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Stocks That Pay Monthly Dividends - 42586 views
The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage. The opinions expressed are those of the author and do not represent the views of TheStreet or its management.
SAN FRANCISCO (Stockerblog) -- There are plenty of benefits to owning stocks that pay their dividends monthly. According to our list WallStreetNewsNetwork.com, there are over 200 different companies that pay dividends monthly, many of which have high yields.
Technically, these stocks are real estate investment trusts, oil income trusts, closed-end bond funds and closed-end income stock funds, which pay dividends every month. Advantages to receiving monthly dividends as opposed to quarterly or annual dividend stocks are that the invested capital is returned faster, compounding takes place quicker, and there is usually less price volatility of the investment. Also, many of monthly dividend investments pay dividends that are tax-free.
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An example is the MFS Multimarket Income Trust (MMT), which pays a yield of 7.80%. The stock trades at a 9.2% to net asset value. The company, which has been around since 1987, has a management fee of 0.82%.
Gas Natural (EGAS), formerly known as Energy Inc., is a distributor of natural gas in Montana, Wyoming, North Carolina and Maine. It was founded in 1909. The stock pays a yield of 4.6% and carries a price to earnings ratio of 12.7.
Baytex Energy (BTE) is an investment trust that generates income from petroleum and natural gas properties. It generates a yield of 4.2%, and has been paying monthly since 2006. The company trades at 22.4 times forward earnings.
Realty Income (O), with the great single-letter stock ticker symbol, yields 5%. This real estate investment trust which specializes in commercial retail real estate, has been around since 1969. The stock trades at 16.7 times forward earnings.
Calamos Convertible & High Income (CHY) has a decent yield of 6.9%. However, the management fee is a bit on the high side at 1.13%. This CEF, founded in 2003, invests in high yield fixed income securities and convertible securities.
Provident Energy Trust (PVX) is a Canadian income trust which generates a yield of 6.1% through the marketing of natural gas liquids. It was founded in 1993. Canada's new legislation which taxes trust income goes into effect this year. This would tax the trusts at the corporate level in addition to the shareholder level. However, many analysts believe that this taxation is built into the price of these Canadian trusts.
Use caution choosing these investments. Avoid the ones with high management fees, watch out for the ones with limited liquidity and those that trade very few shares on a daily basis, and if you invest in the municipal bond closed-end funds, make sure you know the consequences of the alternative minimum tax. You also want to find the ones that trade at a discount to net asset value, and avoid the ones using excessive leverage.
To see the latest updated list of over 200 monthly dividend stocks, including many that have yields of 8% or more, visit WallStreetNewsNetwork.com. Remember, very high yields may not be sustainable.
At the time of publication, author had no positions in stocks mentioned.
Fred Fuld III, the publisher of stock and bond investing blog Stockerblog and founder of WallStreetNewsNetwork, has been in the financial services industry for over 20 years, working as an investment advisor, options market maker at the Pacific Stock Exchange, vice president of a San Francisco money management firm, university faculty member and wholesaler for the New Alternatives Fund (the first environmentally conscious mutual fund). He is the author of the books Investing in Brazil Stocks and The Green Light on Green Stocks.