Dividend stocks are a popular way for investors to generate income, especially retired investors who need reliable cash flow. While most dividends are paid on a quarterly basis, some companies make their payouts on a monthly basis, and many investors like the greater frequency, in part because it can help them structure their own budgets more effectively.

One of the best parts of dividend stocks is the pleasure of seeing your payout deposited in your brokerage account without you having to lift a finger – real passive income. And monthly dividend stocks let you experience that joy 12 times a year instead of just the typical four times.

Here are seven top monthly dividend stocks, an often-overlooked source for monthly dividends as well as what to watch out for as you search for monthly dividend stocks.

7 best monthly dividend stocks

We looked through the relatively small number of companies paying monthly dividends and sorted out some of the best that had the following characteristics (data as of April 9, 2024):

  • Traded on U.S. exchanges, for easy accessibility
  • Market capitalization of more than $1 billion, for some financial stability
  • No business development companies (BDC), which are a risky segment that often pays monthly dividends

Monthly dividends are particularly popular among real estate investment trusts (REITs) because these companies must pay out substantial dividends by law, and they have business models with recurring revenue (rents) that help support reliable cash flow.

1. Realty Income (O)

Realty Income is a REIT whose identity is predicated on monthly dividends, as it calls itself “The Monthly Dividend Company.” This company owns single-unit commercial properties that it leases to high-quality tenants for long terms, typically more than 10 years.

  • Market cap: $46.6 billion
  • Yield: 5.8 percent

2. SL Green (SLG)

You might not be familiar with the name, but SL Green is the REIT behind a lot of Big Apple offices. In fact, the firm bills itself as “New York City’s largest owner of office real estate.” Despite concerns about employees continuing to work from home, New York City remains a top market for this type of real estate.

  • Market cap: $3.6 billion
  • Yield: 5.6 percent

3. STAG Industrial (STAG)

This REIT focuses on industrial properties and warehouses, niches that have performed well amid the rise of e-commerce, particularly since the advent of COVID. STAG is a strong performer and expects to grow significantly in the years ahead as e-commerce continues to rise.

  • Market cap: $7.1 billion
  • Yield: 3.9 percent

4. AGNC Investment (AGNC)

AGNC Investment is a REIT, but a specific type called a mortgage REIT, which owns mortgages on real estate rather than the properties themselves. In this REIT’s case, it buys safer agency-backed residential mortgages. The company has been public for more than 15 years and has paid sizable dividends along the way, though the dividend fluctuates depending on the economic climate.

  • Market cap: $6.8 billion
  • Yield: 14.8 percent

5. Apple Hospitality REIT (APLE)

This lodging REIT operates more than 200 hotels under some of the industry’s most well-known brands, including Marriott, Hilton and Hyatt. While Apple got hit hard by the pandemic like many of its peers and had to cut its dividend, it’s now back to making a monthly payout.

  • Market cap: $3.9 billion
  • Yield: 5.8 percent

6. EPR Properties (EPR)

EPR calls itself an experiential REIT, and that’s because it focuses on properties where consumers can have a good time, such as movie theaters, ski resorts and other cultural venues. It’s been investing in experiential properties for more than 20 years, and while it also had to eliminate its dividend during the pandemic, it’s back to making a monthly payout.

  • Market cap: $3.2 billion
  • Yield: 7.9 percent

7. Agree Realty (ADC)

Agree is another name behind the name: It owns more than 1,500 properties that it leases to well-known retail companies, such as Advance Auto Parts, PetSmart, AutoZone and many more. This REIT converted to a monthly payout schedule in 2021, but it’s been public since 1994.

  • Market cap: $5.9 billion
  • Yield: 5.2 percent

Check out closed-end funds for monthly dividends

The number of monthly dividend-paying stocks is limited, and if you truly want a monthly dividend stream, you’d have to buy many of them, or you’ll still mostly have regular quarterly dividends. But you don’t want to put all your money in one or two monthly dividend payers, either, because you’ll take on significant risk for the modest benefit of that monthly payout.

But investors do have one option if they’re looking for a diversified fund that pays out monthly: closed-end funds (CEFs). These funds are collections of stocks and bonds, and they offer some diversification in their investments, helping to reduce their risk.

It’s also useful to know that CEFs take on significant debt to make their investments, meaning that they can fluctuate a lot when the market gets volatile. If they have to trim their debt during tough times, it means they’ll also need to reduce their payout.

Finally, it’s worth noting that savvy investors usually buy CEFs only when they’re trading below net asset value, that is, the price of all their assets minus their debt. That practice builds in a margin of safety on the investment, helping to protect investors, but it’s no guarantee of safety.

What dividend investors should watch out for

Monthly dividends can be attractive, but don’t get dazzled by the prospect of a regular monthly payout and forget that the underlying company still must thrive. You’ll want to look at the following issues —including a few of the secrets to successful dividend investing – when assessing your monthly dividend stocks:

  • Dividend sustainability: Dividend sustainability is one of the key things to watch, regardless of how often your company makes a payout. If a company cuts the payout, it could send the stock tumbling quickly. It makes little sense to buy a stock for its 5 percent dividend only for it to fall 20 percent when it has to reduce or eliminate the payout.
  • Resilient business model: A company with a resilient business model will thrive in good times and not do so poorly in the bad times, giving it more wherewithal to pay its dividend and ideally grow it over time. Plus, a resilient business model helps the company from having to cut its payout when times get tough.
  • High recurring cash flows: A business with high recurring cash flow, such as a subscription business or a real estate business, has greater stability, giving it the ability to safely pay dividends.

Those are three issues that investors counting on dividends should pay particular attention to, but those are in addition to other issues that you need to analyze when investing in individual stocks. These issues are less pertinent when you buy the best dividend ETFs, however.

And those looking for any kind of sustainable dividend stock (not just the monthly payers) should investigate the Dividend Aristocrats, which have an enviable record of returns.

Bottom line

It can be nice to get paid from your investments on a monthly basis, but it’s vital to remember that dividend sustainability is more important than how often you get paid. After all, you could divide the typical quarterly dividend into three parts and pay yourself each month. So, focus on finding companies that have a strong record of paying – and ideally – growing their payouts.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.