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GettyFrom retired investors needing to meet living expenses to conservative stockholders who simply wanting a consistent income stream, many investors are attracted to monthly dividend payments. Ned Piplovic, a contributor to MoneyShow.com and the editor of DividendInvestor, highlights four-favorite investment offering monthly payments.
Sabine Royalty Trust (SBR) — one of the approximately two dozen of publicly-traded oil and gas royalty trusts, as well as a monthly dividend paying stock — offers investors an above-industry average yield of more than 7%.
Based in Dallas, Texas, and formed in December 1982, the Sabine Royalty Trust currently owns royalty rights in properties across Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.
In addition to a high yield generally associated with royalty trusts, the Sabine Royalty Trust also offers a steady flow of dividend income associated with monthly dividend stocks. The dividend distribution amount is driven by the monthly financial results.
Therefore, the dividend payout level fluctuates from month to month, as well as annually. However, just over the past decade, the instances of total annual dividend payouts exceeding the prior year’s payout outnumbered the drops in annual dividend payouts by a six-to-four margin.
Royalty trusts generally offer safe long-term opportunities to investors seeking alternatives for traditional investment vehicles. These trusts are publicly traded corporations that invest in commodities such as oil, natural gas or metals. Most royalty trusts are located in North America.
The trusts generally do not run their own mining and drilling operations. Instead, the trust grants outside drilling and mining companies exploration and production rights in exchange for royalty payments.
This arrangement allows a royalty trust to operate very efficiently with very few employees and generate high levels of income. Most of this income is redistributed to investors as dividends, which is the primary lure of these investments.
Even with payout fluctuations, the trust increased its annual dividend distribution amount 140% over the past 20 years. This enhancement corresponds to an average dividend growth rate of 4.5% per year. Furthermore, the trust has enhanced its annual payout over the past two consecutive years. The two-year gain of 84% is equivalent to an average annual growth rate of 22.4%.
Investors interested in monthly dividend stocks should consider Global Water Resources (GWRS), which offers above average yields and double-digit-percentage one-year total returns.
Based in Phoenix and founded in 2003, Global Water Resources, Inc. is a water resource management company. The company owns, operates and manages water, wastewater and reclaimed and recycled water utilities in strategically located communities, mainly in the Phoenix metropolitan area.
Global Water Resources manages its resources and provides services through 12 wholly owned subsidiaries. Through the full ownership and control of the entire supply chain, the company can maximize water conservation and usage efficiency. Global Water Resources’ conservation and efficient management approach is especially important in areas that face water supply scarcity, such as in Arizona.
At the current share price level, this annual payout amount is equivalent to a 2.82% forward dividend yield. Despite a share price pullback in late 2018, the three-year total return is 38%. However, the total return since the dividend inception is nearly 85% and dividend income contributed 30% of those gains.
While trailing its own average yield slightly, Global Water Resources’ current yield outperformed the 2.02% simple average yield of the entire Utilities sector by 47%. Furthermore, Global Water Resources’ current yield is the highest yield among the company’s peers in the Water Utilities industry segment.
As such, Global Water Resources’ current yield is nearly two-thirds higher than the 1.79% average yield of all the companies in the segment. Furthermore, Global Water Resources’ 3% yield is also more than 50% above the 1.97% average yield of the segment’s only dividend paying companies
LTC Properties, Inc. (LTC) — a health care real estate investment trust (REIT) and one of the monthly dividend stocks — continues to reward its shareholders with above average dividend yields and double-digit-percentage returns.
Headquartered in Westlake Village, California, and founded in 1992, LTC Properties, Inc. operates as a health care REIT. The company invests in senior housing and long-term health care properties, including skilled nursing properties, assisted living properties and independent living properties.
As of June 2019, the company’s portfolio stretched across 28 states and comprised approximately 210 properties, including 104 assisted living properties, 94 skilled nursing properties, seven other senior housing properties, two schools and two facilities currently under development in Georgia and Oregon.
The company’s share price struggled with increased volatility over the past few years. However, the share price’s long-term trend maintains its upward trajectory. Over an extended time horizon that began after the REIT’s largest share price drop in 2000, LTC Properties grew its share price more than 13-fold. Additionally, the REIT nearly tripled its share price since the 2008 financial crisis.
In addition to a long-term share price uptrend, LTC Properties offers investors a steady flow of monthly dividend income payouts, as well as abundant liquidity to manage current obligations and invest into expansion.
These characteristics should entice interested income investors to at least take a closer look at LTC Properties and analyze the REITs potential for growth against other monthly dividend stocks.
While most REITs and other companies in the Financial sector cut their dividend payout in the aftermath of the 2008 financial crisis, LTC Properties managed to merely suspend its rising dividend for one year.
In 2009, LTC Properties paid the same $1.56 total annual dividend income distribution as the year before. After resuming its annual dividend hikes in 2010, the REIT boosted its annual dividend payout amount for the subsequent eight years.
LTC Properties has been distributing its current quarterly current $0.19 monthly dividend distribution since late-2016. This monthly dividend payout amount corresponds to a $2.28 annualized amount for 2019. At the current share price level of approximately $45, the REIT’s income distributions yield 5%.
Vermilion Energy, Inc. (VET) is one of many monthly dividend stocks in the energy sector that rewards its shareholders with high dividend yield income distributions.
Headquartered in Calgary, Canada, and founded in 1994, Vermilion Energy, Inc. is an international energy producer that seeks to create value through the acquisition, exploration, development and optimization of oil-producing properties in North America, Europe and Australia. The company’s business model targets annual organic production growth, as well as delivery of reliable and increasing dividends to investors.
The company’s share price has lost more than half of its value over the past five years. Even during the last one-year period, the share price continued the downtrend. However, as one of the monthly dividend stocks with a rising revenues and a steady funds from operations inflow, Vermilion Energy’s stock might be undervalued and poised for a trend reversal.
While the share price decline reduced shareholder capital, the lower share price has at least one benefit. The share price drop pushed the forward dividend yield just short of a double-digit level. The current $0.1754 (CA$0.23) monthly payout amount is equivalent to a $2.11 (CA$2.76) annualized distribution and a 9.7% forward dividend yield.
Therefore, investors whose own detailed analysis indicates that the Vermilion Energy stock might rebound, could take the advantage of the price drop and take a long position in the Vermilion Energy’s stock at discounted rates. Furthermore, while waiting for the share price recovery, investors can collect a dividend that yields nearly 10%, which is high, even for monthly dividend stocks.
