When it comes to boring sectors
as I mentioned above, I can’t think
of anything more sleep-inducing
than senior care. At the same time,
I can’t think of anything more robust
and relevant than the senior care
market. That’s why investors ought
to take a long look at LTC Properties
(LTC) and LTC stock.
As a viable name among monthly
dividend stocks, LTC Properties
utilizes a powerful tool as leverage: demographics. Baby Boomers are retiring in droves, which present serious challenges. But they also present opportunities. Increasingly, millennials are taking care of their aging family members, indirectly bolstering the case for LTC stock. That’s because a senior may not have adequate funds, but a working millennial might.
Furthermore, LTC stock has steadily trekked higher since the collapse of the 2000 tech bubble. Given the demographic tailwinds, I expect this longer-term trend to continue.
LTC Properties (LTC)
Main Street Capital Corporation
(MAIN) is what experts refer to as a
business development company.
In this case, Main Street provides
debt and equity financing to small
and mid-tier private organizations.
With a broad range of services,
they’re able to help scale businesses
as their output expands.
And supporting the case for MAIN
stock is the current entrepreneurial
environment. With the advent of e-commerce technologies, and the digitalization of everything, there’s never been a better time than now to start a business. Moreover, the efficiencies inherent in smaller and more nimble organizations allow them to disrupt larger entities. Again, this supports the capital gains narrative for MAIN stock.
Just as importantly, the underlying company has a track record for delivering the goods under pressure. For instance, Main Street first offered MAIN stock to the public in 2007. While incurring volatility during the financial crisis, shares fought back. Today, it pays out a healthy dividend monthly that yields nearly 6%.
Main Street Capital Corporation (MAIN)
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Main Street Capital Corp.
Whenever discussions about
monthly dividend stocks come
about, it’s almost inevitable that
you’ll hear the name Realty Income
(O). And that’s for good
reason. Although a boring name,
strong and consistent cash flows
back up O stock. Obviously, this is
critical for a company paying out
monthly; after all, the money for
dividends has to come
from somewhere!
But O stock has two reasons why it’s especially relevant at this juncture. First, the Federal Reserve is likely to lower interest rates despite robust domestic economic metrics. Global economies don’t necessarily share the same optimism as the U.S. Furthermore, the Fed is determined to learn the lessons that led to the disastrous 2008 financial crisis. Thus, investors seeking substantive yields will probably gravitate toward investments like O stock.
Second, many of the commercial properties that Realty Income owns feature retailers who have competitive or natural moats against e-commerce threats like Amazon (AMZN). For example, Home Depot (HD) customers like to see and test out their prospective products. You simply don’t get that convenience from online channels. And this dynamic should keep the rent money flowing into O stock, which bolsters the dividend payout.
Realty Income (O)
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Cut retirement income risk with the bucket strategy
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In years past, the oil market used to be a no-brainer: we consume energy and therefore we need energy. However, rising global supplies have depressed prices, making this sector a tough call. But infrastructural plays like Pembina Pipeline (PBA) typically
offer stability.
No matter what happens in the underlying market, transportation of energy-related commodities is vital. In recent years, this dynamic supported the bullish case for
PBA stock.
Still, some risks cloud the narrative for PBA stock. First, shares have done well this year, moving up 21% year-to-date. But the equity has demonstrated some notable volatility in recent sessions. Thus, prospective buyers may want to wait a little before pulling the trigger.
Further, Pembina doesn’t have the greatest balance sheet. With a total debt to total equity ratio of 63, I wouldn’t go all in on PBA stock. That said, energy remains a viable long-term play due to the uncertainties of renewable alternatives. Therefore, Pembina is among the riskier monthly dividend stocks that nonetheless deserves a careful look.
Pembina Pipeline (PBA)
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Real estate tends to appreciate and protect against inflation. Although owning rental real estate offers tax benefits and an income stream, there are other ways to capture the benefits of real estate investing. "Real estate investment trusts are a way to generate an income stream that can grow over time, offsetting inflation and protecting your buying power.
Just be sure to hold real estate investment trusts, known as REITs in a tax-advantaged account such as a 401(k) or IRA," says Greg McBride, a chief financial analyst at Bankrate.com. Buying a REIT like the Fidelity MSCI Real Estate ETF (FREL) is as easy as purchasing a mutual or exchange-traded fund on any investing portal like Schwab, E-Trade, Fidelity or Vanguard.
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If you want another high-stakes REIT among monthly dividend stocks, but with a residential angle, consider Armour Residental REIT (ARR). ARR stock gives you exposure to mortgage-backed securities which are backed by a federal entity, such as Fannie Mae or Freddie Mac.
Of course, whenever anyone hears the term mortgage-backed securities, the last housing crisis comes immediately to mind. Certainly, no investment is foolproof and that should give you pause before diving into ARR stock.
On the flipside, both the government and the mortgage industry have taken the lessons of the last decade to heart. Today, it’s very difficult to quality for a mortgage unless you’ve got your financial house in order. Additionally, homeowners themselves have learned not to overextend themselves. Thus, this environment helps bring some confidence toward ARR stock.
Lastly, Armour Residential has a history of consistently rich monthly payouts going back to 2015. But I wouldn’t get too comfortable as the payouts have declined in value over this time. Also, ARR stock is down nearly 18% YTD. All that said, if you’re willing to assume the risk, Armour is an interesting play due to the current economic resiliency.
Sell option contracts on existing stocks for retirement income
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With so much uncertainty weighing on key economic metrics — most notably the U.S.-China trade war — the idea of buying dividend stocks is an attractive one. Primarily, as passive-income generating securities, dividend-bearers are likely to weather volatility better than stocks that don’t offer payouts. Plus, any capital returns are bonuses on top of the yield.
However, dividend stocks typically
have one glaring weakness, especially
for those who depend on stocks for
income: their payouts occur on a
quarterly basis. That’s not particularly
helpful when our society revolves
around monthly cost expenditures,
such as mortgages, car payments,
and utility bills. And that’s one of the
reasons why monthly dividend
stocks are so attractive.
Under this arrangement, you’re receiving income 12 times a year as opposed to the usual four times. Because money has a time component to it, monthly dividend stocks allow investors much more flexibility. Also, if you like to reinvest dividends into more shares of the target asset, a monthly schedule allows you to advantage technical dynamics, such as a pricing dip.
That said, conservative investors should adopt the same precautions toward monthly dividend stocks as you would any income-generating investment. For instance, you should never jump aboard a company or fund merely because they pay out monthly. The key here is healthy cash flows and robust, stable sectors.
At the same time, monthly dividend stocks offer speculators a reason to join in on the fun. With payouts every 30 days, sometimes risky, high-yielding names offer compelling opportunities. Of course, that depends on your personal tolerance
to volatility.
And with these cautionary notes out of the way, here are the eight best monthly dividend stocks to consider in 2019:
Canadian cable company Shaw
Communications (SJR) is another
name that frequently pops up
among recommended monthly
dividend stocks. It’s not hard to see
why. Currently, SJR stock has a
dividend yield of 4.5%. Shares have
also gained over 10% since
January’s opening price.
More importantly, SJR stock
should prove to be incredibly
relevant in the years ahead. While cable is a dying industry due to the streaming revolution, Shaw levers a wireless subsidiary called Freedom Mobile Inc. And in April of this year, Freedom substantially expanded its wireless footprint in the Canadian market. This move improves Freedom’s LTE service and lays the groundwork for the upcoming 5G rollout.
Finally, Shaw is a name that delivers a consistent revenue and earnings stream. As a result, it generally features reliable free cash flow — which is key for stocks that pay out monthly. And while cord cutting hurts SJR stock in the nearer-term, I believe its spectrum coverage will outweigh these concerns.
Shaw Communications (SJR)
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In years past, the oil market used
to be a no-brainer: we consume
energy and therefore we need
energy. However, rising global
supplies have depressed prices,
making this sector a tough call.
But infrastructural plays like
Pembina Pipeline (PBA) typically
offer stability.
No matter what happens in the
underlying market, transportation
of energy-related commodities is vital. In recent years, this dynamic supported the bullish case for PBA stock.
Still, some risks cloud the narrative for PBA stock. First, shares have done well this year, moving up 21% year-to-date. But the equity has demonstrated some notable volatility in recent sessions. Thus, prospective buyers may want to wait a little before pulling the trigger.
Further, Pembina doesn’t have the greatest balance sheet. With a total debt to total equity ratio of 63, I wouldn’t go all in on PBA stock. That said, energy remains a viable long-term play due to the uncertainties of renewable alternatives. Therefore, Pembina is among the riskier monthly dividend stocks that nonetheless deserves a careful look.
Pembina Pipeline (PBA)
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For those who are interested in
higher stakes — and of course,
higher yields — you should check
out Colony Credit Real Estate
(CLNC). CLNC stock provides
shareholders exposure to the world
of commercial real estate credit
REITs, or real estate investment
trusts. Essentially, the company
finances and manages commercial
real estate debt.
Now, I must give you some cautionary notes for CLNC stock. First, shares have not enjoyed the greatest time since its introduction in early 2018. A massive collapse in November of last year, along with the rest of the markets, has not inspired confidence.
Also, as a commercial debt investor, Colony Credit faces turbulence from a possible downturn in the economy. With most folks talking about at least a correction coming up, CLNC stock is only for the risk tolerant.
However, shares have stabilized this year and has recently inched forward. Plus, with a yield of 12%, CLNC is one of the monthly dividend stocks that will consistently
draw eyeballs.
Colony Credit Real Estate (CLNC)
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Colony Credit Real Estate
If you want another high-stakes
REIT among monthly dividend stocks,
but with a residential angle, consider
Armour Residental REIT (ARR).
ARR stock gives you exposure to
mortgage-backed securities which
are backed by a federal entity, such
as Fannie Mae or Freddie Mac.
Of course, whenever anyone hears
the term mortgage-backed securities,
the last housing crisis comes
immediately to mind. Certainly, no investment is foolproof and that should give you pause before diving into ARR stock.
On the flipside, both the government and the mortgage industry have taken the lessons of the last decade to heart. Today, it’s very difficult to quality for a mortgage unless you’ve got your financial house in order. Additionally, homeowners themselves have learned not to overextend themselves. Thus, this environment helps bring some confidence toward ARR stock.
Lastly, Armour Residential has a history of consistently rich monthly payouts going back to 2015. But I wouldn’t get too comfortable as the payouts have declined in value over this time. Also, ARR stock is down nearly 18% YTD. All that said, if you’re willing to assume the risk, Armour is an interesting play due to the current
economic resiliency.
Armour Residential REIT (ARR)
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Armour Residential REIT
income withdrawal
A far riskier counterpart to Pembina
Pipeline, Mesa Royalty Trust (MTR)
is truly an investment only for the
hardened speculator. From the
get-go, MTR stock screams caution.
Let’s start with the obvious. Mesa
Royalty distinguishes itself from the
other monthly dividend stocks on
this list because the company
doesn’t own anything. Instead, it
has an interest in oil and natural
gas projects dispersed throughout the U.S. Basically, the dividend from MTR stock represents a share of the spoils from the facilities’ output.
This leads to my next concern about MTR stock: volatility. I’m not just talking about the share price, which historically is terrible. The payout fluctuates like mad. Needless to say, Mesa Royalty will not belong on a list of stable dividend stocks anytime soon.
Still, the company offers the prospect of a big payday that could arrive at any month. For instance, earlier in March, Mesa paid out nearly 19 cents for each share of
MTR stock.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
Mesa Royalty Trust (MTR)
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Longevity risk, the possibility of outliving one's money is the scariest retirement income risk. But fear of volatility causes many investors to shy away from equities and growth investments, says David Edwards, president at Heron Wealth in New York. Edward's bucket strategy apportions 60% to stocks and commodities, 30% to government and corporate bonds and 10% to short-term cash securities.
When rebalancing during a stock market advance, the excess from the stock bucket goes into the fixed bucket. While the excess in the bond bucket goes into the cash bucket. This works out to roughly one year's worth of retirement income in the cash bucket and four years of income in the fixed bucket. Cash flow distributions initiate first from the income bucket and secondarily from the fixed bucket.
Armour Residential REIT (ARR)
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Armour Residential REIT
A far riskier counterpart to Pembina Pipeline, Mesa Royalty Trust (MTR) is truly an investment only for the hardened speculator. From the get-go, MTR stock screams caution.
Let’s start with the obvious. Mesa Royalty distinguishes itself from the other monthly dividend stocks on this list because the company doesn’t own anything. Instead, it has an interest in oil and natural gas projects dispersed throughout the U.S. Basically, the dividend from MTR stock represents a share of the spoils from the facilities’ output.
This leads to my next concern about MTR stock: volatility. I’m not just talking about the share price, which historically is terrible. The payout fluctuates like mad. Needless to say, Mesa Royalty will not belong on a list of stable dividend stocks anytime soon.
Still, the company offers the prospect of a big payday that could arrive at any month. For instance, earlier in March, Mesa paid out nearly 19 cents for each share of MTR stock.
As of this writing, Josh Enomoto did not
hold a position in any of the aforementioned securities.