In this article, we discuss 10 best monthly dividend stocks to buy in October.
Investors often advocate income-generating stocks during periods of high inflation and slow economic growth. These stocks have historically delivered positive returns to shareholders, making investors turn away from growth companies. According to a report by Financial Synergies Wealth Advisors, high dividend payers delivered an annual average return of 11.8% from 1928 to 2021, whereas low payers returned 11% during the same period.
Jeffrey Kleintop, the chief global investment strategist at Charles Schwab, talked about the importance of dividend stocks in the current economic environment in his interview with Ameritrade Network this September. He said that in every recessionary bear market in the last 50 years, high dividend stocks have outperformed the broader market. He further asserted that in every scenario, dividend stocks have materially less downside and they are also up this year relative to the overall market. Another report by Guardian Capital also expounded on the significance of dividend stocks. The report mentioned that over the last 50 years, companies with growing free cash flow and strong dividend policies have shown long-term performances with less volatility, compared with non-dividend stocks.
Dividend companies like Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), and AbbVie Inc. (NYSE:ABBV) are favored by investors as they hold decades-long dividend growth track records. Moreover, these companies have delivered positive returns this year so far, whereas the S&P 500 declined by 20.9%, as of the close of October 4. In this article, we will discuss the best monthly dividend stocks to buy in October.
Photo by Dan Dennis on Unsplash
Our Methodology:
We selected stocks that pay monthly dividends to shareholders. We examined these stocks through their financial health, balance sheets, and dividend policies. The stocks are ranked from the lowest dividend yield to the highest.
10 Best Monthly Dividend Stocks to Buy in October
10. Savaria Corporation (TSX:SIS.TO)
Dividend Yield as of October 5: 3.63%
Savaria Corporation (TSX:SIS.TO) is a Canada-based company that provides accessibility solutions, such as platform lifts, stairlifts, and residential and commercial elevators for the physically challenged.
Savaria Corporation reported strong Q2 results. It posted an operating income of $17.7 million, up 99% from the same period last year. The company’s operating income represented 9.2% of its revenue. Its operating cash flow came in at $14.6 million, compared with $13 million in the previous quarter. Moreover, its free cash flow jumped to $9.7 million, from $9.4 million a quarter earlier.
On September 16, Savaria Corporation declared a 3.8% hike in its monthly dividend to C$0.0433 per share. This was the company’s sixth consecutive year of dividend growth, coming through as one of the best monthly dividend stocks. In addition to this, the company has raised its dividends at a CAGR of 12.08% in the last five years. As of October 5, the stock’s dividend yield came in at 3.63%.
In addition to famous dividend stocks like Exxon Mobil Corporation, Chevron Corporation, and AbbVie Inc., Savaria Corporation can be a good addition to dividend portfolios due to its monthly payouts.
9. Realty Income Corporation (NYSE:O)
Dividend Yield as of October 5: 4.94%
Realty Income Corporation (NYSE:O) is one of the best monthly dividend stocks on our list with a 28-year dividend growth track record. The real estate investment trust has paid 627 consecutive monthly dividends on its common stock throughout its 53-year operating history. It currently pays a monthly dividend of $0.248 per share, with a dividend yield of 4.94%, as of October 5.
In Q2 2022, Realty Income Corporation generated $743 million in free cash flow (FCF), up from $513.4 million in the previous quarter. The company’s FCF was stable enough to support its dividend payments of $445.8 million during the quarter. These dividend payments represented 76.5% of the company’s AFFO. Moreover, its revenue for the quarter came in at $810.4 million, up 75% from the same period last year.
In October, Raymond James maintained its Outperform rating on Realty Income Corporation with a $68 price target, as the firm sees the company as a strong risk/reward play within the net lease amid the uncertain market situation.
At the end of Q2 2022, 19 hedge funds tracked by Insider Monkey owned stakes in Realty Income Corporation, down from 22 in the previous quarter. These stakes are collectively valued at over $200.7 million. Citadel Investment Group was the company’s leading stakeholder in Q2.
8. STAG Industrial, Inc. (NYSE:STAG)
Dividend Yield as of October 5: 4.97%
STAG Industrial, Inc. (NYSE:STAG) is an American real estate investment trust company that invests in industrial properties across the country. In September, Evercore ISI overtook the coverage of the stock with an Outperform rating and a $39 price target. The firm highlighted the company’s interest rates forecasts amid macro changes.
In the second quarter of 2022, STAG Industrial, Inc. generated $87.2 million in cash available for distribution, which showed a 16.6% growth from the same period last year. The company’s operating cash flow for the quarter came in at $102.3 million, compared with $88.8 million in the previous quarter. Its free cash flow grew to $77.6 million, from $69.2 million in the preceding quarter. This shows that the company’s cash position is strong to cover its monthly dividends.
STAG Industrial, Inc. has been raising its dividends consistently for the past 10 years, which makes it one of the best monthly dividend stocks on our list. It currently pays a dividend of $0.1217 per share every month, with a dividend yield of 4.97%, as recorded on October 5.
The number of hedge funds tracked by Insider Monkey owning stakes in STAG Industrial, Inc. grew to 27 in Q2 2022, from 21 in the previous quarter. These stakes have a total value of nearly $380 million.
Carillon Tower Advisers mentioned STAG Industrial, Inc. in its Q1 2022 investor letter. Here is what the firm has to say:
“U.S. and around the world, and the higher inflation this cycle than in 2000. Labor inflation and general labor availability were again concerns for many companies. Supply chains eased for some goods, but remained challenged for many commodities including energy, agriculture, and fertilizer due to war and general scarcity, and also in many consumer products as semiconductors remained in short supply. Stag Industrial (NYSE:STAG), a warehouse REIT focused on rural distribution properties, fell as interest rates rose and fear of an economic slowdown gripped markets.”
7. Pembina Pipeline Corporation (NYSE:PBA)
Dividend Yield as of October 5: 5.87%
Pembina Pipeline Corporation (NYSE:PBA) is a Canada-based pipeline transport company that also operates storage infrastructure and also delivers oil and natural gas to various parts of the country. On September 8, the company announced a 3.6% raise in its monthly dividend to C$0.2175 per share. This marked the company’s sixth consecutive year of dividend growth. As of October 5, the stock’s dividend yield came in at 5.87%.
In Q2 2022, Pembina Pipeline Corporation reported $604 million in operating cash flow and its free cash flow came in at $452 million. In the six months ending June, the company generated $1.3 billion in operating cash flow, which was majorly used to fund its dividends and the capital program. Its revenue for the quarter stood at $1.02 billion, up 14.1% from the same period last year.
In September, Industrial Alliance upgraded Pembina Pipeline Corporation to Buy with a C$49 price target.
At the end of Q2 2022, 14 hedge funds tracked by Insider Monkey owned stakes in Pembina Pipeline Corporation, compared with 19 in the previous quarter. These stakes hold a collective value of over $91.7 million. Israel Englander and Jim Simons were the company’s major stakeholders in Q2.
ClearBridge Investments mentioned Pembina Pipeline Corporation in its Q1 2022 investor letter. Here is what the firm has to say:
“On a regional basis, the U.S. and Canada were the top contributors to quarterly performance. Pembina Pipeline, which provides transportation and midstream services for the energy industry in North America, was also up on greater LNG demand. The hiring of Scott Burrows as permanent CEO and Jaret Sprott as COO and reaffirmation of its corporate strategy also boosted investor sentiment. On an individual stock basis, the largest contributors to absolute returns in the quarter includes Pembina Pipeline.”
6. LTC Properties, Inc. (NYSE:LTC)
Dividend Yield as of October 5: 6.00%
LTC Properties, Inc. (NYSE:LTC) is a California-based real estate investment trust company that invests in senior housing and healthcare facilities through mortgage and joint ventures. In August, RBC Capital mentioned that the company’s management has been active in pursuing new transactions and raising capital to better position the balance sheet. In view of this, the firm raised its price target on the stock to $44 with a Sector Perform rating on the shares.
In Q2 2022, LTC Properties, Inc. reported revenue of $43 million, which showed a 13% growth from the same period last year. The company’s operating cash flow for the quarter came in at approximately $30 million, compared with $21 million in the prior-year period. In addition to this, the company also reported a rental income of $31.6 million, up from $29.8 million in Q2 2021.
Though LTC Properties, Inc. hasn’t raised its dividends since 2016, the company has maintained its payouts over these years. It pays a monthly dividend of $0.19 per share for a dividend yield of 6.00%, as of October 5. The company’s regular payouts make it one of the best monthly dividend stocks on our list.
At the end of Q2 2022, 6 hedge funds tracked by Insider Monkey reported owning stakes in LTC Properties, Inc., with a total value of over $16.4 million. Among these hedge funds, Citadel Investment Group owned the largest position in the company.
LTC Properties, Inc. is also grabbing investors’ attention alongside famous dividend stocks like Exxon Mobil Corporation, Chevron Corporation, and AbbVie Inc..
5. Keyera Corp. (TSX:KEY.TO)
Dividend Yield as of October 5: 6.56%
Keyera Corp. (TSX:KEY.TO) is one of the largest midstream oil and gas companies in Canada. The company provides services to oil and gas producers in the country and also transports natural gas liquids.
In Q2 2022, Keyera Corp. reported a strong cash position, with its operating cash flow of $199 million, up from $112 million during the same period last year. Its distributable cash flow (DCF) was $209 million, compared with $148 million in the prior-year quarter. The company has a healthy payout ratio of 51%, as it paid $106 million in dividends from its DCF during the quarter.
Keyera Corp. has been raising its dividends consistently for the past six years and has a five-year dividend CAGR of 3.91%, coming through as one of the best monthly dividend stocks to buy. It currently pays a monthly dividend of C$0.16 per share, with a dividend yield of 6.56%, as of October 5.
4. Main Street Capital Corporation (NYSE:MAIN)
Dividend Yield as of October 5: 7.40%
Main Street Capital Corporation (NYSE:MAIN) is a Texas-based principal investment firm. The company is a strong dividend payer as it never slashed its payout ever since its first dividend in 2007. On August 2, the company announced a 2.31% hike in its monthly dividend to $0.22 per share. In addition to this, the company also declared a special dividend of $0.10 per share. The company has paid supplemental dividends for three years in a row. As of October 5, the stock’s dividend yield came in at 7.40%.
On August 4, Main Street Capital Corporation reported its Q2 results, posting a total investment income of $85.2 million which showed a 26.6% year-over-year growth. The company had aggregate liquidity of $518.4 million while its cash and cash equivalents stood at $475 million at the end of June.
At the end of June 2022, 5 hedge funds tracked by Insider Monkey owned stakes in Main Street Capital Corporation, down from 9 in the previous quarter. The collective value of these stakes is over $19.3 million.
3. EPR Properties (NYSE:EPR)
Dividend Yield as of October 5: 8.68%
EPR Properties (NYSE:EPR) is a Missouri-based real estate investment trust company that mainly invests in entertainment properties. The company has over 353 properties as of 2022. The company froze its dividends in 2020 due to the pandemic and reinstated monthly payouts a year later. It currently pays a monthly dividend of $0.275 per share and has a dividend yield of 8.68%, as of October 5.
In Q2 2022, EPR Properties reported revenue of $160.4 million, up from $125.3 million during the same period last year. The company’s cash on hand stood at $168.3 million and had $1 billion in the credit facility. In the first six months of the year, it paid $27.1 million in dividends, compared with $24.9 million at the end of December 2021.
At the end of Q2 2022, 22 hedge funds tracked by Insider Monkey reported owning stakes in EPR Properties, compared with 25 in the previous quarter. The consolidated value of these stakes is over $144.1 million. Renaissance Technologies was the company’s largest stakeholder in Q2.
2. Gladstone Commercial Corporation (NASDAQ:GOOD)
Dividend Yield as of October 5: 9.21%
Gladstone Commercial Corporation (NASDAQ:GOOD) is a Virginia-based business development company that invests in debt and equity securities. The company currently pays a monthly dividend of $0.1254 per share and has a dividend yield of 9.21%, as of October 5. It is one of the best monthly dividend stocks as it has paid 211 consecutive monthly dividends on its common stock.
In Q2 2022, Gladstone Commercial Corporation reported an operating cash flow of over $17.4 million, compared with $17.1 million in the previous quarter. The company’s revenue for the quarter stood at $36.4 million, up from $35.5 million in the preceding quarter.
At the end of Q2 2022, 5 hedge funds in Insider Monkey’s database owned stakes in Gladstone Commercial Corporation, down from 8 in the previous quarter. These stakes hold a collective value of $46.8 million. Renaissance Technologies owned the largest stake in the company in Q2.
1. Prospect Capital Corporation (NASDAQ:PSEC)
Dividend Yield as of October 5: 10.51%
Prospect Capital Corporation (NASDAQ:PSEC) is a yield-oriented business development company that makes debt and equity investments in the US middle market. The company is one of the best monthly dividend stocks as it has been offering dividends to shareholders since its inception in 2004, paying a total of $3.7 billion in dividends. It currently offers a monthly dividend of $0.06 per share, with a dividend yield of 10.51%, as of October 5.
Prospect Capital Corporation announced its fiscal Q4 results on August 29, posting a net interest income of $0.21, which beat analysts’ estimates by $0.03. The company’s total investment income came in at $184.2 million, which showed a 17.3% year-over-year growth and also surpassed consensus by $8.02 million. At the end of June 2022, it had $35.3 million available in cash and cash equivalents.
As of the close of Q2 2022, 7 hedge funds in Insider Monkey’s database owned stakes in Prospect Capital Corporation, up from 6 in the previous quarter. The collective value of these stakes is over $15.3 million, compared with $18.4 million worth of stakes owned by hedge funds in the preceding quarter.
You can also take a look at 10 Monthly Dividend Stocks with Highest Yields and 10 Blue Chip Dividend Stocks to Buy After the Market Selloff
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Disclosure. None. 10 Best Monthly Dividend Stocks to Buy in October is originally published on Insider Monkey.
