3 Ultra High-Yield Dividend Stocks That Can Pay Your Rent Every Month

History proves buying dividend stocks is a superior investment strategy. Since 1930, income-producing stocks on the S&P 500 never had a decade of not producing positive returns. Even during the Great Depression and the so-called “lost decade” of the 2000’s, investors always made money with the dividend payers.

Wellington Management took that a step further. Looking at their yields, it found stocks with the highest yields beat all others 70% of the time. It broke down the stocks into five groups, or quintiles, and learned that those stocks with high and very high dividend yields handily outperformed the other groups.

Investors looking to beat Wall Street might want to search among those quintiles today for stocks to buy. For those preferring to maximize their dividend income immediately to help pay the rent, you might want to choose from among the following three ultra-high-yield dividend stocks that make their payout every month. 

For our purposes here, I’m defining “ultra” as being about four percentage points above the average S&P 500 dividend, which is currently 1.32% annually.

Realty Income (O)

The first high-yielding monthly dividend stock to buy is Realty Income (NYSE:O), the stock that popularized the tactic of monthly payouts. Billing itself as “The Monthly Dividend Company,” Realty Income is a triple net lease real estate investment trust (REIT). That means most of its properties are occupied by just one tenant and the tenant is responsible for paying the rent, insurance, maintenance and taxes. It makes the REIT a low-cost operator.

Unlike shopping malls with multiple tenants, often chains and small companies, Realty Income’s tenants tend to be large, well-known and financially secure businesses like 7-Eleven, Walmart (NYSE:WMT), and Dollar General (NYSE:DG). 

Of course, what sets Realty Income apart from other REITs is its monthly dividend. The payout has grown at a 4.3% compounded annual rate since O stock went public in 1994 while its adjusted funds from operations (AFFO) (a metric similar to free cash flow (FCF) for REITs) has grown 5.5% annually.

Realty Income also has a 30-year track record of raising the dividend, making it a Dividend Aristocrat, and has generated shareholder returns of 4,270% since 1996 versus 2,111% for the S&P 500. The REIT’s dividend currently yields 5.55% annually.

Modiv Industrial (MDV)

Modiv Industrial (NYSE:MDV) is the second-ultra-high-yield stock to consider to help paying your monthly bills as it is a REIT that owns and operates single-tenant industrial properties. It counts Costco (NASDAQ:COST), 3M (NYSE:MMM), and Cummins (NYSE:CMI) amongst its biggest tenants (yes, it has a smattering of retailers in the mix).

Only public since 2022, Modiv is unique in that it was one of the largest non-listed REITs to be raised via crowdfunding before its IPO. Its name also has meaning in that it stands for “MOnthly DIVidend.” MDV is also the only public REIT focused exclusively on the industrial market. 

Its portfolio holds 43 properties in 15 states housing just 29 tenants with an average lease of 13.8 years, giving it good long-term protection. The largest tenant is Lindsay (NYSE:LNN), a maker of farm and heavy equipment machinery, that accounts for 13% of the portfolio.

Modiv Industrial believes in the maxim of Warren Buffet when it comes to acquisitions, that is, it “can afford to stand over the plate looking for the fat pitch without fear of strikes being called.” It won’t invest haphazardly in an environment featuring a volatile economy, high interest rates, and geo-political turmoil.

MDV stock’s monthly dividend of $0.0975 per share currently yields 7.4% a year.

Gladstone Investment (GAIN)

The last monthly dividend stock to consider is Gladstone Investment (NASDAQ:GAIN), a business development company (BDC), or a business that invests early in a small or mid-market growth company’s business cycle to capitalize on its potential.

Gladstone differentiates itself from other BDCs that focus on making loans to business by adding an equity component to its investment profile. It targets about 25% of its portfolio towards equity investments. Most other BDCs have just 5% to 10% of their portfolio in equity. At fair value, though, 33% of GAIN’s portfolio is in equity investments.

While that has the potential to make it a slightly riskier investment, the BDC’s monthly dividend is based upon the loan portion of its portfolio, not the equity portion. Gladstone is also a first-lien investor, so it gets paid ahead of other investors in the event of a default.

Gladstone’s structure has allowed it to make 14 years of consecutive monthly dividend payments, currently at $0.08 per share, that yields 7.07% annually. But it also makes supplemental dividend payments based on when it exits a business. It made a $0.70 per share supplement payout last October, and just announced it exited its investment in Nocturne Luxury Villas.

The post 3 Ultra High-Yield Dividend Stocks That Can Pay Your Rent Every Month appeared first on 24/7 Wall St..