Analysis Of My 7 Reliable Monthly Dividend Stocks

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 |  Includes: AT, EGAS, O, PBA, PGH, SBR, SJT
by: Todd Johnson

I focus upon finding stocks that pay monthly dividends. This rational assumes I am building a monthly income stream to live on. My monthly income cannot have wild swings in net monthly dividends. My goal is to achieve financial utopia with a reliable, ongoing revenue stream. This is what I refer to as my personal pension. I personally monitor the security of each name to ensure the company’s business model is operating smoothly. Due to the nature of requiring monthly income for living expenses, the stocks must be fairly stable. The business models must be relatively easy to understand. Here are seven securities which pay a monthly dividend, and are part of my personal portfolio.

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Gas Natural Inc. (NYSEMKT:EGAS)

Business Model

The company provides utility services in various areas of the U.S. Here is a breakdown of the segments:

Gas Natural Inc. is the parent company of Energy West, Lightning Pipeline Company, Great Plains Natural Gas Company, Brainard Gas, and Gas Natural Service Company. Energy West is the parent company of utility entities with operations in Montana, Wyoming, North Carolina and Maine. Lightning Pipeline is the parent company of natural gas utility entities that are natural gas utility companies with active operations in Ohio and Pennsylvania. Great Plains is the parent company of a natural gas utility entity operating in Ohio. Brainard is a natural gas utility entity with operations in Ohio. The Gas Natural Service Company oversees gas procurement, transportation, and storage for Brainard, Lightning Pipeline subsidiaries, and Great Plains subsidiaries.

The 23% debt level is acceptable. The company is active on the acquisition front. On August 1st, the company closed on an acquisition. Gas Natural paid $1.6 million in cash to acquire the assets of Independence Oil. Independence Oil delivers heating oil, liquid propane, and kerosene to approximately 4,500 customers from its offices in West Jefferson, North Carolina, and Independence, Virginia.

Dividend

Gas Natural Inc. has paid a monthly dividend of 4.5-cents per share. This equates to a 5.1% annual dividend.

Performance

I respect Gas Natural Inc. due to its business model. The stock’s beta is .34, which is desirable for an income stock. Gas Natural Inc. has provided an average 13.6% total annualized rate-of-return over the past 3-years. I would like to see future dividend growth. I recognize the company is growing, so I remain patient to see the fruition of the growth strategy.

Realty Income Corp. (NYSE:O)

Business Model

Realty Income is a 42-year old, publicly traded REIT focused upon paying monthly dividends. The revenues and net income are generated from over 2,500 commercial properties in 49 states. The tenants are predominantly large commercial enterprises that operate multiple locations. Realty Income purchases commercial real estate for cash. The real estate is then leased to tenants that have a good business and operating track record. The tenants are typically under long-term leases. The leases are typically for 15 to 20 years, which support the real estate purchase and provide dividend stability.

Dividend

The current dividend yield is 5.1%. Realty Income has provided investors 55-consecutive quarterly increases. The dividend growth has been 93.2% since 1994. I respect the company's focus upon growing the dividend, as the company has provided an average annual dividend return of 7.7% since 1994.

Performance

Realty Income has provided an average 19.5% total annualized rate-of-return over the past 3-years. I am very pleased with this return.

Atlantic Power Corporation (NYSE:AT)

Business Model

Atlantic Power Corporation provides electricity to utilities in the U.S. The electricity is sold under long-term power purchase agreements with U.S.-based utilities. Atlantic Power Corporation owns positions in various power projects and a transmission line in the U.S. AT is focused upon providing a stable revenue stream in order to satisfy monthly dividends to shareholders. Atlantic Power management has stated the company will purchase additional companies if the earnings are accretive. Atlantic Power's portfolio of assets consists of 13 operational power generation projects.

Dividend

Atlantic Power Corporation provides a reasonable 7.8% dividend in a low interest rate environment. The business model provides essential services, and thus is less prone to key customer revenue losses.

Performance

The performance has been reasonable. The above table illustrates a 2-year time frame due to when Atlantic Power began trading in the U.S. The company has delivered on their expectations. I am confident in this equity being a core positions for at least a few years.

Sabine Royalty Trust (NYSE:SBR)

Business Model

Sabine Royalty Trust is an energy trust with mineral interests in producing and proved undeveloped oil and gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.

Sabine Royalty Trust, per its 2010 annual report, expects to have a life span of 8 to 10 years. This is based upon an estimated reserve estimate of 5.6 million barrels of oil and 36.9 billion cubic feet of gas remaining.

Sabine Royalty will be terminated by (i) two successive fiscal years in which the Trust’s gross revenues from the Royalty Properties are less than $2,000,000 per year, (ii) a vote of Unit holders as described below under “Voting Rights of Unit Holders” or (iii) operation of provisions of the Trust Agreement intended to permit compliance by the Trust with the “rule against perpetuities.”

Dividend

The currency yield of 7.7% is enticing and offers value. As a trust, there are tax advantages in holding the stock in a taxable account. The past two monthly distributions have been 40-cents per share.

Performance

Sabine Royalty Trust has provided unit holders an average 21.3% total annualized rate-of-return over the past 3-years. This is a solid return for a trust.

San Juan Basin Royalty Trust (NYSE:SJT)

Business Model

San Juan Basin Royalty Trust operates as an energy trust. The core asset is a 75% net overriding royalty interest within specific oil and gas leasehold and royalty interests in properties located in the San Juan Basin of northwestern New Mexico.

Based upon the 10K, San Juan Basin Royalty Trust has an estimated 8.3 years of life span. I’ll continue to watch natural gas prices and make adjustments. Investments cannot be providing my portfolio a negative return. That is simply financially embarrassing.

Dividend

The current distribution yield is 6%. This is fairly low and reflects low natural gas prices.

Performance

San Juan Basin Royalty Trust has really let me down in its 3-year return. San Juan Basin Royalty Trust has provided unit holders an average -7.1% total annualized rate-of-return over the past 3-years. This is not a good sign for any investment.

Pengrowth Energy Corporation (NYSE:PGH)

Business Model

Pengrowth Energy Corporation engages in the acquisition, exploration, development, and production of oil and natural gas reserves in the Western Canadian Sedimentary Basin. Pengrowth Energy's focus is exploration for crude oil, natural gas, and natural gas liquids in the provinces of Alberta, British Columbia, and Saskatchewan. Pengrowth has a 66% working interest in over 200-project area properties. Pengrowth's daily production is anticipated to average about 75,000 barrels of oil per day in 2011.

Dividend

Pengrowth Energy Corporation currently offers a solid 8.4% dividend level. Based upon the overall performance, I am pleased with my current position and potential for dividend increases. The equity has provided solid returns. The business model is fairly predictable and remains a core holding.

Performance

Pengrowth Energy Corporation has provided an average 18.5% total annualized rate-of-return over the past 3-years. This is a solid return from a core holding acting as a monthly dividend producer.

Provident Energy Ltd. (PVX)

Business Model

Provident Energy Ltd. is a Calgary-based corporation that owns and operates a natural gas liquids (NGL) midstream services and marketing business. The company's midstream operations are based in Western Canada and in the premium NGL markets in Eastern Canada and the U.S. The company involves in the extraction, processing, storage, transportation, and marketing of NGLs, as well as offers these services to third party customers.

Dividend

I am comfortable with the current dividend level of 6.6%. The equity has provided solid returns. The business model is fairly predictable and remains a core holding.

Performance

Provident Energy Ltd. has provided an average 34% total annualized rate-of-return over the past 3-years. I cannot reasonably ask for a better return.

Disclosure: I am long EGAS, O, AT, PGH, PVX, SJT, SBR.