10 dividend stocks to consider to grow your portfolio
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Updated: February 08, 2024
Many investors turn to regular stocks when they want to capitalize on the growth potential for a company. The best dividend stocks, on the other hand, provide a regular source of cash flow on a semi-annual, quarterly or monthly basis. Monthly dividend cash can be used to support your monthly financial obligations, or be used to reinvest in your portfolio, compounding faster than quarterly investments. We'll highlight some of the best common stocks that provide the highest dividend cash flow on a monthly basis, according to dividend.com.
Real estate investment trusts (REITs) must pay a minimum of 90% of their taxable income in the form of shareholder dividends each year, which makes them a prime source of high monthly dividend income for investors.
High-dividend stocks
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Armour Residential REIT Inc.
Armour Residential REIT invests primarily in residential mortgage-backed securities issued or guaranteed by US Government-sponsored entities, including the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or loans guaranteed by the Government National Mortgage Administration (Ginnie Mae). Armour Residential offers a 25.88% dividend yield that pays $0.24 per share per month.
EPR Properties
EPR Properties is an experiential REIT, which means that the properties in their portfolio include drive-to locations where consumers go to enjoy experiences. The REIT invests in long-term leases for theaters, family entertainment centers, attractions, ski centers, experiential lodging, gaming venues, cultural properties and fitness and wellness facilities.
Its portfolio also includes educational properties, such as private schools and early childhood education centers. EPR specializes in triple-net leases, which require tenants to cover virtually all of the property’s operating expenses. According to their 2022 annual report, EPR’s investments totaled approximately $6.7 billion and included 289 properties. At the time of writing, EPR monthly dividend amount per share was $0.28.
SL Green Realty Corp.
SL Green Realty Corp. is Manhattan’s largest office landlord. The REIT is focused primarily on acquiring, managing and maximizing the value of Manhattan commercial properties. As of Dec. 31, 2023, the company held interests in 58 buildings totaling 32.5 million square feet. At the time of writing, SL Green offers an 7.11% dividend yield that pays $0.25 per share per month.
Invest online in commercial real estate via eREITs and eFunds with Fundrise. Learn more.
Realty Income Corporation
Realty Income has operated for more than 50 years. As a REIT, its monthly dividends are supported by cash flow from more than 13,250 real estate properties primarily owned under long-term net lease agreements with commercial clients. As of 2023, the company has declared 643 consecutive common stock monthly dividends throughout its operating history, and has increased its dividend 123 times since it was listed on the NYSE in 1994. Realty Income Corporation offers a 5.64% dividend yield and pays $0.26 per share per month.
Agree Realty Corp.
Agree Realty Corp. is a REIT that focuses on the ownership, acquisition and development of essential retail properties, such as grocery stores, big box retailers, home improvement stores, and drug stores, which are leased to national tenants through triple net lease arrangements. Agree Realty operates 2,135 properties comprising 44 million square feet throughout the United States. The REIT increased the frequency of its dividend payments from quarterly to monthly in early 2021. Agree Realty offers a 4.92% dividend yield and pays $0.25 per share per month.
Main Street Capital Corporation
Main Street Capital Corp is an investment firm that provides debt and equity financing to lower middle market companies and debt capital to middle market companies in the U.S. It typically deploys capital to support management buyouts, recapitalizations, growth financing, refinancing and acquisitions of companies that operate across many industry sectors. Main Street Capital offers a 6.09% dividend yield and pays $0.24 per share each month.
LTC Properties Inc.
LTC Properties is a REIT involved in financing seniors housing and healthcare properties. LTC’s portfolio is divided approximately evenly between senior housing and skilled nursing facilities. The REIT provides investments through sale-leasebacks, mortgage financing, joint ventures and structured finance solutions. It currently reports 208 investments with 29 partners in 27 states. LTC offers a 7.37% dividend yield and pays a dividend of $0.19 per share each month.
Ellington Financial
Ellington Financial invests in an array of mortgage-related, consumer-related, corporate-related and other financial assets through investments — primarily loans and securities. It looks to underserved, niche market segments where inefficiencies exist, and where the segment's size or complexity could present a barrier to entry for others. Ellington currently manages $9.6 billion in assets. The company offers a 14.61% dividend yield and pays a dividend of $0.15 per share each month.
SLR Investment Corp
SLR Investment Corp provides US middle market businesses and intermediaries with debt financing solutions to fund working capital, acquisition, refinancing and growth capital. It also invests in foreign markets, including emerging markets. SLR offers a yield of 10.82% and pays out a monthly dividend of $0.41 per share.
Stellus Capital Investment Corp
Stellus Capital Investment Corporation is a business development company specializing in investments in private middle-market companies, with a preference for companies in the US and Canada. Industries covered in more than 80 current active investments include aerospace and defense, energy, healthcare, manufacturing, real estate and telecommunications. Stellus offers a dividend yield of 12.46% and pays a monthly dividend of $0.13 per share.
What are dividend stocks?
Dividends are payments made by publicly traded companies to their shareholders.
Beyond the dictionary definition, though, they can be an important tool for portfolio growth (particularly if you opt to reinvest your dividends to buy additional stock shares). Dividend payments can provide income for shareholders of all ages. And financial planners say they’re particularly helpful for retirees because they supplement cash flow from government programs like Social Security benefits — as well as workplace or personal retirement savings.
When bond yields decline, many investors turn to dividend-paying stocks as a way to replace more conventional fixed-income products that are normally part of a diverse portfolio. Some dividend stocks can even consistently increase their payout year after year.
So investing in dividend stocks can be like getting a pay raise. That’s something that's much-needed for investors with inflation at 40-year highs.
How dividends are paid
Dividends are paid on a regular basis, often quarterly, to share profits with stockholders. They can be paid out as either cash or in the form of additional stock.
Shareholders will receive a dollar amount or percentage for each share they own. For example, if the company pays a $1.50 cash dividend per share, and you own 40 shares, you’ll receive $60 over the year.
If the company pays a $1.50 cash dividend per share, and you own 40 shares, you’ll receive $60 over the year.
Other ways to invest in high-dividend stocks
You don’t need to scope out individual stocks and invest in them in order to benefit from high dividends. You can also tap into high dividends through exchange-traded funds (ETFs) or mutual funds representing either stocks, bonds or REITs.
ETFs typically offer lower minimum investment thresholds when compared to mutual funds. When you invest in a mutual fund or ETF, the fund manager is doing the heavy lifting for you, so be prepared to pay a management fee while you own them. Actively managed mutual fund management fees are typically higher than management fees for passively managed ETFs. Dividends for both are paid out after expenses.
Investing in a dividend ETF or mutual fund
Dividend ETFs and mutual funds will provide you with exposure to a large basket of different dividend-generating stocks. Dividend ETFs and mutual funds come in a number of different flavors, providing investors with dozens of choices.
Examples of a dividend ETF include the iShares Select Dividend ETF (DVY) which seeks to track the investment results of an index composed of relatively high dividend paying U.S. equities. It currently pays a quarterly dividend of $1.46 per share, with an expense ratio of 0.38%.
Examples of a dividend mutual fund include the Vanguard High Dividend Yield Index Fund Admiral Shares (VHYAX), which seeks to track a benchmark that provides broad exposure to U.S. companies dedicated to consistently paying larger-than-average dividends. It currently pays a quarterly dividend of $0.23 per share, with an expense ratio of 0.08%.
Related: Best Vanguard ETFs
Investing in a bond ETF or mutual fund
Bonds also pay regular dividends to investors. And while it’s not easy for individual investors to negotiate the bond market, they can gain exposure to bonds offering high yields through a bond ETF or mutual fund.
Examples of a bond ETF include the iShares iBonds 2024 Term High Yield & Income ETF (IBHD), which seeks to track the investment results of an index composed of U.S. dollar-denominated, high-yield and other income generating corporate bonds maturing in 2024. It currently pays a monthly dividend of $0.13 per share with an expense ratio of 0.35%.
Examples of a bond mutual fund include the Vanguard Long-Term Bond Index Fund Institutional Shares (VBLLX), which provides broad exposure to U.S. investment-grade bonds with maturities of more than 10 years. It currently pays a monthly dividend of $0.38 per share with an expense ratio of 0.05%.
Investing in a REIT ETF or mutual fund
REITs typically offer a portfolio of real estate investments: a REIT mutual fund or ETF diversifies that further by representing a number of REITs.
The Vanguard Real Estate Index Fund ETF (VNQ) invests in REITs representing a variety of sectors, including residential, healthcare, industrial, and hotels and resorts. Its most recent quarterly dividend was $0.72 cents per share with an expense ratio of 0.12%. Its mutual fund cousin is the Vanguard Real Estate Index fund Admiral Shares (VGSLX). Its most recent quarterly dividend was $1.02 cents per share with an expense ratio of 0.12%.
Monthly vs. quarterly dividend payments
Dividend stocks are a great way for investors to generate passive income through dividends. While most companies pay quarterly dividends, some pay their dividends monthly. That’s a bonus if you need that money consistently to cover your ongoing financial obligations or want to reinvest the money faster to grow your investment portfolio.
However, most of the high-dividend stocks happen to be REITs, which have all of their holdings in income-producing real estate. These may include offices, apartment buildings, warehouses, medical buildings, storage facilities, data centers, shopping centers and even farmland.
That’s good when the real estate market is booming, but may be less desirable when real estate markets are under pressure.
The office real estate market, for example, hasn't fully recovered following the COVID pandemic as many companies continue to opt for hybrid work arrangements and smaller office footprints. In some major cities, the desirability of downtown office space has also declined. Likewise, some suburban shopping malls have lost their popularity and are finding it difficult to attract tenants. Energy infrastructure may also face challenges under future regulatory pressure affecting fossil fuels.
Investors should understand that a REIT representing a sector of the market that faces economic challenges can continue to pay dividends for some time. However, they should carefully research the viability of the real estate represented in any REIT in which they invest to determine if owning it for the long term is right for them.
Bottom line on dividend stocks
Dividend-paying stocks are a good passive income generator. These stocks put your money to work and help you recuperate your return on investment much quicker than regular equity stocks. Monthly dividend stocks get that cash to you even faster. The dividends you earn can be used to reinvest or to fund your cost of living.
The best place to find high dividend paying stocks is REITs. These are real estate companies that are required to pay dividends to their investors. This means even when the economy takes a downturn you can still expect to still generate income from these stocks.
Related: Dividend Aristocrats List
Dividend stock FAQs
With files from Amanda Claypool and Sigrid Forberg
Peter Kenter is an experienced writer who enjoys making complicated subjects understandable. His range of written expertise includes investing, financial services, the bond market, mining, energy, insurance, pharmaceuticals, cannabis, automotive, sponsorship marketing and entertainment. His clients have included American Express, BlackRock, BMO, the Financial Post, RBC, Scotiabank and VISA.
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