Stocks to buy

Any investor who is looking for a stable source of income would be wise to consider monthly dividend stocks.

Unlike traditional dividend stocks that pay out quarterly or annually, monthly dividend stocks provide a consistent and predictable income stream 12 times a year.

That makes them attractive for retirees, income-focused investors, and anyone who wants to reinvest their dividends for compounded growth.

Monthly dividend stocks are particularly attractive because of their steady cash flow. Dividend payments align with regular household expenses, making them useful for meeting ongoing costs.

It’s much easier to manage your finances when you know you have roughly the same income coming in every month, rather than getting a dividend payment on a quarterly basis.

But you don’t have to be a retiree to enjoy the benefits of monthly dividend stocks. These names are also ideal for people who want to accelerate the beauty of compounded growth.

Because you’re getting your payment 12 times a year instead of four times a year, you can invest your dividend faster and get your money working for you immediately.

I’m using the Portfolio Grader and the Dividend Grader to choose the best monthly dividend stocks on the market.

These tools evaluate stocks based on their dividend payout, as well as earnings performance, growth and analyst sentiment. Even stocks that have an overall lower grade in the Portfolio Grader can make a strong monthly dividend stock, as you’ll see.

If you’re an investor who is looking for both income and growth potential, then these monthly dividend stocks are for you.

Main Street Capital (MAIN)

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Main Street Capital (NYSE:MAIN) is a business development company, or BDC. These types of companies are like real estate investment trusts, in that they have a tax structure that requires the BDC to distribute at least 90% of their income to investors.

BDCs invest in private companies, with Main Street having a focus on lower and middle market firms. In the second quarter alone, Main Street originated new or increased commitments of $375.9 million. As of June 30, the private equity firm’s loan portfolio included total investments of $1.8 billion across 92 unique borrowers.

Main Street won’t issue its second-quarter financial report until Aug. 8, but preliminary results look solid. The company said its net investment income will be $1 to $1.02 per share, while distributable net investment income will be $1.06 to $1.08 per share. Main Street increased its dividend payments in the quarter by 13% from a year ago.

Main Street pays a dividend yield of 8% and gets a “B” rating in the Dividend Grader and an “A” rating in the Portfolio Grader.

PennantPark Floating Rate Capital (PFLT)

Source: Shutterstock

Another BDC on the list is PennantPark Floating Rate Capital (NYSE:PFLT), which invests in middle-market companies with first-lien debt.

It’s always important to know what a BDC is investing in because, unfortunately, sometimes companies fail and can’t repay their loans. But first-lien debt is a pretty safe investment because those types of debts are guaranteed with collateral.

PennantPark also has some floating rate senior secured loans on its books, second lien secured debt and subordinated debt. The Miami-based BDC is currently managing approximately $7.7 billion of investable capital.

Earnings for the second quarter of fiscal 2024, (ending March 31), included $19.1 million in investment income and 31 cents per share in dividend payments, compared to a year ago when it had $13.7 million in investment income and paid out 28.5 cents per share in dividends.

PFLT provides a strong monthly dividend payout of 10.9%. It gets a “C” rating in the Portfolio Grader, but a “B” rating in the Dividend Grader.

Permian Basin Royalty Trust (PBT)

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If you’ve even dabbled in oil or gas stocks, you’re likely familiar with the Permian Basin – a massive oil reserve that spans from western Texas to southeast New Mexico.

For 100 years, oil drillers have been working the Permian Basin and so far have removed 30 billion barrels of oil. But there’s still plenty left, with experts calculating that the reserve still has another 20 billion barrels left to withdraw.

That brings us to the Permian Basin Royalty Trust (NYSE:PBT). Royalty trusts own the rights to assets such as mineral rights or oil reserves. Companies that want to drill or mine the land pay royalties to the landowner, who then distributes the payments to investors.

Because the distributions aren’t considered to be taxable events, the monthly dividend yields are high, which makes royalty trusts a good pick for a monthly dividend stock.

The trust’s principal assets are a 75% net overriding royalty interest carved out by Southland Royalty Company from its fee mineral interest in the Waddell Ranch properties in Crane County, Texas, as well as a 95% net overriding royalty interest from Southland’s major producing royalty properties in Texas.

Royalty income in the first quarter was $6 million, versus $5.2 million in the same period a year ago. Distributable income per unit was 12 cents per unit, an increase from 10 cents per unit in the first quarter of 2023.

PBT stock offers a dividend yield of 6%. That gives it a “D” rating in the Portfolio Grader, but an “A” rating in the Dividend Grader.

Apple Hospitality REIT (APLE)

Source: Dilok Klaisataporn / Shutterstock.com

Real estate investment trusts are always going to be an ideal choice for a dividend stock. REITs invest in various forms of real estate, and often are focused on a specific type of real estate, such as health care, residential or commercial property.

The Apple Hospitality REIT (NYSE:APLE) is a Virginia-based company that invests in upscale hotel properties in the U.S. IT has a portfolio 224 hotels and 30,000 guest rooms throughout 37 states and the District of Columbia.

The company’s investments include 100 hotels branded by Marriott (NASDAQ:MAR), 120 Hilton (NYSE:HLT) hotels and five hotels branded by Hyatt (NYSE:H). Its most recent investment is an Embassy Suites by Hilton property in Madison, Wisconsin, that it purchased in June for $79.5 million.

Earnings in the first quarter included net income of $54 million, up 64.2% from a year ago. Income per share came in at 22 cents, up from 14 cents in the first quarter of 2023.

APLE pays a monthly dividend yield of 6.3%, giving it a “C” rating in the Portfolio Grader and a “B” rating in the Dividend Grader.

Cross Timbers Royalty Trust (CRT)

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Cross Timbers Royalty Trust (NYSE:CRT) is a gas and oil royalty trust. It was formed in 1991 to convey royalties from XTO Energy’s ownership of gas properties in the San Juan Basin of New Mexico and oil interests in Texas and Oklahoma.

Cross Timbers has a 90% profit interest in XTO’s properties in Texas, Oklahoma and New Mexico, but most net profits income is from long-active gas properties in the San Juan Basin of northwestern New Mexico. There are no production or development costs, so the payout is primarily affected by sales volume and prices.

Cross Timbers also has a 75% profit interest in XTO’s working interests in seven large, predominantly oil-producing properties in Texas and Oklahoma. However, those profits are impacted by production and development costs.

Income in the first quarter of 2024 was $1.85 million, but that was down from $3.92 million in the same quarter a year ago. Income per unit was 24.8 cents per unit, down from 60.6 cents in the same period a year ago. Cross Timbers says profits were affected by decreased gas production, lower gas and oil prices and increased development costs.

CRT currently pays a dividend yield of 11.3% and gets a “D” rating in the Portfolio Grader and a “B” rating in the Dividend Grader.

Gladstone Capital (GLAD)

Source: MacroEcon / Shutterstock.com

Gladstone Capital (NYSE:GLAD) is a business development company that specializes in farmland. The Virginia-based company invests in loans to lower-middle market businesses, having made more than 260 deals since its inception in 2001.

The company currently invests in a variety of companies, including aerospace firms, telecommunications, health care, manufacturers, real estate, food services and automotive companies.

Earnings for the second quarter of fiscal 2024 (ending March 31) included $23.99 million in investment income, up 3.3% from a year ago. Net investment income of $10.77 million was down 9.7% from a year ago, and cash distributions fell from 27 cents per share to 25 cents per share.

The company also executed a 1-for-2 reverse stock split in April.

GLAD stock has a dividend payout ratio of 8.3%, and gets “B” ratings in both the Portfolio Grader and the Dividend Grader.

Stellus Capital Investment Corp. (SCM)

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Stellus Capital Investment Corp. (NYSE:SCM) is a private equity firm that focuses on private middle-market companies, which it describes as those with between $5 million and $50 million of earnings before taxes, depreciation and amortization.

The company currently has 94 active investments with $2.9 million in assets under management. Its portfolio of active investments includes firms that are in the aerospace, business services, and capital equipment fields.

Earnings in the first quarter were $10.24 million and 42 cents per share, up from $9.07 million and 46 cents per share a year ago.

Stellus offers a monthly dividend yield of 11.1%, giving it a “C” rating in the Portfolio Grader and a “B” rating in the Dividend Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.

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