Savvy income investors know that it is not good enough simply to chase the highest dividends. Such investors know to avoid so-called dividend traps. That is, those potentially troubled companies offering a dividend higher than their peers to tempt potential investors. Alternatively, a dividend yield can become high as share prices fall due to a company’s financial woes. That is likely to lead to a dividend cut or elimination and further price declines. These would not make good candidates for a list of the best monthly dividend stocks.
Better is to invest in the stocks of stable companies with free cash flow that allows them to steadily increase their payouts over time. The Dividend Aristocrats are a good example of this. These S&P 500 companies have consistently raised their dividends every year for at least 25 years. The Dividend Kings take this even further, regularly hiking their dividends for at least 50 years. That is about as stable as you can get. (Why seven high-yielding Dividend Aristocrats are the best contrarian ideas now.)
The focus here is on monthly dividends. Investors who rely on dividends for income appreciate the steady payout that makes budgeting easier. Those who reinvest their dividends reap the benefit of accelerated compounding. The stocks featured below all have relatively safe dividends that have been increased for more than a year, and they all yield more than 4%. They are mostly real estate investment trusts, which also attract investors seeking income because they are required to distribute at least 90% of their taxable income to shareholders.
Here are the seven best monthly dividend stocks to buy now.
EPR Properties
- Annual per-share dividend: $3.30
- Dividend yield: 7.1%
- Approximate share price: $46
Kansas City-based REIT EPR Properties (NYSE: EPR) focuses on what it calls “experiential properties.” Those include theaters, museums, theme parks and ski resorts. Despite inflation and recession fears, EPR posted robust third-quarter results that exceeded Wall Street estimates. The company was incorporated in 1997 and was formerly known as Entertainment Properties Trust.
Main Street Capital
Source: Pattanaphong Khuankaew / Getty Images
- Annual per-share dividend: $2.88
- Dividend yield: 7.1%
- Approximate share price: $41
Main Street Capital Corp. (NYSE: MAIN) is a Houston-based asset manager specializing in recapitalizations, management buyouts, refinancing, industry consolidation and other financial services in diverse industry sectors. It just posted third-quarter results with an earnings beat but revenues that just fell short despite rising strongly year over year. Main Street also just hiked its dividend and announced a supplemental dividend.
Gladstone Investment
Source: mladenbalinovac / E+ via Getty Images
- Annual per-share dividend: $0.96
- Dividend yield: 6.5%
- Approximate share price: $15
Gladstone Investment Corp. (NASDAQ: GAIN) is headquartered near the District of Columbia. This business development company is focused on manufacturing, consumer products and business services. It recently announced a supplemental distribution, but its fiscal second-quarter results fell short of expectations. Note that shares popped 11% or so in the past week. Also note that its dividend-hiking streak stretches back 11 years.
Realty Income
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- Annual per-share dividend: $3.07
- Dividend yield: 6.0%
- Approximate share price: $50
This Dividend Aristocrat has increased its dividend more than 120 times since going public in 1994. Realty Income Corp. (NYSE: O) is based in San Diego and receives cash flow from over 13,100 real estate properties, primarily owned under long-term net lease agreements with commercial clients. Recently, Realty Income acquired another REIT, Spirit Realty Capital, for more than $9 billion.
Apple Hospitality REIT
Source: Thinkstock
- Annual per-share dividend: $0.96
- Dividend yield: 5.7%
- Approximate share price: $17
About 220 Marriott-, Hilton- and Hyatt-branded hotels in 37 states are in the Apple Hospitality REIT Inc. (NYSE: APLE) portfolio. Its latest acquisitions include Marriott hotels in Seattle and Salt Lake City. The company was founded in 2007 and is headquartered in Richmond, Virginia. Look for its third-quarter report this week.
Agree Realty
Source: felixmizioznikov / iStock via Getty Images
- Annual per-share dividend: $2.96
- Dividend yield: 5.0%
- Approximate share price: $59
Agree Realty Corp. (NYSE: ADC) is a retail-focused REIT with a portfolio of almost 2,100 properties in 49 states. Top tenants include Walmart, Home Depot, CVS and Best Buy. The Michigan-based company posted better than expected third-quarter results last month, and the chief executive officer and other insiders have been buying shares.
STAG Industrial
Source: Scott Olson / Getty Images News via Getty Images
- Annual per-share dividend: $1.47
- Dividend yield: 4.2%
- Approximate share price: $35
Though STAG Industrial Inc. (NYSE: STAG) is based in Boston, it owns more than 560 warehouse, light manufacturing and other buildings in 41 states. Amazon is one of its largest tenants. STAG reported strong third-quarter results, and the stock has outperformed the Dow Jones industrial average year to date. The company was founded in 2010 and has increased dividends for five years.
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