Building a portfolio of monthly dividend stocks offers a steady income stream, which suits retirees and income-focused investors. Unlike quarterly payers, monthly dividends smooth cash flow and compound faster. I have analyzed hundreds of stocks to identify 17 high-quality monthly dividend payers worth holding forever.
Why Monthly Dividends Matter
Monthly dividends provide predictable income, which helps with budgeting. They also allow for faster compounding when reinvested. Consider two stocks—one paying D_q quarterly and another paying D_m monthly. If both yield the same annual rate, the monthly payer compounds slightly faster due to more frequent reinvestment.
The future value of reinvested dividends can be calculated using:
FV = P \times \left(1 + \frac{r}{n}\right)^{nt}Where:
- P = Initial investment
- r = Annual dividend yield
- n = Number of compounding periods (12 for monthly, 4 for quarterly)
- t = Time in years
A monthly dividend stock reinvested over 20 years will outperform its quarterly counterpart, even with identical yields.
Criteria for Selecting Forever Dividend Stocks
I screened for companies with:
- Consistent payout history (at least 10 years of uninterrupted dividends)
- Sustainable payout ratios (below 80% for most sectors)
- Strong cash flow generation (to support future hikes)
- Recession resilience (industries with stable demand)
Here are my top 17 picks across various sectors.
1. Realty Income (O)
Dividend Yield: 5.8%
Payout Ratio: 75%
Sector: REIT (Retail)
Realty Income, “The Monthly Dividend Company,” has paid 640 consecutive monthly dividends and increased payouts for 29 years. Its triple-net lease structure ensures stable rent collections.
2. STAG Industrial (STAG)
Dividend Yield: 4.1%
Payout Ratio: 68%
Sector: REIT (Industrial)
STAG focuses on single-tenant industrial properties, benefiting from e-commerce growth. Its diversified tenant base reduces risk.
3. Main Street Capital (MAIN)
Dividend Yield: 7.2%
Payout Ratio: 90%
Sector: BDC
This BDC lends to middle-market firms. Despite a high payout ratio, its fee income and portfolio quality support dividends.
4. Agree Realty (ADC)
Dividend Yield: 5.0%
Payout Ratio: 72%
Sector: REIT (Retail)
ADC invests in retail properties leased to investment-grade tenants like Walmart and Dollar General.
5. Gladstone Commercial (GOOD)
Dividend Yield: 9.1%
Payout Ratio: 85%
Sector: REIT (Diversified)
While the yield is high, GOOD’s focus on office and industrial properties provides stability.
6. Pembina Pipeline (PBA)
Dividend Yield: 6.3%
Payout Ratio: 78%
Sector: Energy
PBA operates pipelines and storage facilities, generating steady cash flow from long-term contracts.
7. Shaw Communications (SJR)
Dividend Yield: 6.0%
Payout Ratio: 65%
Sector: Telecom
Canadian telecoms offer high yields with lower risk due to regulated markets.
8. EPR Properties (EPR)
Dividend Yield: 8.5%
Payout Ratio: 80%
Sector: REIT (Entertainment)
EPR owns theaters, ski parks, and experiential properties. Post-pandemic recovery supports dividend safety.
9. LTC Properties (LTC)
Dividend Yield: 6.7%
Payout Ratio: 82%
Sector: REIT (Healthcare)
Aging demographics drive demand for senior housing, securing LTC’s rental income.
10. Horizon Technology Finance (HRZN)
Dividend Yield: 10.5%
Payout Ratio: 95%
Sector: BDC
HRZN lends to tech startups. High risk but rewarding for aggressive income seekers.
11. Apple Hospitality REIT (APLE)
Dividend Yield: 6.4%
Payout Ratio: 70%
Sector: REIT (Hospitality)
APLE owns upscale hotels. Travel rebounds post-COVID, ensuring occupancy recovery.
12. SL Green Realty (SLG)
Dividend Yield: 8.9%
Payout Ratio: 88%
Sector: REIT (Office)
SLG owns Manhattan office spaces. Hybrid work trends pose risks, but prime locations help.
13. Whitestone REIT (WSR)
Dividend Yield: 5.5%
Payout Ratio: 73%
Sector: REIT (Retail)
WSR focuses on community-centered retail properties, which are less vulnerable to e-commerce.
14. Global Water Resources (GWRS)
Dividend Yield: 3.8%
Payout Ratio: 60%
Sector: Utilities
Water utilities have monopolistic advantages, ensuring stable cash flows.
15. Dynex Capital (DX)
Dividend Yield: 12.1%
Payout Ratio: 98%
Sector: Mortgage REIT
DX invests in mortgage-backed securities. High yield but sensitive to interest rate changes.
16. Ellington Financial (EFC)
Dividend Yield: 13.5%
Payout Ratio: 105%
Sector: Mortgage REIT
EFC’s yield is enticing, but the payout exceeds earnings—best for tactical allocations.
17. PennantPark Floating Rate Capital (PFLT)
Dividend Yield: 11.2%
Payout Ratio: 92%
Sector: BDC
PFLT lends to mid-market firms with floating-rate loans, benefiting from rising rates.
Risk Considerations
While monthly dividends are attractive, risks include:
- High payout ratios (above 90% may be unsustainable)
- Interest rate sensitivity (REITs and BDCs suffer when rates rise)
- Sector-specific downturns (retail REITs face e-commerce threats)
Final Thoughts
A mix of REITs, BDCs, and utilities can create a resilient monthly income portfolio. I favor Realty Income, STAG Industrial, and Agree Realty for their strong track records. Higher-yield picks like HRZN and EFC should be smaller portfolio components due to elevated risks.
By reinvesting dividends, investors harness compounding—a powerful wealth-building tool. The formula for dividend reinvestment growth is:
A = P \times \left(1 + \frac{y}{12}\right)^{12t}Where:
- A = Future value
- P = Initial investment
- y = Annual yield
- t = Time in years
A $10,000 investment in a 6% monthly dividend stock grows to $18,194 in 10 years with reinvestment—versus $17,908 with quarterly payouts. Small differences add up over decades.
Stick to quality, diversify across sectors, and hold forever. The right monthly dividend stocks can fund retirements, college savings, or passive income streams with minimal effort.
