AGNC Investment Corp. (AGNC)

Despite a slowing housing market, real estate stocks tend to do quite well during periods of inflation, and they’re known as some of the best picks for monthly dividend investors.

AGNC Investment Corp. is a real estate investment trust (REIT) that invests in mortgages. REITs enjoy a number of tax-benefits, and have to pay out at least 90% of their taxable income to shareholders!

AGNC has been consistent in paying out 12 cents per share in it’s monthly dividend distributions for some time.

Because AGNC invests primarily in large, Federal Government-backed loans – backed by the likes of Fannie Mae and Freddie Mac – this stock is seen as a fairly low-risk option despite it’s 12% p.a. dividend yield.

AGNC makes my list as it pays a strong monthly dividend, invests in low-risk assets, and offer investors relative peace of mind in an increasingly volatile economy.

Prospect Capital Corp. (PSEC)

Another sector that tends to do well in times of inflation is private equity.

Prospect Capital Corp. is a business development company (BDC). BDCs are regulated investment companies structured  as closed ended investment companies. They invest in small and/or distressed businesses – providing them with access to growth capital.

BDCs distribute 90% of their taxable income to shareholders. And, because of it’s regulated status, a business development company does not pay Federal income tax.

This makes them great for monthly dividend investors, and also relatively tax efficient, too.

Prospect Capital Corp. has made almost 400 investments totalling around $19 billion since its inception 14 years ago in 2004. It currently holds 127 companies in 39 industries, and has been paying shareholders a consistent 6 cents per share every month.

Since 2004, Prospect has made more than 375 investments totalling more than $18.7 billion. Its current portfolio consists of 127 companies spanning 39 industries, providing investors with deep diversification. Like REITs, BDCs pay out at least 90% of their taxable profits as distributions to investors to maintain a lower corporate tax rate. Prospect has been public for 18 years, and it pays a consistent monthly distribution of 6 cents per share.

Prospect makes it onto my toplist of monthly income dividend stocks because it offers diversification within it’s holdings, and has been a consistent dividend performer for many years.

Main Street Capital Corp. (MAIN)

Another BDC to make it onto my list today is Main Street Capital Corp.

Like Prospect Capital, MAIN has a diversified portfolio of holdings worth about $6 billion, a proven track record of success, and a high monthly dividend.

Main Street Capital Corp is mainly active providing debt to smaller companies with annual revenues of up to $150 million.

The current dividend yield for MAIN shares is 6.5% p.a., making it an ideal addition to a diversified portfolio of monthly income paying investments.

Related: How to Invest in Private Money Lending – Everything You Need to Know

LTC Properties Inc. (LTC)

Back to real estate now, and another REIT to be added to the list, LTC Properties Inc.

LTC is a specialist REIT which owns and operates senior living housing and health care real estate.

Despite major challenges to the sector through COVID-19, LTC maintained its 19 cents per share monthly dividend throughout the pandemic. This shows just how resilient this stock is, making it an ideal choice for my list as we edge into more uncertain economic times.

There are now signs that the company is returning to ‘business as usual’, with the stock price just 13% below 202 levels, and company now paying out less than 90% of its available funds to shareholders – down form 100% during the peak of the global crisis.

The long term fundamental for this sector also look promising, with demand for senior living and health care facilities rising sue to an ever-aging population.

Broadmark Realty Capital Inc. (BRMK)

Sicking to the theme of real estate now with another specialist REIT,  Broadmark Realty Capital.

BRMK provides short term lending to real estate investors and property developers in the form of 1st position deed of trust and mortgages.

The funding provided by Broadmark is typically used to fund the purchase and/or development/renovation of both residential and commercial real estate assets. The average loan size provided by Broadmark is about $7 million.

Broadmark has been around for about 12 years, and has funded over 1,200 loans worth just less than $4 billion. The company has a current loan portfolio of around $1.6 billion in value, with real estate assets securing 227 loans located in 20 states.

Braodmark makes my list due to its consistent high monthly dividend (currently 7 cents per month, or about 12% p.a.), strong underwriting, and the fact that alternative lending such as that offered by the company is likely to become more popular as mainstream banks tighten their lending criteria over the next year or so.

Related: How to Invest in Real Estate Notes – Everything you Need to Know

Ellington Financial Inc. (EFC)

Like a couple of the other selections in this toplist, Ellington Financial Inc. is a real estate investment trust that invests in mortgage loans secured against residential and commercial real estate.

Ellington says it takes a strategic approach to investing, preferring to focus on what it considers to be underserved markets that offer niche investment opportunities for the company.

The company moved to distributing dividends on a monthly basis 3 years ago in 2019, but, like many other companies, then reduced its distributions significantly throughout the COVID-19 pandemic.

Now Ellington investors are starting to earn again as the company has started to build up it’s dividends once more. At present, shareholders are receiving 15 cents per share every month, which is roughly in line with the first monthly income distributions back in 2019.

This niche REIT makes it onto our list today because it is delivers an annual yield of almost 11.45%, and has shown great improvement since the end of the COVID-19 pandemic.

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EPR Properties (EPR)

Realty Income Corp (O)

Realty Income is probably one of the most popular stocks with investors focussed on creating solid monthly income streams.

The whole identity of the company is predicated on the fact that it delivers a monthly dividend, and has been doing so consistently since it’s incorporation. It even brands itself as ‘the monthly dividend company’.

Realty Income owns commercial real estate that it leases exclusively to grade A tenants on long-term leases of typically 10 years or more.

Realty income makes the grade for out list of the best monthly income dividend stocks because the company’s portfolio is in  great shape – owning over 11,400 commercial properties with a 98.9% occupancy rate, and 1,100 tenants operating in 72 separate industries.

While delivering a yield at the lower end of our selection at around 3.97%, Realty income is a solid player that makes sense in any portfolio.

SL Green Realty Corp. (SLG)

This is a lesser known REIT, but despite the fact you may never of heard of SL Green, it is the largest owner of office space in New York City.

New York has always been a prime office market, and despite the current ‘work from home’ trend, SL Green makes sense for monthly dividend investors today.

With a market capitalisation of more than $3 billion, and a forward annual dividend yield of 7.43%, the big apple office market could be an interesting strategic play through this year.

SL Green is included in this list because the stock price fell off from about 82 buck in March this year to around 50 bucks today, but is now showing sign of stability or even recovery. So with a string yield this stock looks cheap right now.

STAG Industrial Inc. (STAG)

Staying with the theme of REITs now, with another monthly dividend paying stock that is widely considered a good inflation hedge, making it’s inclusion in this list a no brainer.

STAG Industrial owns industrial, logistics, and warehouse real estate. These niches have performed particularly in recent years well as the retail economy continues to migrate more and more out of brick and mortar shops and into the online e-commerce space.

With a current market cap of $5.6 billion, growth prospects for STAG look pretty good, and the forward dividend yield is stable at 4.16% as of August.

Adding some exposure to prime, well-managed logistics and industrial real estate occupied by prime grade A tenants seems like a good ide for investor keen to hedge against inflation and earn a decent clip at the same time.

Apple Hospitality REIT (APLE)

Next up is another real estate investment trust with a speciality investment focus, Apple Hospitality REIT.

The company bill itself as owing one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States.

Hospitality took a massive hit during COVID-19, but the stock price for this particular REIT has now recovered to pre-COVID levels as folk are out and about travelling once again, and the company is once again making monthly income distributions to its shareholders.

Owning this stock gives shareholders exposure to an underlying portfolio of over 200 hotels with 28,700 upscale rooms, and operates assets in 86 markets across 36 states alongside industry leading brands such as Hilton and Hyatt.

APLE makes the grade for this list today because it has shown itself to be a resilient stock with the ability to bounce back after crisis, and pays a reliable monthly dividend with an forward yield of about 3.45%.

Agree Realty Corp. (ADC)

Agree Realty is another company you may never have heard of, but you’ve definitely stood inside some of it’s assets.

Originally launched as a REIT stock to the public in 1994, Agree Realty Corp now owns more than 1,600 shopping centre properties worth more than $8 billion that it leases to huge industry leading names such as Advance Auto Parts, PetSmart, and AutoZone.

In 2021 the company converted its dividend distribution into a monthly payout, and currently delivers an annual yield of around 3.51%.

This stock was surprisingly resilient throughout COVID, largely maintaining it’s market capitalization, and making it a nice, lower risk inclusion as part of a portfolio of monthly income paying stocks.

Gladstone Commercial Corporation (GOOD)

Gladstone Commercial Corp. is a real estate investment trust stock. According to it’s website:

We invest in single-tenant and anchored multi-tenant net leased industrial and office properties located in primary and secondary growth markets and with strong underlying land value.

The company focuses on acquisitions valued between $3mm and $50mm, and buildings occupied by “less than investment grade companies, private middle market companies, small and mid-cap public companies, and select investment grade companies”.

With a current market capitalization of $846 million, and a forward yield of 7.15%, this REIT stock gives shareholders exposure to a portfolio of high-performing  commercial real estate assets in good locations, occupied by stable companies.

Bonus Monthly Income Investments Picks

So there you have 15 monthly dividend stocks that look like a great fit for investors seeking to hedge inflation and build a solid and consistent monthly income stream form their investments.

Now, as we all know, diversification is the foundation of risk management. You certainly wouldn’t want to stick all your money into financial markets, right?

So, as a special bonus, let’s take a look at a couple of alternative investments that also pay regular monthly income at a decent yield.

Real Estate Notes

Outside of some of the mortgage REITs I’ve included in this list, another way to access the income from real estate debt is to buy mortgage notes directly, effectively ‘becoming the bank’ yourself

There are all sorts of notes you can buy, including performing notes or non-performing notes, and 1st position loans or 2nd position loans.

If you’re looking specifically for low risk monthly income, then you want to search for performing notes with a 1st position lien. These are real estate notes that are generating regular monthly income, and are secured in 1st position on the title to a piece of real estate.

This gives you the best combination of monthly income and investment security, because if the borrower stops paying, you can foreclose the loan and force a sale of the real estate to repay the debt.

Anyone can buy or sell notes, including banks and other lenders, as well as private investors. If you want to find notes for sale, you can check out my article covering a list of where to buy mortgage notes which has been updated with new note sources for 2022.