Owning dividend stocks can be great, particularly if you need that income to pay your monthly bills. As any dividend stock-owning veteran can tell you, though, these stocks don't make it easy to use this way. Most of your bills are due every month, while most dividend stocks only dish out income once per quarter.
Not every dividend stock does this, though. Some of these names do pay a dividend every month rather than every quarter, making them easier to use to pay recurring bills, or simply funding recurring monthly investments in other securities. Here's a look at two of the top choices from this small, select group of dividend payers.
Dividend yield: 6.5%
Gladstone Capital (GLAD -1.56%) is categorized as a business development company, or BDC. As the name suggests, this fund (of sorts) helps companies at the lower end of the mid-sized company range grow by providing them with capital they may not otherwise be able to get their hands on. This funding usually comes in the form of a loan, though Gladstone will occasionally buy equity in a particular company with the right prospects. As of the latest look it's a lender to a few dozen mid-sized businesses, though it's always on the hunt for new opportunities.
It seems like an especially risky premise. While medium-sized business are clearly beyond their infancy, these organizations are still usually competing with bigger, better-funded players; a bunch of bankruptcies you never hear about come from this tier of corporations.
Gladstone minimizes this risk, however, by carefully picking and choosing the companies it gets involved with. It only lends to (or invests in) organizations it feels merit the risk, and even so, it commands above-average interest rates on the loans it extends. That's a big reason that as of the end of last year, the weighted average yield on its debt portfolio stood above 10%. Perhaps more impressive is the fact that 100% of its portfolio was "performing." That is to say, none of its borrowers were in default then.
Translation: Its current payout to shareholders is very well supported.
Dividend yield: 3.5%
It's a piece of the U.S.'s commerce puzzle that's rarely seen, and even more rarely considered. But, as consumers, we'd all be in serious trouble without all the warehouse space and truck-loading docks that help get goods from a factory to your front door.
Enter STAG Industrial (STAG -1.74%). This real estate investment trust, or REIT, owns a bunch of them, leasing its 108 million square feet worth of working and storage space to logistics companies like FedEx, brands like Tempur Sealy, and the U.S.'s biggest e-commerce name, Amazon. Amazon, in fact, is STAG's biggest customer/renter, although it still only accounts for about 3% of its business. In a similar vein, no single industry generates more than around 11% of STAG's total collected rent.
These are, of course, the sorts of tenants that don't simply walk away from a warehouse lease. Once an outfit like FedEx or Amazon commits to site, they tend to build their delivery network around it. That's why as of the latest look, roughly 97% of its rentable space is still occupied despite a couple of years' worth of economic turbulence.
There's an overlooked nuance, however, that makes STAG Industrial a particularly compelling monthly dividend-paying prospect right now. That is, the United States' retail inventories have yet to fully recover from their pandemic swoon. STAG estimates that, as a percentage of sales, physical inventories are still roughly 25% below levels seen prior to the pandemic. The real estate investment trust's management team further believes this previous degree of on-hand or accessible stock will be restored in the very near future, as supply constraints ease while brick-and-mortar consumerism continues to recover. This of course means there's a tremendous chance the company's income -- and subsequent dividend payments -- could dramatically improve soon.