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Investors buying stocks for their dividends typically receive dividends on a quarterly basis. But there is a smaller group of stocks that pay dividends on a monthly basis, for 12 total dividend payouts per year.Investors can even find high yields above 5% from monthly dividend stocks. This article will discuss 3 of the high-yielding monthly dividend stocks that are attractive for income investors.
LTC Properties (LTC)
LTC Properties is a REIT that invests in senior housing and skilled nursing properties. Its portfolio consists of approximately 50% senior housing and 50% skilled nursing properties. The REIT owns 194 investments in 26 states with 32 operating partners and has a market capitalization of $1.5 billion.In late April, LTC reported (4/29/24) financial results for the first quarter of fiscal 2024. Funds from operations (FFO) per share grew 4.5% over the prior year’s quarter, from $0.66 to $0.69, and exceeded the analysts’ consensus by $0.05.The increase in FFO per share resulted from higher rental revenue and higher interest income from mortgage loans, which more than offset increased interest expense amid 16-year high interest rates. LTC maintained its leverage ratio (Net Debt to EBITDA) at 5.5x.Going forward, LTC’s growth is likely to benefit from a major structural trend. Just like other healthcare REITs, LTC benefits from a strong secular trend, namely the high growth of the population that is above 80 years old.LTC is offering an attractive 6.9% dividend yield. The payout ratio is 86% and the balance sheet is leveraged, but it has an interest coverage ratio of 2.8. Fortunately, the REIT does not have material debt maturities for the next four years.
Gladstone Capital (GLAD)
Gladstone Capital is a business development company, or BDC, that primarily invests in small and medium businesses. These investments are made via a variety of equity (10% of portfolio) and debt instruments (90% of portfolio), generally with very high yields. Loan size is typically in the $7 million to $30 million range and has terms up to seven years.Gladstone posted first quarter earnings on May 1st, 2024. Total investment income increased $0.8 million, or about 3.3%, from the year-ago period.The gain was driven by a $0.7 million increase in interest inome, which itself was driven by a 3.5% increase in the weighted average principal balance of interest-bearing investments.The yields on the company’s portfolio influence its ability to earn income and therefore, cover its expenses and pay distributions to shareholders. Over time, the company’s portfolio yield has drifted higher to 14%.Despite the cost of funding rising as well, Gladstone has managed to increase its yield spreads. Gladstone’s portfolio continues to grow in dollar terms, and the higher spreads on a larger portfolio is leading to earnings growth.GLAD stock currently yields 8.4%.
EPR Properties (EPR)
EPR Properties is a specialty real estate investment trust, or REIT, that invests in properties in specific market segments that require industry knowledge to operate effectively. It selects properties it believes have strong return potential in Entertainment, Recreation, and Education.The REIT structures its investments as triple net, a structure that places the operating costs of the property on the tenants, not the REIT. The portfolio includes about $7 billion in investments across 300+ locations in 44 states, including over 250 tenants.EPR posted first quarter earnings on May 1st, 2024. The company posted adjusted funds-from operations of $1.12 per share, which was three cents ahead of estimates. In the year-ago period, adjusted FFO-per-share was $1.30. Revenue was down 2.4% year-over-year to $167 million, but was more than $18 million ahead of expectations.EPR’s competitive advantage is its portfolio of specialized properties. EPR has methodically identified the most profitable properties through years of experience and focuses its investments in these areas. It certainly isn’t immune to recessions, but it remained profitable during the worst of the financial crisis and continued to pay its dividend.The dividend is at a rate of $3.42 per share annually, which we believe will grow somewhat in the years to come. The stock yields 8.3% now, which is impressive given the trust went several months with no dividend payment. EPR raised its payout from 25 cents per share monthly to 27.5 cents in early-2022, and once again in early-2024.EPR currently yields 8.2%.More By This Author:High Dividend 50: TFS Financial Corporation
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