3 High-Yield Monthly Income Investments
Investors focused on generating income tend to prefer cashflow that is evenly distributed across the year. In fact, the more often income is received, the better.
That’s because consistent, regular cashflow allows growth investors to reinvest more frequently to boost compound returns. It also allows retired investors to manage living expenses more effectively.
While most companies pay dividends to shareholders annually or semi-annually (or quarterly in some cases), there are some stocks that pay monthly dividends.
These monthly dividend stocks generate much more consistent cashflow than other picks, making them a popular choice for those for those income-focused investors.
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In this short report, I’ll show you 3 stocks that pay monthly income to investors right now, that also offer a higher-than-average yield.
SL Green Realty Corp (NYSE:SLG)
I’ve written about SL Green before. This real estate investment trust (REIT) invests in luxury office space in New York City. In fact, the company is the largest office landlord in Manhattan with a market capitalization of $2.2 billion, and a portfolio of buildings worth much more than that.
Despite headwinds from the pandemic-induced work from home trend, and an exodus of some companies from NYC into other markets such as Miami, SL Green remains very profitable and offers an excellent monthly dividend, making is a great monthly income investment choice right now.
The company has reduced it’s dividend payout slightly, but even then still pays shareholders $0.2708 per month, which works out to around $3.25 per year.
Based on the current stock price of $36.02, that works out to an annual yield of about 9% today.
According to its own reporting, the company is forecasting gross revenue from operations of $5.45 in 2023. That gives this stock a dividend coverage ratio of 1.7, and a very reasonable dividend payout ratio of less than 60%.
The company does not expect much growth as it will instead focus on reducing its debt burden through 2023. That said, there are still some interesting projects in the pipeline, and with less debt to service, expenses will be lower, SL Green looks like a fairly solid bet moving forward.
Let’s be honest, even with minimal or zero growth, a dividend yield of 9% and regular, reliable monthly income payments make this a pretty attractive play right now.
Realty Income Corporation (NYSE:O)
Another REIT that pays a decent monthly income dividend right now is Realty Income Corp.
This company has been a stalwart of income-focused investment portfolios for years. The company invests in triple-net-leased retail properties with a wide variety of tenants, including gyms, restaurants, grocery stores and the like.
By focusing on leasing their buildings to stable tenants across multiple sectors, Realty Income enjoys a stable and diversified income stream.
It’s also worth noting that many of Realty Income’s tenants run fairly recession proof businesses, such as dollar stores, and the company is very well geographically diversified, with assets across the USA, and a growing portfolio in Europe to boot.
As a result of the triple net lease model and diversified assets and tenant base, Realty income’s income stream is very resilient, making it especially appealing for income investors who might be worried about an upcoming recession in 2023.
The company has also enjoyed year on year growth in revenues for the last ten years, even throughout the global covid pandemic, further establishing the stock as a solid performer while under pressure.
Realty Income Corp currently pays a monthly dividend of $0.248. Based on the current share price that equates to a yield of 4.7%. which is far better than the average S&P500 yield. The company pays out about 75% of its revenue as dividends, which is still fairly decent considering the company’s stable cashflows.
The last point to make, and this is a bog one, is that Realty Income has increased its dividend every year for the past two decades. Overall, this looks like a great stock for investors looking to add stable and consistent monthly income to their portfolio in 2023.
Main Street Capital (NYSE:MAIN)
Let’s now take a little departure from REITs and look at another type of stock that pays a monthly dividend, a Business Development Company (BDC) called Main Street Capital.
BDCs provide debt and equity financing to small companies. Main Street Capital in particular finances a wide variety of smaller businesses with debt and expansion capital, and often also owns equity in those companies.
Because smaller companies can’t access debt markets themselves, they rely on companies like Main Street to provide financing. As a result, companies like Main Street can charge higher than average interest rates on the loans they provide.
Despite the higher risk attached to lending to smaller businesses, Main Street Capital is very good at managing that risk and has a very low default rate on the loans it provides. The company even managed to turn a profit during the covid pandemic, again cementing its reputation as a fairly recession proof stock.
Main Street is paying its shareholders a monthly dividend of $0.225 per share, which works out to about $2.70 per year, or a yield of 7.3% based on today’s stock price. That a pretty attractive yield, epically considering that fact that the income is paid monthly.
Another bonus of owning Main Street stock is that the company regularly distributes excess cashflow to shareholders on top of its regular monthly income payouts.
In Q3 2022, for example, Main Street paid shareholders an additional $0.10 per share, (roughly $0.03 per month), which, if continued, would boost the annual dividend yield to 8.4%.
The company pays out around 80% of its income to shareholders, but when the extra payments are considered, it’s more like 90%. That’s quite high, but history suggests that Main Street is more than capable of maintaining distributions at this level for the foreseeable future.
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