Dividend stocks are a staple among income investors, but most of them make payments to shareholders only on a quarterly basis. For those seeking income for their monthly living expenses, stocks that pay dividends monthly are a lot more appealing. With that in mind, let's take a closer look at monthly dividend payers Apple Hospitality REIT (APLE 0.82%), San Juan Basin Royalty Trust (SJT +3.02%), and Solar Senior Capital (SUNS +0.00%) to see if they're worthy of a place in your dividend stock portfolio.
Apple Hospitality
Travelers need a place to stay when they're on the road, and Apple Hospitality offers the basics through its portfolio of hotel properties. The real estate investment trust has roughly 30,000 guestrooms available at more than 200 hotels, most of which are select service properties that offer a more limited selection of services and amenities or extended-stay properties for long-term trips. By concentrating on these areas while partnering with well-known high-end hotel brands, Apple is able to profit from the brand awareness of its partners while keeping its costs to a minimum.
Apple Hospitality pays investors $0.10 per share on a monthly basis, and that amounts to a 6.6% dividend yield. That's relatively high even in the REIT space, but the high yield reflects the health of the business economy and the role that travelers play in it. If you believe that economic prospects look good, then Apple Hospitality should be a good way to keep getting solid income month in and month out.
Apple Hospitality owns properties like this Courtyard by Marriott hotel. Image source: Apple Hospitality.
San Juan
San Juan Basin Royalty Trust is one of many royalty trusts in the energy sector. These vehicles are designed to make regular payments based on the production of a set of energy-producing assets, and it's essential to understand that those payments include not only pure income but also a certain amount that reflects the depletion of the asset. In the case of San Juan, the trust has a finite life, and if revenue drops below $1 million annually for two straight years or if holders 75% of the shares of the trust agree, then the trust will terminate.
The San Juan Basin is primarily in northwestern New Mexico, and the royalty trust has operated in that area about 30 years, with a 75% overriding royalty interest in a select set of San Juan assets. Shares of the trust have sagged in recent years, largely because the trust primarily produces natural gas, and prices of the clean-burning fuel have been weak for years.
Dividend payments vary each month depending on production, and they've fallen in recent years as proceeds from the sale of natural gas have dwindled. Yet based on the payments over the past 12 months, the trailing yield of more than 8% is quite impressive. If natural gas recovers, then investors can expect payments to rise as well, but you need to be comfortable with the unique aspects of royalty trusts in mind before you invest.
Solar Senior Capital
Solar Senior Capital is a business development company, and contrary to what its name suggests, the BDC doesn't invest specifically in solar-related projects or in businesses related to senior citizens. Instead, Solar Senior Capital has a portfolio that spans a wide array of industries, including healthcare providers, professional services, communications equipment, insurance, and software. The BDC specializes in providing senior secured loans to middle-market businesses.
Solar Senior has a current yield of around 8.5%, having made monthly dividend payments of $0.1175 per share throughout 2017. Business development companies involve the risk that any lender incurs, and the middle-market companies that borrow from Solar Senior have more credit risk than larger, more well-established businesses. Nevertheless, Solar Senior works hard to select investments that will minimize risk and maximize reward, and its consistent dividends over time speak to its success thus far in doing so.
Dividend stocks that make monthly payments are useful for many investors. Each of these three stocks have their pros and cons, but they have demonstrated the capacity to provide dividend income to shareholders over the years and should continue to do so into the future.
