Top 5 Monthly Dividend Stocks for 2018

Most dividend-paying stocks do so on a quarterly basis, but you can find equities that will pay you each month. If you reinvest dividends, you can grow a position more quickly by buying shares each month. For those who invest in dividend stocks for income to live on, monthly dividends make it easier to keep up with monthly bills.

Beware of companies that declare an aggressive monthly dividend simply to attract investors. Instead, look for companies that have a sustained history of making monthly dividend payments, along with a track record of sustainable revenue and income growth. (See also: What You Should Know About High-Yield Dividend Stocks.)

The following are our five top picks for reliable companies that pay monthly dividends. All figures given are current as of Oct. 3, 2018.

Realty Income Corporation has been paying monthly dividends regularly since 1995. This is a real estate investment trust (REIT) with some 2,600 rental properties, primarily in the retail space. Revenues have grown steadily for the past four years, and income has remained positive throughout the same period.

The share price saw declines in May, July and October 2017, but on all of those occasions, it found support between $53 and $54 per share. The stock saw some continued volatility in the final months of 2017 and into the new year, eventually falling significantly through the support level during the broader market decline in February 2018 before posting solid growth beginning in May to reach current levels of $56.76. Investors could see some continued growth along with income in the months ahead, as Realty Income Corporation matched funds from operations (FFO) estimates in the first quarter and second quarters of 2018. (See also: Realty Income Q3 FFO Beats Estimates, Revenues Up Y/Y.)

• Average Volume: 1,592,135
• Market Cap: $16.504 billion
• P/E Ratio (TTM): 48.85
• EPS (TTM): $1.16
• Dividend and Yield: $2.64 (4.74%)

Shaw Communications has managed to grow its dividend for more than 10 years. This Canadian cable company currently pays a dividend of 4.61%. The shares rose sharply in June 2017 but gave back most of those gains the following month. After moving in an uptrend for a few months, the stock witnessed a decline in early October and experienced significant volatility into year end. Shaw Communications shares had a rough start to 2018, declining roughly 20% through the middle of March. After a recovery that lasted several months, the stock price saw additional declines into September, settling at the current level of $19.58.

Shaw Communications owns a fiber network and provides services for Wi-Fi, digital phone and broadband customers. Cash flow suffered from 2013 through 2015 but turned positive in 2016, while net income has been up over a four-year span. In addition to the attractive monthly payouts, the recent declines could suggest room for stock price appreciation. (See also: Shaw Communications Beats on Q4 Earnings, Revenues Lag.)

• Average Volume: 412,859
• Market Cap: $9.851 billion
• P/E Ratio (TTM): 39.56
• EPS (TTM): $0.50
• Dividend and Yield: $0.89 (4.61%)

Pembina Pipeline has a reliable monthly dividend but does not have the long track record of growing its dividend that other stocks on this list have. This is partly because oil prices recently went through an extended slump. Even so, the company has grown its dividend for the past five years. It currently pays 5.09%.

The stock saw significant volatility in the first half of 2018. After hitting lows near $30 in early April and jumping to over $36 at the end of June, Pembina Pipeline shares posted a secondary low around $33 last month before recovering to current levels of $35.23. This stock makes the list because of the possibility that oil prices will show continued strength in the remaining months of 2018. Although the company does not deal directly in oil, demand for its services could pick up if drilling and exploration improve, making Pembina Pipeline a good potential prospect for both long-term growth and monthly income. (See also: Pembina Pipeline to Purchase Veresen for $7.1 Billion.)

• Average Volume: 427,150
• Market Cap: $17.661 billion
• P/E Ratio (TTM): 21.87
• EPS (TTM): $1.61
• Dividend and Yield: $1.75 (5.09%)

The second REIT on our list is Gladstone Commercial, which has a history of regular monthly dividend payouts since 2005. The REIT invests in commercial real estate and focuses on renting space to small and mid-sized companies. Gladstone Commercial has seen revenue growth for the past four years, and income has kept pace with revenues. After some volatility in the first half of 2018, the stock price is currently up around 4% on the year. The company has issued several different stocks, including these preferred shares. (See also: 5 Types of REITs and How to Invest in Them.)

• Average Volume: 3,164
• Market Cap: $559.15 million
• P/E Ratio (TTM): N/A
• EPS (TTM): -$0.12
• Dividend and Yield: $1.88 (7.00%)

Gladstone Investment has grown its dividend for over five years. It focuses on buyouts and recapitalizations of companies. The five-year growth rate of the dividend, plus the prospects for a robust buyout market going forward, make this a reliable monthly income stock. What appears to be volatility in Gladstone Investment's share price is actually dividend payout dates. (See also: 4 Ratios to Evaluate Dividend Stocks.)

• Average Volume: 134,860
• Market Cap: $371.551 million
• P/E Ratio (TTM): 4.35
• EPS (TTM): $2.60
• Dividend and Yield: $0.80 (7.03%)

Just as you need income monthly, so do companies. When a company pays a dividend each month, that is money it cannot use to grow. To make up for this consistent outflow, companies that pay monthly dividends must have strong cash flow and stable business models. 

Choose your monthly dividend stocks based on due diligence about the companies themselves and not merely on the basis of a high monthly payout. Each company that issues a dividend has an ex-dividend date – you must own the stock before that date in order to receive the dividend. (See also: Introduction to Dividends: Investing in Dividend Stocks.)