According to the Internal Revenue Service (IRS), passive income generally includes earnings from rental activity or any trade, business, or investment in which the individual does not materially participate. It can also include income from limited partnerships, stocks, bonds, and other similar enterprises in which the investor is not actively involved. The more passive income can help cover rising costs, such as mortgages, insurance, taxes, and other expenses, the easier it is for investors to set aside money for future needs as they prepare for retirement. Dependable, recurring dividends—especially those paid monthly—are a recipe for success.
Our 24/7 Wall St. passive income stock research database is a reliable source of the best investment ideas for generating passive income. We have identified six ultra-high-yield stocks that pay investors their dividends every month. Investing just $7,500 in each, for a total of $37,500, will yield over $370 per month in passive income, totaling $4,400 annually. As a caveat, these stocks are better suited for those with higher risk tolerance. Our readers should note that these figures are current as of the day this post was written and may vary slightly, either higher or lower, when published.
Why we recommend monthly income stocks
In a world where prices seem to be consistently rising, a monthly check makes sense for many who have bills and expenses due on a 30-day basis. Items such as mortgage payments, 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 significant help in meeting those obligations.
AGNC Investment
AGNC Investment Corp. (NASDAQ: AGNC | AGNC Price Prediction) provides private capital to the U.S. housing market. This company has paid solid monthly dividends for years, and is currently yielding 14.10%. By providing private capital to the U.S. housing market, it enhances liquidity in the residential real estate mortgage markets and, in turn, facilitates home ownership in the United States.
The company invests primarily in agency residential mortgage-backed securities on a leveraged basis. These investments consist of residential mortgage pass-through securities and collateralized mortgage obligations for which a U.S. government-sponsored enterprise guarantees the principal and interest payments.
AGNC buys debt from the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Together, Fannie Mae and Freddie Mac are known as the GSEs, or Government-Sponsored Enterprises. Alternatively, AGNC may purchase debt from a U.S. government agency, such as the Government National Mortgage Association (Ginnie Mae).
$7,500 buys 735 shares, which pay $1.44 per share each year, or $0.12 per month. That equals $88 in passive income every 30 days.
Apple Hospitality REIT
Apple Hospitality REIT Inc. (NYSE: APLE) owns one of the largest portfolios of upscale, select-service hotels in the United States. It is a publicly traded real estate investment trust that pays a solid monthly dividend of 8.15% and distinguishes itself in the market with its unique offerings.
The company comprises 224 hotels with more than 30,066 guest rooms in 87 markets throughout 37 states, as well as one property leased to third parties.
Apple Hospitality REIT’s portfolio comprises 100 Marriott-branded hotels, 119 Hilton-branded hotels, and five Hyatt-branded hotels. They are operated and managed under separate management agreements with 16 hotel management companies, including:
- Hilton Garden Inn
- Hampton
- Courtyard
- Residence Inn
- Homewood Suites
- SpringHill Suites
- Fairfield
- Home2 Suites
- TownePlace Suites
- AC Hotels
- Hyatt Place
- Marriott
- Embassy Suites
- Aloft
- Hyatt House
Apple Hospitality hotels are in various states, including Alaska, Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Kansas, Louisiana, and Michigan.
$7,500 will purchase 645 shares, which yield $0.96 annually or $0.08 per month. That comes to $52 per month.
Barings BDC
Barings BDC Inc. (NYSE: BBDC) primarily makes debt investments in middle-market companies. This business development company is a leader in its industry and pays a substantial dividend of 11.63%. It is a publicly traded, externally managed investment company elected to be treated as a business development company under the Investment Company Act of 1940.
It seeks to invest primarily in:
- Senior secured loans
- First lien debt
- Unitranche
- Second lien debt
- Subordinated debt
- Equity co-investments
- Senior secured private debt investments in private middle-market companies operating across various industries
The company specializes in:
- Mezzanine
- Leveraged buyouts
- Management buyouts
- ESOPs
- Change of control transactions
- Acquisition financings
- Growth financing
- Recapitalizations in lower-middle-market, mature, and later-stage companies
Barings BDC invests in manufacturing and distribution, business services and technology, transportation and logistics, and consumer products and services. It invests in the United States and companies with EBITDA of $10 million to $75 million, typically in private equity sponsor-backed investments.
$ 7,500 will purchase 840 shares, which pay $1.04 per year, or $0.086 per month. $72.24 per month goes to the bank.
Ellington Financial
This high-quality mortgage REIT has been at the forefront of data-driven investing since its founding in 1994, and it pays a rich 11.3% dividend. Ellington Financial Inc. (NYSE: EFC) is a favorite among Wall Street investors. Through its subsidiary, Ellington Financial Operating Partnership, it 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 a U.S. government agency or a 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. The company offers consumer loans and asset-backed securities backed by consumer and commercial assets.
$7,500 buys 545 shares, which pay $1.56 per share each year, or $0.13 per month. That equals $71 in passive income every 30 days.
PennantPark Floating Rate Capital
Often overlooked by Wall Street, this business development company offers a substantial monthly dividend yield. PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) invests in middle-market companies in the U.S. It seeks to invest in floating-rate loans through private, thinly traded, or small-cap public middle-market companies.
It primarily invests in the United States, with a limited extent in non-U.S. companies. The fund typically invests between $2 million and $20 million.
The fund also invests in:
- Equity securities
- Preferred stock
- Common stock
- Warrants or options received in connection with debt investments or through direct investments
It primarily invests between $10 million and $50 million in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies.
The fund invests 30% in non-qualifying assets, like:
- Investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million
- Securities of middle-market companies located outside of the United States
- High-yield bonds
- Distressed debt
- Private Equity
- Securities of public companies that are not thinly traded
- Investment companies as defined in the 1940 Act
Under normal conditions, the fund expects at least 80% of its net assets plus any borrowings for investment purposes to be invested in floating-rate loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65 percent of its portfolio through senior secured loans.
$7,500 will purchase 816 shares, which will pay $1.23 per year, or $0.1025 per month. That equals $83.64 each month.
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