Most dividend stocks dish out a payment once every quarter, which is fine. Most investors seem to not actually need that income immediately, instead opting to reinvest those dividends in more share of the paying company.
If you're living off of your dividends though, that payout cadence can be a bit of a pain. Although you're collecting reliable income every three months, your mobile phone, utility, and credit card bills are coming due every month.
There is a solution. Although they're relatively rare, a handful of companies make dividend payments every month rather than every quarter. Here's a rundown of three you should consider.
1. Gladstone Capital
Dividend yield: 7.1%
Gladstone Capital (GLAD 0.56%) provides capital to mid-sized businesses in the form of loans.
It's organized as a business development company, though it could be just as fairly considered a private equity or venture capital fund. Some of its customers include office furniture brand Belnick, truck axle maker Defiance Integrated Technologies, and restaurant chain Cafe Zupas, just to name a few.
The business model is well suited for supporting dividend payments. These middle-market companies are risky, but not necessarily doomed. They're willing to take loans at above-average interest rates that reflect their relative risk, and Gladstone is happy to lend these young, high-potential companies that money. And like any other loan, these are paid back gradually over time. A portion of these payments is simply passed along to shareholders as they're made.
Gladstone Capital hasn't failed to make a dividend payment in any month since 2003. That's when it began dishing them out on a monthly basis.
It's also more than able to afford these payments, having earned $0.81 per share in its COVID-19-crimped fiscal 2020 versus full-year dividend payments of $0.78. And this year's projected bottom line of $1.11 per share should dramatically widen this profit/payout cushion, buoyed by new loan originations that are exceeding loan repayments.
2. Realty Income
Dividend yield: 4.2%
The coronavirus pandemic was rough on most industries, but it was downright brutal for already-struggling retailers. CoStar Group estimates 12,200 stores were permanently shuttered last year. Retail landlords are now suffering as a result.
But not all retail landlords. One of them is doing just alright. Realty Income (O 0.11%) was able to collect 93.6% of the rent it was due for the final quarter of last year, and comparable revenue slipped less than 2% year over year in the fourth quarter. The real estate investment trust's (REIT) same metrics were even better for the first quarter, suggesting the retail sector's COVID-19 headwind continues to abate.
That's largely a function of the trust's tenant list. Its five biggest renters are Walgreens, 7-Eleven, Dollar General, FedEx, and Dollar Tree, which includes the Family Dollar brand of stores. Walmart and Kroger are also major tenants. These organizations not only sidestepped the impact of the coronavirus pandemic, but they arguably benefited from it.
Be aware that there is an impending merger with VEREIT that has spurred some concerns. Not only are the two REITs organized differently with a different sort of tenant base, but VEREIT's still in the midst of a turnaround effort.
Such worries may be overblown, however. Debt-rating agency Moody's says this acquisition will increase Realty Income's "scale and durability of cash flows," creating synergies by pairing the two complementary portfolios.
3. STAG Industrial
Dividend yield: 4.1%
Finally, add STAG Industrial (STAG 0.92%) to your list of solid dividend stocks making monthly payments.
Like Realty Income, STAG Industrial is organized as a REIT. Unlike Realty Income, though, STAG is aimed at a completely different type of tenant. This real estate investment trust offers single-tenant industrial and commercial space to a wide array of renters. No one tenant accounts for more than 4% of its rents, and no more than 8% of its annual base rent comes from any one business sector. STAG Industrial also (rightfully) touts that about 40% of its renters are involved in e-commerce, somewhat shielding them from the impact of the pandemic.
Largely being overlooked is how STAG has taken advantage of the environment to do even more of what it does best. That's acquiring and redeveloping properties for optimal cash flow. Last quarter the company bought six buildings covering 1.3 million square feet of industrial space, and although it also sold four buildings in the same quarter, it sold them for a profit. For the same quarter, its occupancy rate held at 97%, and it renewed all the leases expiring during the three-month stretch.
This is a REIT that's not just built to last, but built to grow revenue in perpetuity, which it has every year since 2011. Income from operations has grown just as well, even if less consistently, and while the dividend hasn't grown much since 2015, it's been paid every month like clockwork that whole time.