In this article, we discuss 10 monthly dividend stocks with over 5% yield. If you want to see more stocks in this selection, check out 5 Monthly Dividend Stocks with Over 5% Yield.
During a difficult time for the capital markets in 2022, dividend-paying stocks proved to be a strong investment, outperforming both non-dividend stocks and bonds during the year. Even with a sluggish economy, market specialists remain optimistic about the growth of dividends. This is due to the conservative dividend payout ratios, which provide companies with sufficient buffers to keep increasing dividends even in the face of slowing or declining earnings growth. Concerns about inflation persist in 2023. Dividend-growing stocks can perform well during inflationary periods because, unlike bonds with fixed interest payments, the increasing dividends can help counter the impact of inflation and maintain purchasing power.
Dividends have made a substantial contribution to the returns earned by investors over the past half-century. From 1960 till present, reinvested dividends and the impact of compounding have accounted for 84% of the total return of the S&P 500 Index. From 1930 to 2021, the average contribution of dividend income to the total return of the S&P 500 Index was 40%.
ClearBridge Investments, a leading global equity manager with $151.3 billion in assets under management as of December 31, 2022, announced that it will target companies with the ability to increase prices in response to inflationary pressures, thus preserving their profitability. The firm has a positive outlook on financial sector companies, as they can benefit from rising interest rates and a strong labor market, thus maintaining high credit quality. ClearBridge also anticipates that the energy sector will remain a key contributor to dividend returns, due to its strength and the financial stability of some of the companies within the sector. The firm considers investing in dividends to be a timeless strategy.
Monthly dividend stocks offer consistent and growing income, improved reinvestment opportunities, and a potential for higher yield. While investors usually pick up dividend names like The Coca-Cola Company (NYSE:KO), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), we discuss monthly dividend payers in this article.
Our Methodology
We referred to the “2023 Monthly Dividend Stocks List” from Sure Dividend, selecting stocks yielding more than 5% as of February 3. From these stocks we selected 10 stocks with the highest hedge fund sentiment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
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Monthly Dividend Stocks with Over 5% Yield
10. Horizon Technology Finance Corporation (NASDAQ:HRZN)
Dividend Yield as of February 3: 10.72%
Number of Hedge Fund Holders: 5
Horizon Technology Finance Corporation (NASDAQ:HRZN) is a company that specializes in providing loans and investing in early-stage businesses. The firm focuses on securing debt and venture loans for companies in the technology, life science, healthcare information and services, clean tech, and sustainability industries that are backed by venture capital. On January 11, Horizon Technology Finance Corporation (NASDAQ:HRZN) reported that in the fourth quarter of 2022, its lending platform provided $114 million in new loans, an increase of 8.1% quarter-over-quarter. As of December 31st, 2022, Horizon Technology Finance had a portfolio that included warrant and equity positions in 99 companies, with 82 of them being private companies.
On November 3, Horizon Technology Finance Corporation (NASDAQ:HRZN) declared a $0.11 per share monthly dividend, a 10% increase from its prior dividend of $0.10. The dividend was distributed on January 13, and the next payment will be made on February 15, to shareholders of record on January 18.
According to Insider Monkey’s third quarter database, 5 hedge funds were bullish on Horizon Technology Finance Corporation (NASDAQ:HRZN), with combined stakes worth $6.11 million, compared to 5 funds in the prior quarter worth $5.70 million. John Overdeck and David Siegel’s Two Sigma Advisors is the leading stakeholder of the company, with 236,397 shares valued at $2.3 million.
Like The Coca-Cola Company (NYSE:KO), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), Horizon Technology Finance Corporation (NASDAQ:HRZN) is one of the best dividend stocks to monitor.
9. Gladstone Investment Corporation (NASDAQ:GAIN)
Dividend Yield as of February 3: 6.85%
Number of Hedge Fund Holders: 6
Gladstone Investment Corporation (NASDAQ:GAIN) is a company that specializes in business development in the lower middle market and mature stage buyouts. The firm provides financing for existing debt and offers various types of senior and junior debt securities, limited liability company interests, warrants, and options. Gladstone Investment Corporation (NASDAQ:GAIN) does not invest in startups. It focuses on investing in the manufacturing, consumer products, and business/consumer services sectors.
On February 1, Gladstone Investment Corporation (NASDAQ:GAIN) reported a Q4 non-GAAP NII of $0.30, beating market estimates by $0.04. The total investment income of $21.59 million, which represents a year-over-year increase of 29.0%, exceeded expectations by $1.6 million.
Gladstone Investment Corporation (NASDAQ:GAIN) on January 10 declared a $0.08 per share monthly dividend, in line with previous. The dividend was paid on January 31, and the next payment is due on February 28, to shareholders of the company as of February 17.
Riley analyst Bryce Rowe initiated coverage of Gladstone Investment Corporation (NASDAQ:GAIN) on December 13 with a Neutral rating and a $14 price target. According to the analyst, there is limited potential for the stock price to increase in the short term due to the potential for minimal origination and exit activity in the current market conditions, which could impact the company’s revenue. He views the risk and reward of investing in Gladstone Investment Corporation (NASDAQ:GAIN) as balanced at current share prices.
According to Insider Monkey’s data, 6 hedge funds were long Gladstone Investment Corporation (NASDAQ:GAIN) at the end of Q3 2022, compared to 3 funds in the prior quarter. Israel Englander’s Millennium Management is the largest stakeholder of the company, with 82,167 shares worth $994,000.
8. Orchid Island Capital, Inc. (NYSE:ORC)
Dividend Yield as of February 3: 15.46%
Number of Hedge Fund Holders: 6
Orchid Island Capital, Inc. (NYSE:ORC) was incorporated in 2010 and is based in Vero Beach, Florida. The company is a specialty finance firm that invests in residential mortgage-backed securities (RMBS) within the United States. On January 11, Orchid Island Capital, Inc. (NYSE:ORC) announced that its estimated book value per share increased by 4.5% during the fourth quarter of 2022.
On January 11, Orchid Island Capital, Inc. (NYSE:ORC) declared a $0.16 per share monthly dividend, in line with previous. The dividend is distributable on February 24, to shareholders of record on January 31. It is one of the best monthly dividend stocks to invest in.
According to Insider Monkey’s Q3 data, Orchid Island Capital, Inc. (NYSE:ORC) was part of 6 hedge fund portfolios, compared to 5 in the prior quarter. The collective stakes held by elite funds in the third quarter of 2022 increased to $23.5 million from $536,000 in the second quarter. Dmitry Balyasny’s Balyasny Asset Management is the leading position holder in the company, with 1.5 million shares worth $12.25 million.
7. Ellington Residential Mortgage REIT (NYSE:EARN)
Dividend Yield as of February 3: 12.06%
Number of Hedge Fund Holders: 7
Ellington Residential Mortgage REIT (NYSE:EARN) was incorporated in 2012 and is based in Old Greenwich, Connecticut. It is a real estate investment trust, specializing in acquiring, investing in, and managing residential mortgage and real estate-related assets. On January 9, Ellington Residential Mortgage REIT (NYSE:EARN) declared a $0.08 per share monthly dividend. The dividend is payable on February 27, to shareholders of record on January 31. The dividend yield on February 3 came in at 12.06%.
On December 19, JonesTrading analyst Jason Stewart initiated coverage of Ellington Residential Mortgage REIT (NYSE:EARN) with a Hold rating without a price target. The analyst believes that the appreciation of the company’s book value will be driven by a narrowing agency mortgage market, but also expects periods of elevated market volatility in the first half of 2023. Despite this, the analyst has a positive outlook for agency mortgage real estate investment trusts in the medium term.
According to Insider Monkey’s third quarter database, 7 hedge funds were long Ellington Residential Mortgage REIT (NYSE:EARN), compared to 5 funds in the last quarter. Jim Simons’ Renaissance Technologies is the biggest position holder in the company, with 471,100 shares worth $2.90 million.
6. ARMOUR Residential REIT, Inc. (NYSE:ARR)
Dividend Yield as of February 3: 18.69%
Number of Hedge Fund Holders: 8
ARMOUR Residential REIT, Inc. (NYSE:ARR) is a Florida-based company that invests in residential mortgage-backed securities in the United States. On January 30, ARMOUR Residential REIT, Inc. (NYSE:ARR) declared a $0.10 per share monthly dividend, in line with previous. The dividend is distributable on February 27, to shareholders of record on February 15. ARMOUR Residential REIT, Inc. (NYSE:ARR)’s dividend yield on February 3 stood at 18.69%.
On January 6, Barclays analyst Mark DeVries lowered the price target on ARMOUR Residential REIT, Inc. (NYSE:ARR) to $5 from $6 and kept an Underweight rating on the shares. The analyst has turned neutral on the U.S. consumer finance sector with a “recession looking likely in 2023” and downgraded 10 stocks.
According to Insider Monkey’s Q3 data, 8 hedge funds were long ARMOUR Residential REIT, Inc. (NYSE:ARR), with combined stakes worth $23.8 million, compared to 5 funds in the prior quarter worth $13.4 million. Israel Englander’s Millennium Management is the leading stakeholder of the company, with 2.4 million shares worth $11.7 million.
In addition to The Coca-Cola Company (NYSE:KO), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ), ARMOUR Residential REIT, Inc. (NYSE:ARR) is a top dividend name to monitor.
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Disclosure: None. 10 Monthly Dividend Stocks with Over 5% Yield is originally published on Insider Monkey.
Correction: The article was corrected on February 6 at 13:57 PM ET to remove Pembina Pipeline Corporation from the list. A previous version of this article incorrectly called Pembina Pipeline a monthly dividend stock. Pembina in December announced that subject to approval of future common share dividends by the Board of Directors, the company intends to move from monthly dividends to a quarterly common share dividend payment, following the monthly December 2022 dividend.