In this article, we discuss 10 monthly dividend stocks with over 5% yield.
Dividend paying stocks are considered to be a reliable hedge against the rising inflation that is expected to last for the foreseeable future. Stable dividend stocks offer a passive stream of income over a long-term horizon for investors looking to retire comfortably, or for individuals who like additional income pouring in. Investors looking for monthly dividend income usually select real estate investment trusts or dividend ETFs, since they offer attractive yields and their payout is usually based on a per month basis.
According to Kevin Mahn, the president and chief investment officer at Hennion and Walsh Asset Management, since the S&P 500 had its best 3-year performance run since 1999 in 2021, returning more than 72%, the overall market became highly overvalued. The average price to earnings ratio at the end of 2021 clocked in at over 26. The Fed decided to end tapering by the end of first quarter of 2022, and declared that there might be multiple interest rate hikes in the near future, amounting to 25 basis points.
This announcement by the Fed naturally rattled many investors, some of whom thought it would be best to cut their losses short, take what profits they can get, and exit the stock market until the investing environment is more stable. However, Kevin Mahn suggested that these defensive investors should not deviate from their usual risk tolerance and mix up their portfolios with income stocks that are value-oriented. He noted that dividend paying securities will enable investors to earn some money even when the market is not outperforming historical estimates, stay in the trades, and benefit from the upside when the market rebounds, which he expects will happen soon.
The most notable dividend stocks that are endorsed by elite hedge funds include Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and PepsiCo, Inc. (NASDAQ:PEP).
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Our Methodology
We selected stocks that distribute dividends monthly, offering yields of over 5%. We have discussed the latest dividend payouts for each company, in addition to mentioning the hedge fund sentiment around each stock, which was gauged from a total of 867 elite funds monitored by Insider Monkey in the third quarter of 2021.
Monthly Dividend Stocks with Over 5% Yield
10. Gladstone Investment Corporation (NASDAQ:GAIN)
Dividend Yield as of January 27: 5.84%
Number of Hedge Fund Holders: 6
Gladstone Investment Corporation (NASDAQ:GAIN) is a private equity fund that primarily acquires stable lower middle market companies, offering both equity and debt capital to its clients, investing up to $30 million in a single transaction. Gladstone Investment Corporation seeks to provide monthly dividends and potential capital gains to its shareholders.
On January 12, Gladstone Investment Corporation declared a $0.075 per share monthly dividend, in line with previous. Additionally, the company declared a supplemental distribution of $0.120 per share. The dividend will be distributed on January 31, to shareholders of record on January 21.
Gladstone Investment Corporation published its financial results for the quarter ending September 2021 on November 2. The company posted GAAP earnings per share of $0.85, beating estimates by $0.52. Revenue over the period jumped 56.57% to $18.54 million, outperforming estimates by $1.87 million.
Among the hedge funds tracked by Insider Monkey in Q3 2021, 6 funds were bullish on Gladstone Investment Corporation, with stakes totaling $3.6 million. John Overdeck and David Siegel’s Two Sigma Advisors is the largest shareholder of Gladstone Investment Corporation, with a $1.93 million stake.
9. LTC Properties, Inc. (NYSE:LTC)
Dividend Yield as of January 27: 6.50%
Number of Hedge Fund Holders: 9
LTC Properties, Inc. (NYSE:LTC) is a real estate investment trust based in California with a portfolio of assets including senior housing and healthcare establishments in the United States. LTC Properties, Inc. uses a number of structured finance solutions to fund its projects.
LTC Properties, Inc. on January 3 declared a monthly per share dividend of $0.19, in line with previous. The dividend will be paid on January 31, to shareholders of record on January 21. As of January 27, LTC Properties, Inc. delivers a dividend yield of 6.50%.
On January 13, KeyBanc analyst Jordan Sadler upgraded LTC Properties, Inc. to Overweight from Sector Weight with a $40 price target. The analyst disclosed in a research note for investors that LTC Properties, Inc.’s “impending” cash flow recovery should positively impact its entire portfolio. He is maintaining the apartment and retail real estate investment trust sectors at Overweight for 2022 and keeping industrial, data center, self storage, healthcare, and triple net REITs at Sector Weight.
As of the third quarter of 2021, Israel Englander’s Millennium Management is the largest LTC Properties, Inc. stakeholder, owning 129,066 shares worth $4.09 million. Overall, 9 hedge funds were bullish on LTC Properties, Inc. in Q3 2021, with stakes totaling $12.1 million.
Hedge funds are taking an interest in LTC Properties, Inc. as of Q3 2021, in addition to Microsoft Corporation, Johnson & Johnson, and PepsiCo, Inc..
8. Gladstone Capital Corporation (NASDAQ:GLAD)
Dividend Yield as of January 27: 7.41%
Number of Hedge Fund Holders: 4
Gladstone Capital Corporation (NASDAQ:GLAD) is a business development company that delivers flexible debt capital solutions to lower middle market businesses. Gladstone Capital Corporation lends with the purpose of assisting with private equity buyouts, acquisitions, or to support a company’s growth plans.
On January 12, Gladstone Capital Corporation declared a $0.065 per share monthly dividend, in line with previous. The dividend is payable on January 31, to shareholders of record on January 21. Gladstone Capital Corporation delivers a dividend yield of 7.41% as of January 27.
Gladstone Capital Corporation posted its third quarter earnings on November 15, announcing a GAAP EPS of $0.98, beating estimates by $0.72. The $14.36 million revenue for the period outperformed estimates by $628,000.
In Q3 2021, 4 hedge funds were long Gladstone Capital Corporation, with stakes totaling $3.1 million, as compared to 6 funds in the preceding quarter, with stakes in Gladstone Capital Corporation worth over $4 million. McKinley Capital Management is one of the leading stakeholders of the company, with 94,964 shares, valued at $1.07 million.
7. Horizon Technology Finance Corporation (NASDAQ:HRZN)
Dividend Yield as of January 27: 8.33%
Number of Hedge Fund Holders: 1
Horizon Technology Finance Corporation (NASDAQ:HRZN) is headquartered in Connecticut, and the company operates a venture lending platform that offers structured debt products to life science and technology companies. Horizon Technology Finance Corporation has invested more than $2.3 billion in venture loans to over 285 growing companies since 2004.
On October 26, Horizon Technology Finance Corporation declared a $0.10 per share monthly dividend, in line with previous. The dividend will be distributed on January 14, February 16, and March 16, respectively. Horizon Technology Finance Corporation also declared a special dividend of $0.05, which was paid on December 15.
Riley analyst Sarkis Sherbetchyan raised the price target on Horizon Technology Finance Corporation on October 21 to $15.50 from $14.50 and kept a Neutral rating on the shares ahead of its Q3 results. The company exceeded market consensus estimates on third quarter earnings and revenue on October 26.
Two Sigma Advisors holds a $2.54 million stake in Horizon Technology Finance Corporation as of Q3 2021, owning 156,197 shares of the company.
6. SLR Senior Investment Corp. (NASDAQ:SUNS)
Dividend Yield as of January 27: 8.92%
Number of Hedge Fund Holders: 1
SLR Senior Investment Corp. (NASDAQ:SUNS) commenced operations in 2011 and operates as a business development company that invests primarily in senior secured loans of private middle market companies, offering debt financing solutions. SLR Senior Investment Corp. aims to generate income which is distributed to shareholders on a monthly basis.
On January 2, SLR Senior Investment Corp. declared a $0.10 per share monthly dividend, in line with previous. The dividend is payable on February 2, to shareholders of record on January 20. SLR Senior Investment Corp. offers a dividend yield of 8.92% on January 27.
In June 2021, Oppenheimer analyst Mitchel Penn assumed coverage of SLR Senior Investment Corp. with an Outperform rating and a $16 price target.
The third quarter database of Insider Monkey suggests that 1 hedge fund holds a $1.09 million stake in SLR Senior Investment Corp..
While stocks like Microsoft Corporation, Johnson & Johnson, and PepsiCo, Inc. deliver quarterly dividends, SLR Senior Investment Corp. is a good play for monthly dividend income.
5. Dynex Capital, Inc. (NYSE:DX)
Dividend Yield as of January 27: 9.92%
Number of Hedge Fund Holders: 7
Dynex Capital, Inc. (NYSE:DX) is a Virginia-based real estate investment trust that generates dividend income and long-term returns for shareholders by financing real estate assets across the United States. Dynex Capital, Inc. offers shareholders a 9.92% dividend yield as of January 27. The REIT beat market consensus for earnings in the third quarter of 2021.
On January 13, Dynex Capital, Inc. declared a $0.13 per share monthly dividend, in line with previous. The dividend will be distributed on February 1, to shareholders of record on January 24.
Among the hedge funds monitored by Insider Monkey in Q3 2021, 7 hedge funds reported owning stakes in Dynex Capital, Inc., equaling approximately $13 million, as compared to 9 funds holding stakes worth $26.8 million in Dynex Capital, Inc. in the preceding quarter. Marshall Wace LLP is the largest stakeholder of the company in the third quarter, holding 296,649 shares, valued at $5.1 million.
4. Ellington Financial Inc. (NYSE:EFC)
Dividend Yield as of January 27: 10.29%
Number of Hedge Fund Holders: 10
Ellington Financial Inc. (NYSE:EFC) is a Connecticut-based real estate investment trust that invests primarily in residential and commercial mortgage loans, consumer loans, collateralized loan obligations, non-mortgage and mortgage-related derivatives, and equity investments, among others.
On January 7, Ellington Financial Inc. declared a $0.15 per share monthly dividend, in line with previous. The dividend is payable on February 25, to shareholders of record on January 31. Ellington Financial Inc.’s dividend yield on January 27 came in at 10.29%, making it one of the most notable monthly dividend stocks to invest in.
Sheridan Capital and Ellington Financial Inc. on January 10 jointly announced a strategic partnership whereby Ellington Financial Inc. made an equity investment in Sheridan Capital, a player in originating commercial real estate bridge loans, to provide unique and creative loan products to the market.
As of Q3 2021, Millennium Management, the largest stakeholder of Ellington Financial Inc., increased its stake in the company by 597%, holding a total of 1.15 million shares worth $21.1 million. Overall, 10 hedge funds were bullish on Ellington Financial Inc. in the third quarter.
3. Ellington Residential Mortgage REIT (NYSE:EARN)
Dividend Yield as of January 27: 11.52%
Number of Hedge Fund Holders: 10
Ellington Residential Mortgage REIT (NYSE:EARN) is a mortgage real estate investment trust based in Connecticut, specializing in acquiring and managing residential mortgage and real estate assets that are guaranteed by a U.S. government agency. Ellington Residential Mortgage REIT delivers a dividend yield of 11.52% as of January 27.
On January 7, Ellington Residential Mortgage REIT declared a $0.10 per share monthly dividend, in line with previous. The dividend is payable on February 25, to shareholders of record on January 31.
BTIG analyst Eric Hagen downgraded Ellington Residential Mortgage REIT on November 8 to Neutral from Buy. The analyst is positive on Ellington Residential Mortgage REIT’s portfolio structure, particularly its move to hedge its cost of funds at the short-end, but as Ellington Residential Mortgage REIT’s shares approach book value with 10% dividend yield, valuation has become a concern.
Among the hedge funds tracked by Insider Monkey, 10 funds were long Ellington Residential Mortgage REIT in Q3 2021, with stakes totaling $18.1 million. Renaissance Technologies is the biggest stakeholder of the company, owning 582,700 shares worth $6.5 million.
2. ARMOUR Residential REIT, Inc. (NYSE:ARR)
Dividend Yield as of January 27: 13.12%
Number of Hedge Fund Holders: 6
ARMOUR Residential REIT, Inc. (NYSE:ARR) is a real estate investment trust based in Maryland, investing mainly in mortgage backed securities in the United States that are guaranteed by government-sponsored enterprises.
On January 4, ARMOUR Residential REIT, Inc. declared a $0.10 per share monthly dividend, in line with previous. The dividend is payable on January 28, to shareholders of record on January 18. ARMOUR Residential REIT, Inc.’s dividend yield came in at 13.12% on January 27.
The company’s distributable earnings missed market consensus in Q3 2021, hence JonesTrading analyst Jason Stewart on October 28 downgraded ARMOUR Residential REIT, Inc. to Hold from Buy and removed his prior price target. With the shares effectively trading at book value per share, he sees the risk versus reward as balanced at current levels for ARMOUR Residential REIT, Inc..
A total of 6 hedge funds were long ARMOUR Residential REIT, Inc. in the third quarter of 2021, with stakes totaling $23 million. Citadel Investment Group holds a $4.2 million position in ARMOUR Residential REIT, Inc. and is one of the leading stakeholders of the company.
1. Orchid Island Capital, Inc. (NYSE:ORC)
Dividend Yield as of January 27: 16.90%
Number of Hedge Fund Holders: 10
Orchid Island Capital, Inc. (NYSE:ORC) is a Florida-based specialty finance company that operates as a real estate investment trust, with a portfolio of residential mortgage-backed securities on a leveraged basis. Orchid Island Capital, Inc. delivers a 16.90% dividend yield as of January 27, making it one of the best monthly dividend stocks with over 5% yield.
On January 13, Orchid Island Capital, Inc. declared a $0.055 per share monthly dividend, which reflects a 15.4% decrease from its prior dividend of $0.065. The dividend is payable on February 24, to shareholders of record on January 31. The company reduced its dividend due to margin compressions in Q4 2021.
JonesTrading analyst Jason Stewart on January 24 upgraded Orchid Island Capital, Inc. to Buy from Hold with a $4.25 price target. The analyst believes mortgage backed securities and rates markets “now have room to provide near term support” to Orchid Island Capital, Inc.’s book value, especially since the shares are down 16% ahead of the company’s Q4 results.
Balyasny Asset Management is the biggest stakeholder of Orchid Island Capital, Inc. as of Q3 2021, holding 1.71 million shares worth $8.40 million. Overall, 10 hedge funds reported owning stakes in Orchid Island Capital, Inc. in the third quarter of 2021, totaling $16.1 million.
You can also take a look at Billionaire Michael Platt’s Stunning Performance in 2021 and His Top 10 Stock Picks and 10 Notable Earnings Reports to Watch.
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This article is originally published at Insider Monkey.
