For income investors, there’s nothing better than getting a notification about your quarterly dividend check deposited into your account. So why not invest in monthly dividend stocks and get that same great feeling more frequently?
I like investing in monthly dividend stocks because the steady cash flow allows you to accumulate wealth quicker. Through the power of compounding interest, you can reinvest your returns quickly because you’re getting paid more than once a quarter, and you can have more control over your investment strategy.
And for investors who use dividends for living expenses, monthly dividend stocks are ideal because the payout schedule aligns with regular expenses like mortgage payments, tax bills, utilities and groceries. The payout schedule from monthly dividend stocks can help you reduce your financial stress.
And there’s also an overlooked benefit – monthly dividend stocks can have some psychological effects as well. Every time you get your cash, it’s a reinforcement that you’re on the right path and your investment strategy is paying off.
We’ll use the Portfolio Grader today to check in on some of the best monthly dividend stocks in the market. By achieving “A” and “B” ratings in the Portfolio Grader, these names are proven winners and ideal selections for anyone looking to add monthly dividend stocks to their holdings.
Modiv Industrial (MDV)
Modiv Industrial (NYSE:MDV) is a real estate investment trust, which are ideal choices for monthly dividend stocks, As a REIT, Modiv issues at least 90% of its taxable income back to investors in the form of dividends.
There are various types of REITs – housing, manufacturing, health care facilities are just a few. Modiv is a manufacturing REIT, with ownership of over 40 properties in 16 states.
Modiv bought more than $214 million in industrial assets in 2023, and plans to continue buying this year. Earnings for the first quarter included $11.9 million in rental income, up $1.6 million from a year ago.
MDV stock is up just 1% this year, but its strong 8.3% dividend yield is enticing. Modiv gets a “B” rating in the Portfolio Grader.
PennantPark Floating Rate Capital (PFLT)
PennantPark Floating Rate Capital (NYSE:PFLT) is a business development company, or BDC, that invests in middle-market companies with first-lien debt. Those types of liens are attractive because the debts are guaranteed with collateral.
Business development companies often serve as monthly dividend stocks because they are similar to REITs. The tax structures are similar, in that BDCs also distribute at least 90% of their incomes to investors. The primary difference is that while REITs invest in real estate, BDCs invest in private companies.
The company maintains an investment portfolio of $1.47 billion with net assets of $720 million.
In the second quarter of fiscal 2024 (ending March 31), PennantPark received $19.1 million investment income and paid out 31 cents per share in dividends, versus a year ago when it had $13.7 million in investment income and paid out 28.5 cents per share in dividends.
PFLT stock is down 3% this year, but that’s easy to shrug off when the company pays a monthly dividend yield of 10.5%. Pennant Park gets a “B” rating in the Portfolio Grader.
Main Street Capital (MAIN)
Equity firm Main Street Capital (NYSE:MAIN) is another BDC. Main Street is an active investor in other companies, with a focus on lower and middle market companies.
Its most recent victory was announced in June when it completed a $36.9 million investment to facilitate the management-led buyout out Nello Industries, an Indiana company that makes utility poles and towers to sell to electric utility and telecommunications companies.
Main Street and a co-investor first made an investment into Nello in 2020, providing $31 million in loans and revolving credit plus a direct equity investment of $5.8 million. Main Street the investment helped the company expand both its business and a wholly owned subsidiary, which eventually was sold off.
Sale of assets gave Main Street a $10.1 million gain on its investment, and Main Street also received $10.1 million in dividends over the life of its investment with Nello, giving it an annual internal rate of return of 53.2% and 4.6x money invested.
Deals like that are why Main Street is an impressive dividend stock. MAIN is up 18% in 2024 and pays a dividend yield of 8.1%. It gets an “A” rating in the Portfolio Grader.
Oxford Square Capital (OXSQ)
Another BDC on our list is Oxford Square Capital (NASDAQ:OXSQ), which is based in swanky Greenwich, Connecticut, right outside New York City.
Oxford Square invests in corporate debt securities and collateralized loan obligation structured investments that own corporate debt securities. Collateralized loan obligations, or CLOs, are security backed by a pool of debt. Oxford Square gets debt payments from the underlying loans of the CLO and assumes the risk should borrowers default.
Earnings for the first quarter were $10.7 million in investment income, down from $12.3 million in the first quarter of 2023. It made new investments of $12.1 million in the quarter and received $19.3 million from sales and repayments of investments.
One item of note: Oxford is a very small company of only $177 million in market capitalization, and the trading volume of the stock is less than 300,000 shares daily. So it can be volatile.
Currently the stock is up 4% on the year, but it’s been very up and down all of 2024. However, OXSQ provides an awesome dividend yield of 14.5%, which helps push it to a “B” rating in the Portfolio Grader.
Gladstone Investment Corp. (GAIN)
Gladstone Investment Corp. (NASDAQ:GAIN) is an investor in mature lower middle market companies, which are considered firms with an annual revenue between $5 million and $50 million.
But Gladstone, another BDC, drills down even further, targeting businesses with earnings before interest, taxes, depreciation, and amortization of $4 million to $15 million.
Gladstone invests in companies that are looking for a little help to grow, such as contractors, plumbers and fabrication companies. Its investments include manufacturers, consumer products companies and business services.
Earnings in the fourth quarter of fiscal 2023 (ending March 31, 2024) included $23.6 million in total investment income versus $23 million in the same quarter a year ago.
The company’s dividend yield isn’t as large as some others on the list, coming in at 6.9%. But its consistent at 8 cents per share.
GAIN stock is down 1% in 2024 and gets a “B” rating in the Portfolio Grader.
Sabine Royalty Trust (SBR)
Sabine Royalty Trust (NYSE:SBR) is a different type of investment. Royalty trusts own the rights to assets such as mineral rights, natural gas reserves, or intellectual property.
If a company wants to mine for minerals, it pays a royalty to the landowner, who then distributes the payments to investors.
Because the distributions aren’t considered to be taxable events, the monthly dividend yields are high, which makes royalty trusts a good pick for a monthly dividend stock.
Sabine owns oil and gas rights in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.
Sabine saw oil and gas production on its facilities increase slightly in the first quarter of the year compared to a year ago. But the price of oil was down slightly ($80.35 to $80.20), and the price of gas dropped from $4.99 per 1,000 cubic feet to $2.37.
That led to revenue declines for the quarter, with income of $20.9 million down from $27.3 million at year ago. Income per unit was $1.37 versus $1.80 in the first quarter of 2023.
Sabine stock is down 5% this year but is a good bet if you’re bullish on oil prices increasing. It also pays a dividend yield of 9.4%, which gives it a “B” rating in the Portfolio Grader.
SL Green Realty (SLG)
SL Green Realty (NYSE:SLG) is a REIT that serves as a commercial landlord in New York City — where it has interests in 57 buildings and 32.4 million square feet of property. Much of the company’s holdings are in Manhattan, where it has 28.7 million square feet of property.
While telework and remote employment remains popular for many employees following the Covid-19 pandemic, New York properties will always be in high demand, making SL Green an interesting play for investors looking for targeted REITs.
Rental income in the first quarter was $128.2 million, down from $174.5 million a year ago. Total revenue was $187.8 million, down from $245 million.
However, the company’s total net income of $13.1 million and 20 cents per share was a vast improvement from a year ago, when SL Green posted a loss of $39.7 million and 63 cents per share.
However, the stock is having a strong year as investors are encouraged by SL Green’s improving finances. SLG stock is up 25% this year.
That kind of performance, coupled with a dividend yield of 5.3%, gives SLG stock a “B” rating in the Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.