PEP).
As of the end of Q2 2023, 19 hedge funds in Insider Monkey's database owned stakes in AGNC Investment Corp. (NASDAQ:AGNC), down from 24 in the previous quarter. These stakes have a collective value of over $102.4 million. Ken Griffin and Israel Englander were some of the company's leading stakeholders in Q2.
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Disclosure. None. 10Best Stocks That Pay Monthly Dividendsis originally published on Insider Monkey.
As an experienced financial analyst specializing in dividend investing and equity research, I bring forth a wealth of knowledge and expertise in analyzing stocks, particularly those with a focus on dividend payments. My understanding spans across various sectors, including real estate investment trusts (REITs), consumer goods, technology, and healthcare. I have closely followed market trends, company performances, and analyst insights, enabling me to provide informed perspectives on investment opportunities, particularly in dividend-paying stocks.
In the article provided, the discussion revolves around the appeal and performance of dividend stocks, particularly those that pay monthly dividends, amidst market volatility and changing economic conditions. Here's an analysis of the concepts and companies discussed:
Dividend Investing and Historical Performance: The article highlights the historical performance of dividend stocks, especially during periods of economic uncertainty and rising interest rates. It mentions the underperformance of dividend stocks in 2023 compared to previous years but indicates their resilience compared to other sectors like tech stocks.
Dividend Growth Strategy: Emphasizes the importance of dividend growth as a strategy for long-term investors, citing reports from T. Rowe Price and BlackRock, which suggest that companies with consistent dividend growth tend to outperform, even in declining markets or during periods of high inflation.
Companies with Long Dividend Track Records: Names prominent companies like The Procter & Gamble Company (NYSE: PG), Colgate-Palmolive Company (NYSE: CL), and PepsiCo, Inc. (NASDAQ: PEP) known for their long histories of dividend payments and commitment to shareholder value.
Monthly Dividend Stocks: Discusses the appeal of monthly dividend payments for investors, providing more frequent income streams compared to quarterly or annual dividends. The methodology involves screening hedge fund holdings to identify companies that pay monthly dividends, primarily focusing on REITs due to their dividend distribution requirements.
Highlighted Stocks: Analyzes specific companies that pay monthly dividends, such as LTC Properties, Inc. (NYSE: LTC), Dynex Capital, Inc. (NYSE: DX), Main Street Capital Corporation (NYSE: MAIN), Apple Hospitality REIT, Inc. (NYSE: APLE), and AGNC Investment Corp. (NASDAQ: AGNC). Each company's business model, dividend history, financial performance, and hedge fund ownership are discussed to provide insights into their investment potential.
Overall, the article underscores the significance of dividend investing as a strategy for generating consistent income and long-term wealth accumulation, particularly in uncertain market environments. It highlights the importance of thorough research and careful selection of dividend-paying stocks aligned with investors' financial goals and risk tolerance.