While not as exciting as hot tech stocks or as glamorous as high-end funds, monthly dividend stocks are a key component of any good financial portfolio. Investors looking for solid and reliable monthly income rely on these steady earners while building their wealth. This article takes a deep look at some of the best performing monthly dividend stocks on the market today, giving you the inside track towards financial prosperity. Aimed at readers who are looking to retire by the time they reach the age of 37, our rundown of the best monthly dividend stocks of 2018 can help you achieve your financial goals.
What Are Monthly Dividend Stocks?
Monthly dividend stocks are a sub-category of dividend stocks. Dividends are simply the share of the company profits that the company decided to pass onto its shareholders. While conventional stocks can pay out dividends to their shareholders, many publicly traded companies don’t. Dividend stocks are those stocks that have a history of making payouts to their shareholders. They are usually large, established companies with good cash flow, which is to say: good investments. Monthly dividend stocks are those that make their dividend payments every month instead of once a year. This makes them particularly suited for producing regular income in your investment portfolio.
The Best Stocks That Pay Monthly Dividends
There are a number of important aspects that we’ve considered when putting together this list of top monthly dividend stocks. Many of the same valuations that are important when judging regular stocks, such as the Price-to-Earning ratio also apply to finding the best monthly dividend stocks. Some measures, such as Earnings Per Share, are even more important. Also important to consider are the company’s future prospects, history of growth, and the general situation in the market segment. Here is our list of five best monthly dividend stocks according to all of those criteria.
5. Realty Income Corp
Realty Income Corporation is a real estate investment trust that owns rental properties all over the United States. It offers buyers a very respectable yield of over 5%, which is a fairly good return on a monthly dividend stock. It owns a large and diversified portfolio of commercial real estate that makes it fairly resistant to market downturns, making it a solid investment. A few things keep it from a place higher in our best monthly dividend stocks ranking though. It has a relatively high price-to-earnings ratio at 47.69, which suggests that it might be somewhat overpriced for its value. It has also paid out a higher dividend last month than its earnings-per-share, which may not be sustainable for the company in the long term unless the market improves.
- Market Cap: $14.94 billion
- Average Volume: 2,001,144
- Dividend and Yield: $2.63 (5.23%)
- P/E Ratio: 47.69
4. Gladstone Commercial Corporation
The Gladstone Commercial Corporation is also a REIT, though it focuses on a more narrow portfolio of small and medium-sized businesses than Realty Income. It earns a spot among out best monthly dividend stocks through its very high yield – over 7%! Those are pretty good returns for any stock, much less a monthly dividend one. That said, there are some concerns that hold it back from being an immediate buy. It has posted losses on the books recently, which is somewhat concerning. Its lower trading volume and market capitalization also make it a more volatile type of investment than many of the other top dividend stocks. It certainly deserves a spot in any dividend stock portfolio, but it is a position that should be hedged in the long run.
- Market Cap: $513.979 million
- Average Volume: 3,204
- Dividend and Yield: $1.88 (7.17%)
- Earnings-per-share: -$0.19
3. Shaw Communications Inc.
Shaw Communications is an interesting pick for our best monthly dividend stocks list for a few reasons. This Canadian telecommunications provider has actually experienced a big drop in share price since the start of the year. However, it still retains a healthy customer base and good revenues. It has posted slightly higher dividends in recent months than its earnings-per-share, but the two values still remain mostly in lockstep with each other. This generally suggests that Shaw stock is likely to be on its way up in the near future, making it a good choice for investors who are looking to both earn dividends and see some appreciation in their portfolio. When it comes to earning a dividend, this stock is a little below the other stocks that we rank among the best monthly dividend stocks, with a yield of only 4.5% which keeps it from ending up higher in the rankings.
- Market Cap: $9.994 billion
- Average Volume: 757,129
- Dividend and Yield: $0.95 (4.51%)
- Earnings-per-share: $0.92:
2. Pembina Pipeline Corporation
The Pembina Pipeline Corp is another Canadian firm on the list, though it also operates facilities in North Dakota. While not involved in oil drilling itself, it does transport and process both oil and natural gas, and is naturally affected by the price of that commodity. It has been a monthly dividend stock since 2012, but has posted poor returns in those early years due to low oil prices. As oil has ticked up over the last few months and years, so has the value and the dividends offered by Pembina. At 5%, its yield is fairly average among this list of best monthly dividend stocks, but it is likely to rise substantially if the current oil price trends hold, earning it the number two spot in our listing.
- Market Cap: $17.344 billion
- Average Volume: 633,795
- Dividend and Yield: $1.68 (5.34%)
- Change in Oil Price over the Last Month: 7.21%:
1. Gladstone Investment Corporation
Our choice for the best monthly dividend stock is the Gladstone Investment Corporation. Unlike its commercial counterpart, this company deals primarily in buying and recapitalizing other companies. This stock has everything that you would want in your dividend-bearing portfolio. It offers high yields of 7%, earnings-per-share at nearly twice the dividend payouts, and a relatively low price-to-earnings ratio. All of these point to the company being significantly undervalued currently, and due for some growth in price. There is also room for dividends to grow in the future as well, making this a good long-term investment in addition to a good monthly dividend stock.
- Market Cap: $362.67 million
- Average Volume: 155,081
- Dividend and Yield: $0.80 (7.07%)
- Price-to-earnings ratio: 8.26
Just like with regular stocks, it is important to invest in companies with healthy fundamentals and a strong potential for growth when it comes to choosing the best monthly dividend stock. The Gladstone Investment Corporation has all the hallmarks of a company poised to grow, from good price ratios to high rates of return and plenty of capital to spare as it grows. Over the rest of the year, this is likely to be the monthly dividend stock that everyone will want in their portfolio. Which dividend stocks are you planning on investing in? Let us know below!