Need Monthly Income? Some Stocks Pay You 12 Times a Year

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Ever since the great recession hit, low interest rates have forced many retired Americans who live off their savings to seek new sources for the income they need each month. Bank CDs and other safe investments no longer pay anywhere near enough interest to help them make ends meet, which has led many investors to consider dividend-paying stocks. Yet with most dividend stocks making payments only once every three months, it can be a challenge to coordinate your investments with when you actually need cash.

Some companies, though, have realized the value of delivering income to shareholders on a more frequent basis. Investors can find several promising industries in which many companies make dividend payments monthly, which makes things easier from a budgeting standpoint. Let's take a look at some stocks that provide monthly income to their shareholders.

1. Oil and Gas Companies

Many players in the oil and gas industry pay high dividend yields, and a number have jumped onto the monthly dividend bandwagon. Vanguard Natural Resources (VNR), for instance, has oil and gas properties across the central U.S., ranging from the oil-rich Bakken region of North Dakota all the way south to the Permian Basin in Texas and oil and gas fields in Mississippi. Unlike many other energy players, Vanguard has emphasized the natural gas side of its business, and rebounding gas prices from a slump two years ago has helped support Vanguard's 8 percent annual dividend yield, coming in payments of 21 cents per share each month.

Canada's Enerplus (ERF) is another energy company with strong prospects and healthy income. With exposure to the Bakken region as well as the oil and gas fields in the Canadian provinces of Alberta and Saskatchewan, Enerplus has balanced its exposure between crude oil and natural gas to make the most of price moves in both products. In addition, assets in the Marcellus region of the eastern U.S. also add growth potential for Enerplus, which could lead to even higher payouts than its current yield of 4.1 percent.

2. Business Development Companies

Business development companies are specialized investment vehicles that provide financing to privately held smaller businesses. One of the benefits of BDCs is that they generally don't have to pay corporate-level tax, instead leaving shareholders on the hook for paying tax on the taxable income that they generate. The beneficial thing for shareholders, though, is that BDCs are required by law to pay out the bulk of their earnings, leading to high yields. Not all BDCs pay dividends monthly, but some do, and their high yields make those payouts substantial.

Prospect Capital (PSEC) invests in middle-market companies, providing debt and equity financing to help foster their growth. One of the BDC's recently concluded investments was in airport retail company AirMall, in which Prospect first invested four years ago and which paid a return of more than 16 percent annually for shareholders. With investments ranging from energy and financial companies to producers of food and other consumer goods, Prospect has a yield of almost 13 percent, and it has announced its schedule of monthly dividend payments through the rest of this year.

Main Street Capital (MAIN) doesn't have as high a yield at 6.3 percent, but the BDC also makes monthly dividend payments to shareholders. Moreover, with supplemental dividends twice a year, those who rely on income effectively get bonus payments from time to time that can help with unexpected expenses. Focusing on smaller businesses, Main Street earns high yields, and although default risk is higher with small companies, the generally strong conditions in the economy have supported that part of the market recently.

3. Real Estate Investment Trusts

Like BDCs, real estate investment trusts are a creation of the tax code, with these real-estate holding companies not having to pay corporate tax if they pay out most of their income to shareholders. Moreover, because many REITs receive monthly income in the form of rents from tenants, it's only natural for some of them to pay their shareholders in the same manner.

Realty Income (O) has touted its monthly payouts for a long time, even registering a trademark as "the monthly dividend company." For 45 years, Realty Income has paid monthly dividends, with distributions totaling more than $3 billion over that time. With more than 4,200 properties in its portfolio, Realty Income generates a nearly 5 percent annual yield. Even more important, Realty Income has a strong track record of raising its dividend payouts, with 76 increases over the past two decades.

But Realty Income isn't the only monthly dividend payer in the REIT world. Armour Residential (ARR) focuses on mortgage-backed securities, and it pays shareholders a nickel per share each month for a current yield of more than 14 percent. Shares of mortgage REITs have been under fire lately because of concerns about possible increases in interest rates in the near future, and Armour has cut its dividend on multiple occasions in the past two years. Nevertheless, with shares already having fallen from their peak levels in recent years, some see Armour as a value proposition if interest rates don't rise as quickly as many fear.

Be Smart About Dividends

Just because a stock pays a monthly dividend doesn't mean it's automatically a good stock. You still have to decide whether a company has the growth potential to be a promising investment. For good companies, though, monthly dividends make things even easier for income investors looking for reliable cash flow.

For more on promising dividend stocks, check out our free report. You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google Plus. He and the Motley Fool has no position in any of the stocks mentioned.

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When the market corrects, the share prices of the Business Development Companies will go down to almost zero.

September 04 2014 at 12:59 AM Report abuse rate up rate down Reply

PGH all the way. A great monthly dividend and great growth ahead all at the same time.

And being a Canadian Oil and Gas company, it's a great takeover candidate also.

September 03 2014 at 12:23 PM Report abuse -1 rate up rate down Reply
1 reply to bb0515's comment

Chevron has a nice quarterly dividend.

September 03 2014 at 9:05 PM Report abuse +1 rate up rate down Reply

Another misleading article from the Fools at Motley.

It really isn't that tough to build a portfolio that will pay dividends every month. And you can do this, WITHOUT buying the risky stocks that Motley Fool recommends.

Many good companies pay their dividends in March, June, September, and December. So, you have a big choice to choose from for those months. But, there are also some that pay on different schedules. For example, Medtronic pays in January, April, July, and October. So does AT&T and Southern Company. As another example, Bristol Myers Squibb pays in February, May, August, and November. Con Edison pays in February; so do Exxon and Hershey.

The above short list is just to get you started. There are lots of other good dividend-paying companies to choose from.

How do you find out when a company you are interested in pays out its' dividends?? Go to their website and click on Investor Relations. The dividend schedule and payout dates will be shown in that section of the website.

You will have to spend some time doing research. But, you CAN build a solid portfolio of good-quality stocks that will pay you dividends every month.

If you are interested in learning more about this subject, a good book to read is "The Little Book of Big Safe Dividends" by Charles B. Carlson.

September 03 2014 at 11:00 AM Report abuse +2 rate up rate down Reply

Unfortunately you can't believe what the Motley Fool has to say

September 03 2014 at 9:47 AM Report abuse +1 rate up rate down Reply