There are over 350 stocks which pay their dividends monthly. Conservative investors love these investments for several reasons: they get their return of capital back faster, they can compound faster, the income coincides with their monthly expenses, they are more liquid than individual corporate or municipal bonds, there is no minimum investment allowing them greater diversification, and there is the potential for capital appreciation for some of these stocks. To get a downloadable list of all the monthly dividend stocks that you can open in Excel which you can sort, add to, delete from, or change, go to WallStreetNewsNetwork.com.
There are some caveats you should be aware of. For purposes of this article, it is assumed that exchange traded funds [ETF’s], real estate investment trusts [REIT’s], and Canadian oil income royalty trusts are considered stocks. Dividends are always subject to change and reduction, including changes in payment schedules from monthly to quarterly. The principal can also drop, by even more than the amount of the income received. The information on these stocks was gathered over the past couple weeks, so obviously some yields have changed during that time frame.
Some of these stocks are extremely speculative, and high yield does not mean safe. The Canadian royalty trusts have special tax issues that you should be aware of, especially if you are planning on putting them in a retirement plan. A Canadian law which goes into effect in 2011 can affect the price and income of the Canadian stocks.
Remember, these are monthly dividend stocks, in case you are wondering why your quarterly dividend stock does not appear on the list. I’ve extracted the top eight from the list, including the highest yielding from various categories, such as tax-free, real estate oriented, and Canadian royalty trusts.
- RMK Strategic Income Fund (RSF), is at the top of this list in terms of yield, and probably in terms of risk. It yields 24.9%. This is a closed-end fund which is extremely speculative due to its portfolio holdings which include home equity loans, commercial loans, franchise loans, equipment leases, manufactured housing, common stocks, collateralized debt obligations, certificate-backed obligations, and collateralized mortgage obligations. The company has been paying $0.14 per month for the last nine months, which is down from $0.15 per month last year. I personally don’t think the dividend is sustainable.
- Pengrowth Energy Trust (PGH) is the highest yielding monthly Canadian oil royalty income trust, with a yield of 16.2%. It owns and operates interests in oil and natural gas properties in Canada. It has increased its monthly dividend for the last two months, and the dividend is the highest it has ever been in the last three years. The price earnings ratio, for what it is worth, is 13.6.
- Boulder Growth & Income Fund Inc. (BIF), is the highest yielding monthly growth and income fund, and yields 14.1%. This CEF invests in common stocks in both the U.S. and outside the U.S., warrants, corporate bonds, treasury bills, and repurchase agreements. It was founded in 1972, and is co-managed by Boulder Investment Advisers, and Stewart Investment Advisers.
- Neuberger Berman Real Estate Securities Income Fund Inc. (NRO), is the highest yielding monthly real estate CEF, as opposed to a REIT. The fund, with yields 13.6%, invests in real estate investment trusts, and other real estate stocks. It has paid its dividend monthly since their inception in 2003, and recently raised its dividend in May of this year.
- Mesa Royalty Trust (MTR), is the highest yield American royalty trust, with a yield of 13.2%. Mesa, which is based in Austin, Texas, owns oil and gas royalty interests in Kansas, New Mexico, Colorado, and Wyoming. It has been paying monthly dividends since 1988.
- The New America High Income Fund Inc. (HYB), is the top yielding monthly bond CEF, and yields 12.8%. Its portfolio holds below investment grade corporate bonds. It has paid monthly dividends since April 1988.
- The Calamos Convertible Opportunities & Income Fund (CHI), is the highest yielding convertible fund, and generates a yield of 11.7%. It invests in convertible bonds, and regular bonds of all ratings. It has paid its monthly dividends since August 2002.
- BlackRock Municipal Income Trust (BFK) is the highest yielding municipal bond CEF, with a 6.8% yield. It invests at least 80% of its portfolio in municipal bonds that are investment-grade quality, and up to 20% in lower grade munis. It has paid monthly dividends since September of 2001.
Disclosure: The author does not own any of the above.