Best Monthly Dividend Stocks For 2021

Are you looking for Stocks Paying Monthly Dividends? Our Listing Cover 34 Stocks Paying the Highest Monthly Dividends, Plus Dividend Payout Ratio

Are you looking for Stocks Paying Monthly Dividends? Our report covers 34 companies with a dividend yield between 1% and 13.8%. We also list the sector, market capitalization, and the consecutive years of dividend increases.

Note: Liberated Stock Trader is in no way affiliated, paid by, or owns any stock in any of the companies mentioned in this report.  This is an unbiased research report.

Monthly Dividend Stocks List for 2021

TickerCompanySectorDividend YieldMarket Cap ($M)Payout RatioDividend Growth Years
ORCOrchid Island CapitalReal Estate13.80%$4802087.50%0
ARRARMOUR Residential REITReal Estate10.00%$7840
PSECProspect CapitalFinancial Services9.90%$2,80761.00%0
PFLTPennantPark Floating RateFinancial Services9.60%$458129.60%0
AGNCAGNC InvestmentReal Estate9.00%$8,6260
DXDynex CapReal Estate8.40%$50222.80%0
MCRMFS Charter IncomeFinancial Services8.20%$374146.80%
GLADGladstone CapitalFinancial Services8.10%$313265.00%0
GOODGladstone CommercialReal Estate8.10%$6801746.30%1
BRMKBroadmark Realty CapitalReal Estate8.10%$1,3801
MMTMFS Multimarket ITFinancial Services8.00%$370
EFCEllington FinancialFinancial Services7.70%$6830
PBAPembina PipelineEnergy7.30%$19,088154.70%9
GAINGladstone InvestmentFinancial Services7.10%$39110+
MAINMain Street CapitalFinancial Services6.90%$2,3650
BKTBlackrock Income TrustFinancial Services6.80%$388107.20%
SBRSabine RoyaltyEnergy5.80%$49699.50%0
LTCLTC PropertiesReal Estate5.50%$1,62594.60%0
SLGSL Green RealtyReal Estate5.40%$4,621113.00%0
SJRShaw CommunicationsCommunication Services5.30%$11,45689.80%0
OIAInvesco Muni Income OppsFinancial Services4.90%$36935.70%
AVALGrupo Aval AccionesFinancial Services4.90%$6,90056.30%0
BKNBlackrock InvestmentFinancial Services4.80%$292
STAGStag IndustrialReal Estate4.60%$5,046109.10%9
ORealty IncomeReal Estate4.60%$22,909243.60%10+
WSRWhitestoneReal Estate4.60%$401156.50%0
GRP.UGranite REITReal Estate4.10%$4,53745.20%6
ADCAgree RealtyReal Estate3.80%$4,121136.70%8
LANDGladstone LandReal Estate2.90%$4456
ERFEnerplusEnergy1.90%$1,3970
GWRSGlobal Water ResourcesUtilities1.70%$493577.90%4
ITUBItau Unibanco HoldingFinancial Services1.20%$45,88346.50%0
BBDBank BradescoFinancial Services1.00%$37,74138.70%0
LANDMGladstone Land (Preferred)Real Estate1.00%$445

 

Be Careful When Buying High Dividend Stocks

It is easy to think that buying a stock with a high dividend yield is the key to making easy money.  But you need to pay attention to the dividend payout ratio. We calculate the payout ratio by dividing the total dividends paid by the Net Income.  A payout ratio above 100% would indicate that a company cannot continue paying dividends at this level because they are not earning enough profit to cover the dividend payment.

It is generally a good rule of thumb to go for companies with a payout ratio under 100%.  The lower the payout ratio, the better.

Also, you need to pay attention to Market Capitalization; if the company is too small or does not have enough liquidity, it may be difficult to sell the stock in the future.

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What Stocks Pay Monthly Dividends

Usually, investors searching for dividend stocks follow an “income strategy,” which means they seek to generate a steady income from their investments rather than a big capital gain through appreciation of the stock price.

WHEN you get paid in an income investment strategy is almost as important as how much you get paid. Income strategies are usually about creating a cash stream to face specific financial targets. This implies that each investor must build his own portfolio in accordance with their timely needs in a way that dividends are paid WHEN needed.

However, some investors have other goals when buying dividend-paying stocks and are actually more interested in reinvesting the dividends received. Even then, dividend frequency plays a big role. The purpose of reinvesting is to take advantage of compounding.

In other words, they build a larger position which yields a larger dividend that is reinvested again in making the position even larger. This cycle can grow your returns exponentially, and that growth is as fast as the dividends are reinvested.

Does this mean dividends paid more frequently are better than those paid less frequently?

Related Articles: Finding Great Stocks With Stock Rover

Why Do Companies Pay Monthly Dividends?

From the company’s perspective, it seems unfavorable to pay monthly dividends, so why do some companies choose to pay so frequently?

If a dividend in itself is a commitment, a monthly dividend is an even bigger commitment, one that attracts investors. Nowadays, companies and funds are more aware than ever of investors’ preferences and do their best to meet them.

Also, some businesses like Real Estate Investment Trusts (REITs) receive their income on a monthly basis (e.g., rents), so it makes sense they also distribute it monthly.

Advantages & Disadvantages of Monthly Dividends

The increased frequency of monthly dividends is desirable for several reasons:

  • Easier to Manage
  • Faster Compounding with Monthly Payouts
  • Less Volatility around Ex-dividend Date
  • Fairness
  • Incremented expenses
  • Financial Constraints
  • Diversification

Easier to Manage

As previously mentioned, income strategies can require some management to make dividend payments meet specific expenses. It can be difficult to meet recurring expenses with a quarterly or biannual dividend since many of those amounts are due on a shorter period basis.

Of course, income investors can build a portfolio that pays dividends every month by choosing stocks that reward shareholders in alternate months. Nevertheless, that is more difficult and can be more expensive (transaction costs) than choosing monthly dividend-paying investments.

Faster Compounding with Monthly Payouts

Whether to meet specific financial needs or to take advantage of the compounding, monthly payments can still have the upper hand against less-frequent payments. The more frequent the dividend, the faster it is reinvested; this means your monthly income increases faster. Obviously, the difference is small because each reinvestment amounts to 1/12 of the yearly dividend, but over a long period (decades), it turns into a sizeable amount.

Less volatility around the ex-dividend date

There is a date after which investors that buy the stock aren’t entitled to receive the next dividend; instead, they have to wait for the following payment.  That date is called the “ex-dividend date.”

Imagine a company that pays an annual dividend of 5%. It’s easy to understand there will be many people trying to get the stock right before the ex-dividend date in hopes of getting 5% out of their investment without having to wait the whole year and being exposed to share price volatility. In the same way, there will be a lot of people closing their position after they get their payment.

The larger the dividend yield, the larger the price swings around the ex-dividend date.  When the dividend is spread throughout the year, each payment is smaller, translating into less volatility around these dates.

Fairness

An income investment strategy isn’t intended to be a short-term strategy. Still, every once in a while, it’s healthy to reevaluate the portfolio, close some positions, and open new ones.

When the time comes, it can be frustrating having to wait for a dividend that’s distributed once or twice a year. Picture the situation where an investor sells the stock one or two months before the ex-dividend date, and the dividend is distributed once a year. This investor might have held the stock for ten or eleven months, and he still doesn’t get a cent in dividends. This will happen to a lesser degree to more frequent dividend payments.

However attractive, monthly dividends also imply some inconveniences:

Incremented expenses

Some companies mention increased costs for processing dividend payments which makes it more attractive for companies to pay dividends less often. If that’s the case, monthly payments can cost roughly 12 times as much as processing a single annual dividend. Could stocks have a higher dividend yield if they paid annual dividends?

Financial constraints

To pay monthly dividends, a company needs to have a very disciplined financial execution. If its cash flow is exposed to some seasonality, the company may require external funds to pay dividends which could otherwise fund itself, provided it had some more time.

Diversification

The business that makes monthly dividend-payments on stocks needs to be very stable – and even then, most companies are paying quarterly dividends – it can be a challenge to find the right investments, especially if you want to diversify.

[Related Article: The Best Stock Screeners To Find Dividend & Value Stocks]

Highest Paying Monthly Dividend Stocks 2021

TickerCompanySectorDividend YieldMarket Cap ($M)Consecutive Div. Growth Years
ORCOrchid Island CapitalReal Estate13.80%$4800
ARRARMOUR Residential REITReal Estate10.00%$7840
PSECProspect CapitalFinancial Services9.90%$2,8070
PFLTPennantPark Floating RateFinancial Services9.60%$4580
AGNCAGNC InvestmentReal Estate9.00%$8,6260
DXDynex CapReal Estate8.40%$5020
MCRMFS Charter IncomeFinancial Services8.20%$374
GLADGladstone CapitalFinancial Services8.10%$3130
GOODGladstone CommercialReal Estate8.10%$6801
BRMKBroadmark Realty CapitalReal Estate8.10%$1,3801
MMTMFS Multimarket ITFinancial Services8.00%$370

[Related Article: Best Financial & News Services For Traders]

Further Reading

Learn more about dividend investing and read out expert tips on dividend strategies.

Related Articles: Finding Great Stocks With Stock Rover


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Note: We Hold No Positions in any of these stocks, nor do we have any business or personal relationship with any of the companies mentioned – this is a completely unbiased report for educational purposes and is not a recommendation to buy or sell any stock referenced.

Vasco Ferreira graduated in Business Administration in 2009 and since then has been passionate about stock markets. He’s been investing and writing about it since then. He interned at an investment Bank during his Master in Finance, worked in a major consulting firm and in one of the largest national retail enterprises. Now he fully dedicates his time to personal projects which include writing stock market articles and analysis.

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