Investing in Monthly Dividends: 3 Ultra-High-Yield Stocks for a Steady Income Stream
Dividend stocks have consistently outperformed non-payers over the past 51 years, delivering an average annual return of 9.2% compared to 4.31% for non-payers. While most dividends are paid quarterly, a select few companies offer monthly payouts, providing a steady stream of income for investors. In this article, we will explore three ultra-high-yield stocks with yields ranging from 5.6% to 15.48% that offer the potential for significant returns for patient investors.
The first stock is AGNC Investment Corp., a mortgage real estate investment trust (REIT) that has been delivering a double-digit yield for over a decade. Despite the industry's sensitivity to interest rate changes and Federal Reserve monetary policy, AGNC has performed well during rate-easing cycles and has a portfolio focused on agency mortgage-backed securities, which are backed by the federal government in the event of default. This makes AGNC a relatively safe investment with a high yield.
Another option is PennantPark Floating Rate Capital, a business development company (BDC) with a modest $1 billion market cap but a high-yielding annual dividend of 11.8%. The company focuses on debt investments in middle-market companies, which tend to have lower access to financial services, resulting in a weighted average yield of 10.5%. PennantPark's debt securities portfolio is based on variable rates, allowing it to lock in superior yields even during rate-easing cycles. This makes it an attractive investment for those looking for high yields with some level of safety.
The third ultra-high-yield stock is Realty Income, a retail REIT with a 5.6% yield. While its yield may appear modest compared to the other two stocks, Realty Income has raised its monthly payout for 111 consecutive quarters, making it the premier company among retail REITs. Its commercial real estate portfolio consists of over 15,600 properties and generates more than $5 billion in annualized base rent. Realty Income leases to brand-name, stand-alone businesses that draw consumer traffic in any economic climate, ensuring the rent continues to be paid regardless of the U.S. economy's performance. This makes it a relatively safe investment with a steady stream of income for investors.
Investing $32,850 equally among these three stocks would allow an investor to collect $300 in safe monthly dividend income. However, before investing in any stock, it's important to consider the overall market performance and the potential risks involved. The Motley Fool's Stock Advisor team has identified 10 stocks they believe are the best for investors to buy now, and AGNC Investment Corp. was not one of them. Investors should always do their own research and consider their investment goals and risk tolerance before making any decisions.
