Income investors turn to closed-end funds, covered calls and other investments to seek out monthly income. However, there are a select number of stocks that distribute their dividends on a monthly basis. For an income investor, there is nothing like getting a consistent monthly dividend check each and every month. This is very convenient for timed income and even better if you are compounding your income investment. Having analyzed several monthly payers, my favorite monthly income stock is Main Street Capital.
Main Street Capital (MAIN) is a principal investment firm that primarily provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies. Main Street's portfolio investments are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in diverse industry sectors. MAIN is trading at $24.45 with a market cap of $663 million. MAIN has an EPS growth last 12 months versus prior 12 months of 33%. Revenue growth was 71% during the same period. MAIN has an annual dividend yield of 7.1% with monthly distributions. Year to date, MAIN's stock price is up 18% compared to 4.1% for the Russell 2000 index.
MAIN had a Blowout First Quarter
For the first quarter of 2012, total investment income was $20.6 million, a 54% increase over the $13.4 million of total investment income for the corresponding period of 2011. Distributable net investment income, which is net investment income before non-cash, share-based compensation expense, increased 71% to $13.4 million, or $ 0.50 per share, in the first quarter of 2012 compared with $7.8 million, or $ 0.40 per share, in the corresponding period of 2011. The net increase in net assets resulting from operations attributable to common stock was $23.8 million, or $0.89 per share, in the first quarter of 2012, representing an increase of 130% compared with $10.3 million, or $0.54 per share, in the corresponding period of 2011.
MAIN Increases Monthly Dividend
MAIN recently announced that it's Board of Directors declared monthly dividends of $0.145 per share for each of July, August and September 2012. These monthly dividends equal a total of $0.435 per share for the third quarter of 2012. The third quarter 2012 dividends represent an 11.5% increase from the dividends declared for the third quarter of 2011 and a 3.6% increase compared to the second quarter of 2012. Including the dividends declared for the third quarter of 2012, Main Street will have paid $7.58 per share in cumulative dividends since its October 2007 initial public offering.
In summary, MAIN looks like a steady monthly dividend stock to add to an income portfolio. MAIN has a 12-month price target of $30, a potential 23% increase from its current price. MAIN has an equity summary score of 9.2 out of 10 for a VERY bullish outlook.
Disclosure: I am long MAIN.