What’s better than a company that pays a steady dividend? Well, here are Dividend Appreciation we believe the only thing better than a company that pays a sustainable and growing dividend is a company that can pay a sustainable and growing dividend every month.
While most dividend paying stocks pay their shareholders once a year or once every quarter, some rare companies believe in paying out money every single month. All monthly dividend stocks have one thing in common – steady cash flows. They usually have business models that lend themselves to consistent cash returns to shareholders. All monthly dividend stocks help their shareholders match their investment return schedule to their monthly expense schedule. This makes it easier for investors to live off their dividend income from investments.
We’ve covered these monthly dividend stocks before. Back in August this year, we created a list of all monthly dividend stocks on the market. We talked about their strengths and weaknesses and general business models. However, there have been new additions to this list since then. Six new companies have become part of the list of all monthly dividend stocks. Here’s a closer look at all the newcomers:
Chorus Aviation (CHR.TO)
Dartmouth, Canada-based Chorus Aviation operates a charter airline service in Canada. The company operates under two brands – Jazz Charter and Air Canada Express. Chorus has been paying monthly dividends for a few years now, but it’s been added to the list because US residents can buy the stock and expect the dividends to be taxed at the ‘qualified dividend’ rate. We’ve discussed the qualified dividend previously on this blog. Chorus offers a 5.48% dividend yield at the moment which makes it one of the highest dividend yielding companies on this list. The payout ratio is also a relatively low 58%, which means the company has enough of earnings to cover and perhaps grow the dividends in the coming years.
Crius Energy Trust (CRIUF)
North America’s largest independent energy retailer is another Canadian company that makes the list of all monthly dividend stocks. Although the company is still primarily an oil supplier to some of the largest companies in the country, new verticals such as natural gas, electricity, and solar power products should help it tap into growth.
Over the past few years the company’s earnings and dividends have been growing at a steady clip. In fact, distributions have increased by 16% since the start of 2016. By the fourth quarter of this year, the management is committed to increasing the dividend by 2% every quarter. That’s an impressive but tangible goal considering the payout ratio is still relatively low at 58%. Crius Energy Trust has relatively low long term debt, low costs of customer acquisition, and a lot of cash and cash equivalents on the book. In its most recent earnings report, the company claims to have nearly $50 million in total cash and cash equivalents on its books. At the current rate of dividend distribution, that cash could sustain the dividends for five years.
Gladstone Land Corporation (LAND)
NASDAQ-listed Gladstone Land Corp is a part of the Gladstone Group. It’s a real estate investment trust like many of its other Gladstone counterparts. However, this REIT is exclusively focused on farming land and parcels that can be leased out for agricultural activities. With a 3.88% dividend yield, this is a relatively lucrative REIT with a massive portfolio of land focused on a specific niche. Land parcels the trust operates are located in Arizona, Michigan, Nebraska, Florida, Oregon, California, and Colorado.
At the tail end of last year, appraisers estimated the value of their portfolio at $455 million. That’s $37 per share worth of land while the stock trades at $13.64. Over the past two years the company has increased its dividends a total of six times. Overall, since 2015 the company’s dividends have expanded by 45%. Meanwhile, Adjusted funds from operations remain fully covered. Farmland is a relatively stable and lucrative niche of the REIT market and Gladstone Land Corp seems to be on the path to impressive growth.
Pennant Park Floating Rate (PFLT)
Pennant Park may offer a juicy dividend yield of 8.27%, but this high yield comes with some risks. At the moment, this is one of the highest yielding stocks in a list of all monthly dividend stocks. However, the dividend paid out is higher than the investment income this company earns from the loans it gives out to small and medium-sized businesses across the country.
The company offers different sorts of floating rate loans to businesses. These could include secured debt, senior notes, second lien debt, mezzanine loans, or private high-yield debt. However, the company has a broadly diversified portfolio of over 86 different companies. Most of these companies belong to different sectors which may reduce the risk somewhat. Also, 99% of the loans given out by this business development company is floating rate, which means as interest rates rise in the coming years profits could expand too.
The total portfolio is worth $770 million and it earns a 8.2% yield on cost, which is entirely paid out to shareholders every month.
Superior Plus (SPB.TO)
Canada-based Superior Plus supplies sodium chlorate, chlor-alkali and potassium and sodium chlorite, besides propane to the US and Canada. Over the past few years the company has managed to bring down long term debt on the books. From a total debt to adjusted EBITDA of 4.6x in 2012, the ratio is now just over 2.1x. Earnings have been steadily increasing while debt has been cut over the past half decade.
Listed on the Toronto Stock exchange, Superior Plus offers a 5.5% dividend yield and is part of the exclusive club of all monthly dividend stocks. Antitrust regulations prevented the company from acquiring Canexus Corp earlier this year. Regulators believed that the combined entity would have a stranglehold on the market for sodium chlorate, a chemical that is used to make paper white during manufacturing. Goes to show how significant Superior’s market share is in the Specialty Chemicals industry.
Transalta Renewables (RNW.TO)
Calgary-based Transalta Renewables is a hydro electricity supplier featured in the top 25 of all monthly dividend stocks. The company owns and operates over 40 facilities. This means the operations are geographically diversified. The contracts the company manages to sign tend to have a long-term impact on earnings. On average, each contract lasts about fifteen years which offers clear visibility of revenues for the foreseeable future.
That’s not all, the company is also one of the deepest value buys on the market right now. It offers a 6.76% dividend yield and trades at a fantastically low 1.5x book value.
We’ve finally added more stocks to the list of all monthly dividend stocks. These six stocks round off a total of 41 stocks that pay a dividend every single month. This sort of payment schedule should closely align with your monthly living expenses. Investments that pay you a monthly dividend could make it easier to achieve and maintain financial freedom.
However, these are just stocks that pay a dividend monthly. There is no reason to invest in a company solely because of its dividend schedule. You must consider other factors while picking dividend investments. Run a health check on your dividend companies to see if the company can maintain or even grow its dividends over the long term. Pick companies you understand and have studied closely. Add them to your dividend portfolio only when you feel the market price is below the intrinsic value of the firm. Make sure the long-term debt or annual payout ratio is not too high.
Reasonable dividend investing could make it easier for your to live entirely off the income from your investments.