Key Points
- While most companies that pay a dividend usually do it quarterly, many pay out their monthly dividends.
- Real estate investment trusts (REITs) must pay at least 90% of their income to shareholders through dividends.
- O is a stable REIT that pays 4.66% annualized dividends.
- AGNC is a REIT investing in Agency MBS, paying 12.8% annualized dividends.
- HRZN is a business development company (BDC) paying 10.39% annualized dividends.
- 5 stocks we like better than AGNC Investment
Dividend stocks come in all shapes and sizes. They all share the objective of providing income to their investors. Dividend stocks can provide a source of income in exchange for taking the risk of holding onto the underlying shares. They are suitable for retirees and investors looking for an extra source of income from their investment holdings.
While most dividend stocks pay quarterly, some pay monthly. These stocks tend to fall into either real estate investment trusts (REIT), financing, or business development companies (BDC). Publicly traded REITs must distribute 90% or more of their operating income to shareholders as dividends.
Capital appreciation is possible if entries are timed well, but depreciation is possible if you chase entries. Being patient when looking for entries is prudent since the annual dividend yield improves at lower prices. For those of you seeking a monthly income stream from dividend stocks, here are three monthly dividend stocks to watch for.
This is a very stable commercial REIT that has been operating for over five decades and trading as a public company for over 25 years. It acquires, develops, operates, and leases sizeable retail shopping centers and commercial properties. Their portfolio consists of over 12,000 commercial properties spanning 84 industries. Some of their blue-chip clientele include Home Depot NYSE: HD, Chipotle Mexican Grill Inc. NYSE: CMG, Walmart Inc. NYSE: WMT, Starbucks Co. NASDAQ: SBUX, 7-Eleven, and Sainsbury.
The shares have generated a 14.6% compound annual return since its 1994 public listing. The company pays a 4.66% annual dividend yield. Pullback support levels are $62.52, $61.10, $58.91 weekly MSL trigger, and $57.61. It's a member of the S&P 500 Dividend Aristocrats, having paid over 600 consistent monthly dividends with 119 dividend hikes throughout its 54-year operating history since it went public in 1994.
This REIT invests in agency residential mortgage-backed securities (MBS). Government-sponsored agencies, including Fannie Mae and Freddie Mac, guarantee agency MBS. Its core business model is simple, borrow money paying short-term and medium-term three to five-year treasury rates to purchase Agency MBS and pocket the spread.
The company hedges during the monetary tightening as the U.S. Federal Reserve (Fed) aggressively pursues efforts to dampen inflation. As inflation returns towards the Fed's target rate, hedging costs should also dissipate, leading to more profits and potential dividend increases. The company actively manages a portfolio of Agency MBS and commercial MBS and collateralized mortgage obligations (CMO).
The company pays a 12.8% annualized forward dividend yield. Pullback support levels are at $10.86, $9.99, $9.66, and $8.30 weekly market structure low (MSL) buy trigger.
This business development company (BDC) provides investment and specialty financing for development-stage companies. It provides secured loans to venture capital-backed technology, healthcare, sustainability, and life sciences companies. Its portfolio companies are in various stages of development, from start-ups to more established revenue-generating businesses.
Its lending platform funded 8.1% more loans on a quarter-over-quarter (QoQ) basis to $114 million. It has a $255 million debt investments backlog, including $220 million in HRZN commitments. Its loan portfolio grew by $262 million in 2022.
The company holds a warrant and equity portfolio in 99 companies, including 82 private companies, as of Dec. 31, 2022. The company pays 10.39% to annualize forward dividend yield.
Shares have been in a downtrend since peaking at $19.08 in November 2021 at the height of the post-pandemic technology bull market. Shares have since fallen and bottomed out at $9.67 in October 2022. HRZN shares are correlated with the technology sector and can see capital appreciation when tech stocks rally, which means the shares may have more upside at current levels than REITs. The company pays a 10.39% annualized dividend. Pullback supports sit at $12.42, $11.61, $11.22, and $10.86 weekly market structure low (MSL) buy trigger.
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