Attention dividend hunters! We have uncovered several monthly dividend stocks that you can invest in to receive monthly payouts with double-digit yields.
While this may sound too good to be true, are a select number of stocks that can be highly profitable to people who seek a regular source of income from their investments.
These are not stocks of companies that are household names. But they nevertheless can be profitable long-term investments for people who prize consistent, reliable dividend payments over growth stocks and share price appreciation.
Here are four monthly dividend stocks paying double digit yields that are worth adding to a portfolio.
- Armour Residential REIT (NYSE:ARR)
- Sabine Royalty Trust (NYSE:SBR)
- Horizon Technology Finance Corp. (NASDAQ:HRZN)
- Prospect Capital (NASDAQ:PSEC)
Monthly Dividend Stocks: Armour Residential REIT (ARR)
Armour is a real estate investment trust that focuses on consumer or residential mortgages that are backed by the U.S. federal government. Armour is currently paying a dividend yield of 11.3%, and has managed to maintain that high level throughout this volatile year.
ARR’s stock price has also been volatile throughout 2020, falling 69% from a peak of $21.13 in February to a low of $6.66 in March, before climbing back 45% to nearly $10 today. While it has been up and down, Armour Residential’s stock price might actually be attractive to investors at only $10 each, especially investors who are not nearly as concerned about volatility as they are with high monthly dividend payments. At the end of September, Armour Residential reconfirmed that it will continue paying a monthly cash dividend at a rate of 10 cents per common share, making this a solid monthly dividend stock.
As a REIT, Armour is required to distribute all of its ordinary taxable income in the form of a dividend. This is good news for shareholders and should keep them happy for the foreseeable future.
ARR stock has also been bought by company insiders recently, which is typically a vote of confidence in the organization and its future prospects. Chief Executive Officer Scott Ulm bought $139,000 worth of shares at an average price of $13.88 per share, which was above the current market price of the stock.
Sabine Royalty Trust (SBR)
A royalty trust is an investment that holds an asset and pays back shareholders from royalties on the underlying product. In the case of Sabine Royalty Trust, the underlying asset is a massive network of oil and gas fields that are spread across the southern U.S. – from Florida to New Mexico. Shareholders receive payment as the oil and gas is sold at market prices.
The oil and gas sector has been extremely volatile this year and so has the dividend payouts to SBR shareholders. The monthly dividend bottomed out at 15 cents a share in the spring as energy prices crashed. However, since then, the dividend paid by Sabine Royalty Trust has risen as high as 32.7 cents per share in July. That equated to a dividend yield of 13.4% at the time, which was among the highest yields investors will find anywhere these days.
For October, Sabine lowered its dividend payment to 20 cents per common share, which is equal to a about a 10% yield.
In terms of its share price, SBR stock has been beaten down this year. In January, shares were trading at $42.98 each. In March, they crashed 44% to $24.01 each. Since then, the stock price has been rocky, and is currently trading right around $28 a share.
Analysts appear to be somewhat bullish on the stock. The consensus forecast is for the share price to reach $32.50 over the next 12 months, representing a potential upside of more than 11% for shareholders.
Horizon Technology Finance Corp. (HRZN)
Despite taking a steep fall in March with the broader market, Horizon has maintained its healthy monthly dividend of 10 cents a share. Despite the difficulties of 2020, Horizon’s dividend has not been interrupted.
That’s been a big relief to shareholders who rely on this diversified financing company for a steady stream of income. Horizon provides financing to start-up companies, and focuses largely on medical technology firms. However, the company’s portfolio also includes telecommunications and energy companies.
Horizon is essentially a venture capital firm. As the various start-ups it invests in grow, Horizon reaps profits and passes a good chunk of them onto shareholders each and every month. It’s an approach that has proven to be successful for the company and investors.
HRZN stock has clawed its way back this year and has managed to recover nearly all the value it lost in the spring. Today, the share price is up 150% from its March low of $5.25 a share and trades at $12, near where it was at the start of the year. Analysts seem to feel that the stock price is fairly valued right where it is today and don’t see a lot more growth in the coming months. But that is likely OK with investors who can buy shares for under $15 each and enjoy a monthly dividend that pays out at a 10% yield.
That’s a strong monthly payment, made all the stronger by the fact that it hasn’t changed at all during one of the most difficult years in recent memory.
Prospect Capital (PSEC)
In terms of a truly monster dividend yield, it doesn’t get much bigger or better than the 14.4% offered by Prospect Capital on its monthly dividend payment. Prospect Capital is a business development company that makes debt and equity investments in U.S. private businesses, typically businesses that are too small to sell stocks or bonds to public investors.
Basically, the company makes loans that banks and other large financial institutions can’t or won’t touch. It can be risky, but Prospect Capital appears to have the experience and acumen to make smart, calculated risks.
By law, Prospect Capital is required to pay out virtually all of its income as dividend payments, which is great news for shareholders who look for monthly dividend stocks. In good times and bad, Prospect Capital can be counted on to pay its monthly dividend.
PSEC stock has been more stable throughout this year than the other companies on this list. The stock is down 23% year-to-date at $5.13 a share, but up 36% from its March bottom. At only $5 a share, investors can snap up plenty of shares for a relatively modest amount of money and reap the benefits of a 14.4% dividend yield, which is hard to top, especially in the current market.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.