Investors love dividend stocks, especially the ultra-yield variety, because they provide a big income stream and give investors a great opportunity for massive total returns. Total return includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation.
Most dividend investors also seek solid passive income streams of quality dividend stocks. Passive income is a steady stream of unearned income that doesn’t require active traditional work. Shared ideas for earning passive income include investments, real estate, or side hustles.
Most stocks pay quarterly dividends, which is fine for many shareholders who reinvest dividends. However, many investors rely on dividends as part of a passive income stream, and getting a monthly dividend payout is more beneficial. Typically, real estate investment trusts, business development companies, and closed-end funds are among the investment vehicles that pay distributions monthly.
We screened our 24/7 Wall St. ultra-yield dividend stock universe looking for the companies that pay monthly dividends and found five top companies that aggressive income investors should look at now.
Why we recommend monthly income stocks
In a world where prices seem to consistently be rising higher, a monthly check makes sense for many who have bills and expenses due on a 30-day basis. Items like mortgage payments or rent, utility bills, trash collection, and even grocery bills are always due each month, and a steady stream of passive monthly income can be a huge helping hand to meet those obligations.
AGNC Investment
This company has paid solid monthly dividends for years; its current yield is 15.58%. AGNC Investment Corp. (NASDAQ: AGNC) is a real estate investment trust (REIT) in the United States.
The company invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by the United States government-sponsored enterprise or by the United States government agency.
The company funds its investments primarily through collateralized borrowings structured as repurchase agreements. It has elected to be taxed as a REIT under the Internal Revenue Code 1986. However, it would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.
Dynex Capital
Paying a hefty 13.38% dividend, Dynex Capital Inc. (NYSE: DX) is a passive income champion for more aggressive investors. It is a mortgage real estate investment trust that invests in mortgage-backed securities (MBS) on a leveraged basis in the United States.
It invests in agency and non-agency mortgage-backed securities (MBS), including residential, commercial, and interest-only securities.
Agency MBS has a guarantee of principal payment by an agency of the U.S. government or a U.S. government-sponsored entity, such as Fannie Mae and Freddie Mac.
Non-agency MBS has no such payment guarantee. The company has qualified as a real estate investment trust for federal income tax purposes. It is generally not subject to federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends.
Ellington Financial
This is a quality mortgage REIT company that is a favorite across Wall Street and pays a massive 13.45% dividend. Ellington Financial Inc. (NYSE: EFC), through its subsidiary, Ellington Financial Operating Partnership LLC, acquires and manages mortgage-related, consumer-related, corporate-related, and other financial assets in the United States.
The company develops and manages residential mortgage-backed securities (RMBS) backed by:
- Prime jumbo
- Alt-A, manufactured housing, and subprime residential mortgage loans
- RMBS for which the principal and interest payments are guaranteed by the U.S. government agency or the U.S. government-sponsored entity
- Residential mortgage loans
- Commercial mortgage-backed securities
- Commercial mortgage loans and other commercial real estate debt
Ellington Financial also provides collateralized loan obligations; mortgage-related and non-mortgage-related derivatives; corporate debt and equity securities; corporate loans; and other strategic investments. In addition, the company offers consumer loans and asset-backed securities backed by consumer and commercial assets.
EPR Properties
This REIT invests in some of the most popular entertainment companies and pays a solid 8.32% dividend. EPR Properties (NYSE: EPR) is a leading experiential net lease real estate investment trust (REIT) specializing in select enduring experiential properties in the real estate industry.
The company focuses on real estate venues that create value by facilitating out-of-home leisure and recreation experiences where consumers spend their time and money.
The company has nearly $6.7 billion in total investments across 44 states. It adheres to rigorous underwriting and investing criteria centered on key industry, property, and tenant-level cash flow standards. Senior management believes its focused approach provides a competitive advantage and the potential for stable and attractive returns.
Prospect Capital
Hedge Funds love this top Business development company, and the gigantic 13.74% dividend makes it a potential total return home run. Prospect Capital Corporation (NASDAQ: PSEC) specializes in the middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending, and bridge transactions.
It also invests in the multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second-lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses.
Prospect Capital focuses on both primary origination and secondary loans/portfolios and invests in situations such as debt financing for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, and real estate financings/investments.
The company invests in the follwing sectors and business silos:
- Aerospace and defense
- Chemicals
- Conglomerate and consumer services
- Ecological
- Electronics
- Financial services
- Machinery and manufacturing
- Media
- Pharmaceuticals
- Retail
- Software
- Specialty minerals
- Textiles and leather
- Transportation,
- Oil gas and coal production
In addition to favoring materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sect
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