5 Stocks to Buy That Pay Reliable Monthly Dividends

Key Points

• Dividend stocks are known for stability in volatile markets and the opportunity for reliable income. 
• Monthly dividend stocks increase the frequency of cash distributions which is particularly appealing to retirees on a budget. 
• Investors should prioritize the reliability of the dividend over a high yield. 
• Because of their business models, REITs and BDCs are good candidates for finding monthly dividend stocks.   

The benefit of having dividend stocks in your portfolio is well established. Companies that pay dividends are not the flashiest of stocks. But when you consider that a dividend is a percentage of a company’s profits, it should tell you something about the balance sheet of these companies.  

These are companies that generate predictable revenue and profits. And that allows them to return some of those profits to shareholders by way of a dividend. Dividend stocks have their place in a portfolio at any time, but particularly in bear markets when investors are looking for stocks with less volatility and the opportunity to earn some income. 

Many dividend stocks pay their dividends quarterly, but several pay them monthly. This makes them a smart choice for retirees who are looking for control of their cash flow. And these stocks generally have a higher dividend yield. This means that a higher percentage of their profits is paid out as a dividend. 

Of course, investors must be careful. Companies don’t have to pay dividends, and as the pandemic showed, companies can and will cut or suspend their dividend if business conditions dictate. 

For that reason, investors need to focus on the reliability of the company’s dividend. That means checking under the hood and learning about the company’s business model. There are many companies such as real estate investment trusts (REITs) and business development companies (BDCs) that pay out reliable dividends with high yields. 

This article will show you five monthly dividend stocks that income-oriented investors should consider buying in 2023.  

Realty Income (NYSE:O) - There’s a reason Realty Income has made “The Monthly Dividend Company” its official nickname. The real estate investment trust continues to churn out a reliable dividend month after month.  

They do this by investing in companies that are in “recession-proof” businesses. Consider that it counts 7-Eleven and Home Depot (NYSE:HD) as two of its largest tenants. These companies are built to withstand economic downturns and thrive when the economy is strong. 

Realty Income has a dividend yield of 4.60% which, at the time of this writing, comes out to a $2.98 payout on an annual basis. Plus, the company has increased their dividend for the last 28 years making them the only Dividend Aristocrat on this list.  

STAG industrial (NYSE:STAG) - The next REIT on this list is STAG Industrial. This is a company that invests in commercial properties such as the warehouses that are needed for e-commerce. In 2022, e-commerce is taking a hit as consumers shift from buying stuff to buying experiences. This is reflected in the STAG stock price which has fallen approximately 30% from the record high it hit at the end of 2021.  

However, according to data from the U.S. Census Bureau, e-commerce sales continue to make up a small percentage (14.8%) of all retail sales at the end of the third quarter. That gives STAG Industrial a long runway.  

That means, the stock should have a nice runway for future growth. And investors get a dividend that currently has a yield of 4.46% and pays out $1.46 per share on an annual basis.  

EPR Properties (NYSE:EPR) - You can look at the next REIT on this list as the opposite of STAG Industrial. EPR Properties invests in properties that center around delivering experiences for consumers. So, we’re talking about amusement parks, ski resorts, and venues like Topgolf.  

That focus is clear in the company’s stock price. It fell off a cliff at the onset of the pandemic but has posted a gain of over 100% since that date. However, EPR stock still has a long way to go to reach its pre-pandemic level. And with consumers shifting their spending habits from products to services, EPR Properties is likely to be a beneficiary.  

In the meantime, EPR Properties pays a dividend with a yield of over 8% (8.24%) and pays out $3.30 per share on an annual basis.  

LTC Properties (NYSE:LTC) - The last REIT on this list has a long-term story for 2023 and beyond. LTC Properties primarily invests in long-term care (I.e., LTC) properties and skilled nursing facilities.  

The bullish argument for LTC Properties is one of simple math. Over the next two decades the peak of the baby boomer generation will be reaching the age where they may have a need for long-term care. And, as that demand is rising so is the growth of long-term care facilities. This makes LTC Properties a solid long-term buy.  

The company has a current dividend yield of 5.85% with an annual payout of $2.28 per share.  

PennantPark Floating Rate Capital (NYSE:PFLT) - The last company on this list is the only company that’s not a REIT. PennantPark Floating Rate Capital is a business development company (BDC). These companies provide capital to small- and mid-size companies that are not able to get capital from other sources. 

That means if you’re planning to invest in a BDC, it’s important to understand who they invest in. PennantPark focuses on primarily U.S. companies with proven management teams with strong fundamentals and solid growth potential.  

With a 10.20% dividend yield, Pennant Park has the highest dividend yield of the companies in this article. However, this shows why yield isn’t the only factor for investors to consider. The annual payout is just $1.14, but it’s an exceptionally reliable dividend.