Have you been to your bank lately? You are lucky if you can get half a percent on a savings account. If you want to get more than 1%, you may need to tie your money up for ten years. The alternatives include monthly income stocks. Though these investments are often referred to as stocks, they are technically closed end bond funds, real estate investment trusts, oil income trusts, and closed end income stock funds that pay dividends monthly.
The advantage of monthly dividend investments include the return of your capital faster, which can generate faster compounding. In addition, the monthly payments can help reduce volatility. These monthly dividend investments can be found at WallStreetNewsNetwork.com, which has a recently updated list of about 200 different companies that pay dividends monthly, many of which have high yields in excess of 7%.
One example is Gas Natural Inc. (EGAS), previously called Energy, Inc., It is a distributor of natural gas in Montana, Wyoming, North Carolina, and Maine. It was founded in 1909. The stock pays a yield of 5.8% and sports a forward price to earnings ratio of 13.9.
The Advent Claymore Convertible Securities & Income Fund (AVK) sports a yield of 6.9%, sells at about a 8.2% discount to net asset value. This closed end fund, founded in 2003, invests approximately 60% of its portfolio in convertible securities and 40% in lower-grade non-convertible income securities. The company recently announced it will pay a supplemental dividend of 51.371 cents a share.
The MFS Multimarket Income Trust (MMT) pays a yield of 6.5%. It invests in fixed income investments throughout the world. The stock trades at a 5.2% discount to net asset value. The trust was founded in 1987, and has a management fee of 0.82%.
LMP Real Estate Income Fund Inc. (RIT) is a vehicle that allows the investor to participate in the real estate recovery and receive monthly income. It is an exchange traded fund that invests in real estate related companies including real estate investment trusts. It carries a yield of 6.5%, and has paid dividends since 2002. It is trading at a 8.6% discount to net asset value.
Pengrowth Energy Trust (PGH) is a Canadian oil royalty income trust that yields 9.8%. The company, which was founded in 1988, explores, develops, and produces oil and natural gas reserves in western Canada.
When choosing monthly dividend investments investors should avoid investments with high management fees, limited liquidity, ones that trade at a large premium to net asset value, and the ones using excessive leverage. The municipal bond closed end funds may trigger the Alternative Minimum Tax; check with your accountant before investing.
A list of over a couple hundred monthly dividend stocks, including many that have yields of 6% or more, is available at WallStreetNewsNetwork.com. Keep in mind that very high yields may not be sustainable.
Disclosure: Author did not own any of the above at the time the article was written.