Top 10 Dividend Stocks That Pay Monthly

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In this article we present the list of Top 10 Dividend Stocks That Pay Monthly. Click to skip ahead and see the Top 5 Dividend Stocks That Pay Monthly.

Dividend stocks are valuable additions to any portfolio during even the best of market conditions, providing a consistent source of income from your investments that can then be reinvested or used in other ways. However, their utility truly shines during challenging or stagnant stretches of the market, when dividends account for larger chunks of the market’s total returns.

Investors may be surprised to know just how much of the S&P 500’s total returns come courtesy of dividends, though the amount has fallen in the past few decades as growth stocks have taken off. According to Hartford Funds, a whopping 73% of the S&P 500’s total returns in the 1970’s were thanks to dividends, while between 1930 and 2017 the figure stood at 42%.

Of course, when market conditions are poor, that could signify that numerous companies are also in financial peril, which could likewise jeopardize those dividend payments. That’s certainly been the case in the pandemic-savaged 2020, as companies big and small have been forced to slash or outright suspend their dividend payments.

In some cases, those moves have ended lengthy runs of ongoing and non-declining dividend payments, such as in the case of Royal Dutch Shell plc (NYSE:RDS), which is one of the 10 Best Dividend Stocks To Buy According To Billionaire Ken Fisher, but which was forced to slash its dividend this year for the first time since 1945.

The same has been true of monthly paying dividend stocks, which are a much smaller subset of dividend stocks and which tend to be stocks whose prime selling point is their consistent and high yielding dividend payments to investors. Of the less than 60 companies which make monthly dividend payments, several have been forced to suspend their dividends entirely as a result of the pandemic, including EPR Properties (NYSE:EPR), Chatham Lodging Trust (NYSE:CLDT), and Apple Hospitality REIT Inc (NYSE:APLE).

Several others have been forced to slash their dividends this year in response to the challenging market environment, including some of the top monthly dividend stocks on this list, which has been compiled based on the hedge fund ownership of every dividend stock which pays out monthly.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. That doesn’t mean there isn’t money to be made off their consensus stock picks. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.