If you’re scratching your head on how to deal with your rising monthly bills and looking to add to your monthly income, an income-investing strategy is one of the low risk approaches that could help increase your income.
With oil prices continuing to slide, the stock market is performing like a roller-coaster. And gold prices are at a five-year low. I expect many companies will start to reduce their dividends to deal with the upcoming financial crisis.
With that said, there are very few companies out there that provide monthly income to shareholders with a relatively high yield. Here, I’ve identified three of my favorite monthly dividend stocks.
Vanguard Natural Resources, LLC (NASDAQ/VNR)
Dividend Yield (As of July 3): 13%
Year to Date Performance: -36.67%
Last dividend Increase: February 27, 2014
Vanguard Natural Resources, LLC (NASDAQ/VNR) focuses on acquiring and developing long-lived oil and natural gas fields within the United States through its subsidiaries.
According to the company’s 2014 annual report, they spent over $142 million in capital expenditure—their largest capital expenditure ever—to expand operations in the energy sector. The company currently has a dividend yield of 13% and pays monthly dividends of $0.12 per share to its shareholders.
Despite the ongoing crisis in the energy sector, the company has been able to deliver positive earnings in the previous three-month period due to improved production and lower operation costs. With high efficiency and lower operation cost, the company is expected to reward its shareholders with monthly dividends for the coming months and years to come.
Realty Income Corporation (NYSE/O)
Dividend Yield (As of July 3): 4.8%
Year to Date Performance: 1.97%
Last dividend Increase: March 30, 2015
Realty Income Corporation (NYSE/O) is a very well established real estate company. Since 1969, the firm has mailed out 540 consecutive dividend payments to unit holders, totaling some $3.5 billion. Even better, management has hiked the firm’s payout consistently, ensuring the income stream for investors can keep up with inflation.
The San Diego-based company holds a diversified portfolio ranging from industry properties to commercial tenants. Because the company’s primary assets are in real estate, they pay back to shareholders in exchange for the federal tax exemption as part of the Real Estate Investment Trust (REIT). Instead of paying taxes to the government, the program allows the company to pay the net taxable income to shareholders in the form of dividends; monthly dividends for this particular company.
LTC Properties Inc. (NYSE/LTC)
Dividend Yield (As of July 3): 4.7%
Year to Date Performance: 2.02%
Last dividend Increase: October 21, 2013
LTC Properties Inc. (NYSE/LTC) is a real estate investment company who focuses on retirement housing and the healthcare industry. Currently, the company holds about 200 properties in 29 states. In addition, the company is part of the REIT, which is not subject to pay federal income tax; it pays its net taxable income as a dividend to shareholders.
The company has been able to mange its capital expenditures to main an adequate amount of solvency in order to be able to rewards its shareholders and grow its portfolio. Today, LTC has a payout ratio of 79.38% and is currently paying 0.17 cents per share on a monthly basis. Notably, the company has grown its dividends since 2002 and is expected to rewards its shareholder with a solid dividend plan.
To put it in perspective, if you invested $1.00 in the company in late 1992 and reinvested all of your distributions, you would have had $22.16 in dollar value. That represents a return of 2,116% over that period. Given the financial health of the company, I expect those positive returns to continue for many years to come.