It may be hard to believe but there are over 350 stocks which pay their dividends monthly. With all the volatility in the stock market recently, many investors are turning to income stocks for at least a part of their portfolio. Monthly dividend stocks are desirable because investors get their investment back faster, compounding is faster, the stocks are more liquid than individual corporate or municipal bonds, and there is no minimum investment. In addition, there may be capital appreciation. To download an Excel list of all the monthly dividend stocks which can be sorted, added to, or changed, go to WallStreetNewsNetwork.com.
It is assumed for this analysis that Canadian oil income royalty trusts, real estate investment trusts [REIT’s], and exchange traded funds [ETF’s] are considered stocks. You should be aware that all yields may change, be reduced, or eliminated. The principal will also fluctuate and may drop in value, offsetting any dividends received. The data on these stocks was gathered during the last week, so yields may have changed. Some of these stocks should be considered extremely speculative. The Canadian oil income 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.
At the top of the list, in terms of yield, and probably in terms of risk, is the RMK Multi-Sector High Income Fund (RHY), which yields 23.2%. This is a closed end fund which is speculative due to its portfolio holdings which include corporate bonds, mortgage and asset-backed securities, convertible debt securities, distressed securities, and other bonds. Up to up to 20% of its total assets may be invested in distressed securities.
Advantage Energy Income Fund (AAV) is the highest yielding monthly Canadian oil royalty income trust, with a yield of 17.8%. It owns and operates interests in oil and natural gas properties in Canada. The forward price earnings ratio is 39.
The highest yielding monthly growth and income fund is Boulder Growth & Income Fund Inc. (BIF), which yields 14.8%. This CEF invests in common stocks both U.S. and foreign, 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 closed end fund. The fund, with yields 13.3%, invests in real estate investment trusts and other real estate stocks. Its dividends have been paid monthly since the fund's inception in 2003, and the company raised its dividend in May of 2007.
The highest yielding American royalty trust is Mesa Royalty Trust (MTR), with a yield of 9.1%. Mesa is an Austin, Texas owner of oil and gas royalty interests in Kansas; New Mexico, Colorado, and Wyoming. It has been paying dividends monthly since 1988.
The top yielding monthly bond CEF is the New America High Income Fund Inc. (HYB), which yields 11.6%. Its portfolio holds below investment grade corporate bonds. It has paid monthly dividends since April 1988.
The highest yielding convertible fund is the Calamos Convertible Opportunities & Income Fund (CHI), which generates a yield of 11.3%. It invests in convertible bonds and non-convertible bonds of investment grade and non-investment grade. The fund has paid its dividends monthly since August 2002.
BlackRock Municipal Income Trust (BFK) is the highest yielding municipal bond CEF, with a 6.4% 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 dividends monthly since September 2001.
Disclosure: The author does not own any of the above.