You know what's better than a dividend stock? A dividend stock that pays you every month. While most dividend stocks make quarterly payments, I have found five companies whose monthly dividends could provide you with the income needed to meet your monthly obligations or provide you with steady capital to reinvest and grow your portfolio.

Company

Sector

Recent Monthly Payment

Current Yield

ARMOUR Residential REIT (NYS: ARR) Residential REIT $0.11 18.6%
Atlantic Power (NYS: AT) Electric utility $0.096 8.0%
Enerplus Resources (NYS: ERF) Oil and gas exploration $0.18 9.3%
Main Street Capital (NYS: MAIN) Diversified investments $0.135 7.1%
Realty Income (NYS: O) Retail REIT $0.146 4.7%

Source: Yahoo! Finance.

Two options from a hot dividend sector
The two real-estate investment trusts on this list couldn't be more different. While ARMOUR Residential primarily invests in mortgages, Realty Income does exactly what its name implies: collect rental income from retail occupants of malls and other store properties. With the Federal Reserve potentially keeping interest rates low through 2014, however, the rate spread for ARMOUR and other mortgage REITs should stay at a point to keep the income flowing. Though Realty Income doesn't invest directly in mortgages, lower rates could allow it to purchase more retail properties and boost rental income from new owners as the economy continues to recover.

Two Canadian companies
Atlantic Power is primarily in the power production business, with interests in 31 power generation projects across 11 states and two Canadian provinces. The British Columbia-based utility recently reached an agreement to purchase a majority ownership in a wind power plant in Oklahoma, a purchase that will increase its production by nearly 14%. This new investment should help the company keep its place as one of the highest-yielding dividend stocks going forward.

Enerplus has operations in some of the most lucrative locations for oil and natural gas in North America. Assets in the Western Canada oil sands, the Bakken shale in North Dakota, and the Marcellus shale in the Eastern U.S. provide the company with a strong asset base. As development continues at these locations, Enerplus will be able to cash in and should continue yielding near 10%.

A "publicly traded private equity firm"?
Main Street Capital is one example of a business development company, or BDC. BDCs are similar to REITs in that they are required to distribute at least 90% of their income as dividends. They in turn take money and loan it to private businesses. Main Street Capital provides long-term debt and equity capital to "lower middle market companies." The companies that it invests in tend to have annual revenue of between $10 million and $100 million. As income is received from these investments, it is returned to shareholders in the BDC in the form of monthly dividends.

Dividends are great
I personally like dividends, and if a dividend is paid monthly, it is even better in my book. With the right amount of investment, the income provided by monthly payers can be used to pay some monthly expenses, instead of waiting for what might be a larger dividend every quarter. If you are looking to diversify your portfolio with income-generating stocks, be sure to get a copy of our free report to "Secure Your Future With 11 Rock-Solid Dividend Stocks." Even though none of the included companies pay monthly dividends, it should still be worth your while to get your copy today!

At the time this article was published Fool contributor Robert Eberhard holds no position in any company mentioned. Click here to see his holdings and a short bio or follow him on Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Emiko Howard

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February 14 2012 at 5:49 AM Report abuse rate up rate down Reply