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Three High-Yield Stocks with Monthly Dividends

02/19/2019 5:00 am EST


Tim Plaehn

Investment Research Analyst, Investors Alley

My investment plan is to focus on owning higher yield dividend stocks with potential for dividend growth; here are three that have monthly dividends, suggests Tim Plaehn, editor of The Dividend Hunter.

EPR Properties (EPR) is a very well-run net lease REIT that has done a great job of growing the business and generating above average dividend growth for investors.

With the triple net-lease (NNN) model, the tenants that lease the properties owned by EPR are responsible for all the operating costs like taxes, utilities and maintenance. EPR’s job is to collect the rent checks.

Typically, NNN leases are long term, for 10 years or more, with built-in rent escalations. EPR Properties separates itself from the rest of the triple net REIT pack by the highly focused types of properties the company owns.

The EPR assets can be divided into the three categories of Entertainment (movie megaplex theaters), Recreation (golf and ski facilities), and Education (including private and charter schools, and early childhood centers). EPR just increased its dividend for the ninth consecutive year, boosting the payout by 4%. The shares yield 6.1%.

Main Street Capital Corporation (MAIN) is a business development company has been a tremendous stock for income focused investors. A BDC is a closed-end investment company, like closed-end mutual funds (CEF).

The difference is that a CEF owns stock shares and bonds, while a BDC makes direct investments into its client companies. A BDC will have hundreds of outstanding investments to spread the risk across many small companies.

MAIN uses a two-tier approach to its portfolio. This unique strategy allows Main Street to generate a high level of interest income and capital gains from equity investments.

This company is one of just a small number of BDCs that has grown its dividends and net asset value per share. The monthly dividend has been increased five times in the last three years. MAIN has also been paying semi-annual special dividends that boost the realized yield above the current yield.
The stock currently yields 6.3%.

The Reaves Utility Income Fund (UTG) is a closed end fund manage by Reaves Asset Management, an investment manager firm that solely focuses on the utility, telecom and infrastructure sectors.

I recommend UTG over individual utility stocks because it pays monthly dividends and has a higher yield than the typical utility stock. The UTG dividend has never been reduced. It has increased steadily and is now 75% higher than at the time of the fund’s IPO in 2004.

No portion of the dividends paid have every been classified as return-of-capital. Utilities are viewed as a safe haven stock sector, and UTG is a great way to invest in that sector. Current yield is 6.5%.

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