Charles Lewis Sizemore


The 2020 election likely will be a pivot point for several areas of the market. Here are some of the best stocks to own should President Donald Trump win re-election.

It’s best to leave your politics at the door when investing. No matter how much you like or dislike the man in the White House, presidential policies generally matter a lot less for the stock market than Federal Reserve policy or the general health of the economy.

That said, the best stocks to buy under a Republican administration are sure to be different than those under a Democratic administration.

We’re currently in the homestretch of what has already been a raucous election cycle. But it’s far from over. As of late July, the betting markets were pricing in a 60% probability of former Vice President Joe Biden taking the Oval Office. But as recently as June, it was a dead heat, and President Trump had an 8-point lead for most of April and May.

Meanwhile, most national polls show Biden with a roughly 8% lead. But his lead in the six battleground states that really matter this election – Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin – is only about 3%, barely outside of the margin of error.

In other words, this race is far from over.

“We’re advising our clients to be cautiously optimistic going into the election,” says Chase Robertson, Managing Partner of Houston-based RIA Robertson Wealth Management. “We’re hedging our bets, raising a little cash and spreading our positions across sectors we think will do well regardless of who takes the White House.”

However, those who want to try to generate additional returns by front-running the election should know that the prospective winners under a second Trump administration are a very different mix than those that might shine with Biden in office.

Read on as we take a look at 10 of the best stocks to buy for the re-election of President Donald Trump. Or, you can also learn more about the best stocks to buy if Joe Biden wins the election.

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Bank of America

Market value: $216.5 billion
Dividend yield: 2.9%

We’ll start with Bank of America (BAC, $24.99), one of the Big Four financial stocks.

Republican administrations have traditionally been friendlier to large banks than Democratic ones. And Trump’s slashing of corporate tax rates in the Tax Cuts and Jobs Act was particularly beneficial to banks.

“Wall Street veterans Larry Fink and Lloyd Blankfein, along with presumptive Democratic Presidential nominee Joe Biden, have suggested deficit-reducing increases in corporate tax rates,” write Keefe, Bruyette & Woods analysts. By KBW’s estimate, raising the corporate tax rate to Biden’s suggested 28% levels would reduce earnings per share by about 8% for the sector, and by more than 9% for Bank of America specifically.

Now, a 9% bite out of profits per share isn’t catastrophic. But it does mean less cash available for dividends, and presumably, it would slow share price growth. So, BofA likely would respond well to a Trump presidential victory.

Beyond the election, Bank of America isn’t a bad-looking stock at current prices. It yields just shy of 3% in dividends, and Warren Buffett recently topped up his already-large investment in BAC with an additional purchase of $800 million in BAC stock.

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JPMorgan Chase

Market value: $292.9 billion
Dividend yield: 3.8%

Along the same lines, JPMorgan Chase (JPM, $96.10) would be another likely winner from a Trump victory. By Keefe, Bruyette & Woods’ estimates, the corporate tax rate alone would account for a 4.1% difference in JPM’s earnings per share.

But the argument goes beyond tax rates alone. Research by Piper Sandler found that “the broader market performed on average slightly better under Democratic administrations” in the first six months after an election. “However, bank stocks performed significantly better under Republican administrations.”

As a general rule, Republican administrations are less likely than Democratic administrations to issue stricter banking regulations. This matters because, following the COVID-19 economic upheaval, the next president will be in a position to address consumer bankruptcy protections and a host of other issues.

The election aside, JPMorgan is attractively priced in an otherwise expensive market and pays a dividend yielding almost 4%. JPM will likely fare better under a Trump administration, but it probably wouldn’t do too poorly under a President Biden, either.

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Market value: $1.55 trillion
Dividend yield: N/A

This pick might be counterintuitive given the bad blood between Donald Trump and (AMZN, $3,111.89) founder Jeff Bezos, but Amazon certainly could benefit from Trump remaining in the White House.

Bezos owns the Washington Post, which has generally been critical of the Trump presidency, provoking the commander in chief’s ire and Twitter rage. Conversely, Trump routinely bashes Amazon and has suggested that the U.S. Postal Service should double the rates that Amazon pays.

But while Trump talks tough, his administration hasn’t been in a hurry to actually do anything to Amazon. And attacking the company via the USPS would seem like a long shot.

Meanwhile, Amazon has been struggling with labor unrest for years and complaints of harsh working conditions. This only got worse during the COVID-19 pandemic as some workers complained of unsafe working conditions.

A Republican administration would be less likely to side with unionization efforts, as well as to interfere in the company’s business on antitrust grounds.

Of course, even under a Biden presidency, it’s hard to imagine the Amazon juggernaut slowing much. But a Trump presidency would favor the company, even if it doesn’t seem that way at first blush.

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Exxon Mobil

Market value: $178.7 billion
Dividend yield: 8.2%

Energy has been in the doghouse for years, and it’s possible we haven’t seen the bottom yet. Fundamentally, we’re looking at structural oversupply for the foreseeable future. America’s frackers were a little too good at their jobs, bringing massive new supplies of crude oil online.

Unfortunately for the industry, demand has been whacked by the COVID-19 pandemic. This is a short-term factor that will eventually pass. But green energy becomes a larger and larger piece of the grid, demand for traditional fossil fuels may never come back as strongly.

The Wells Fargo Investment Institute also says there “may be an analogy between the pandemic and energy policy:

“Plans for a lockdown were developed only partially during the 2006 avian flu by policymakers not anticipating a pandemic anytime soon,” the WFII writes. “Now, the wakeup call around the pandemic may prompt analogies to climate change, intensifying the policy debate over fossil fuels.”

That’s the narrative. But there comes a point when a stock is too cheap to ignore, and we might be to that point in Exxon Mobil (XOM, $42.25). XOM is trading at prices first seen 20 years ago and sports a dividend yield of more than 8%.

Realistically, fossil fuels will not be a major growth industry again any time soon. It might never be again. But as we’ve seen with tobacco stocks, industries in a gentle decline can make solid investments if bought at the right prices.

A Trump administration would not reverse the trends affecting energy prices. That’s likely beyond the power of any president. But it would be less hostile to the sector and less likely to slap it with new taxes or regulations.

“We expect a second Trump administration to look for ways to further deregulate or otherwise encourage fossil fuel production. Fundamentally different policies from a Biden White House would push for higher carbon controls, strict limits on coal mining, and reduced fracking.”

A more laissez-faire approach would make Exxon Mobil among the best stocks to buy for four more years of President Donald Trump.

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Market value: $28.6 billion
Dividend yield: N/A

President Donald Trump has something of a love-hate relationship with social media leader Twitter (TWTR, $36.39). He fumes when his tweets get flagged as being factually untrue and regularly criticizes the platform for allegedly silencing conservative voices. Yet he still favors the platform as his primary medium for communication, mostly bypassing the traditional media.

The dirty little secret is that Twitter needs President Trump as much as he needs Twitter.

Prior to the 2016 election, Twitter was very much an also-ran in social media. But the constant controversy coming out of the president’s tweetstorms made the platform relevant. So much of the news cycle stems directly from his tweets and from the reactions to his tweets by others, and this has expanded to other politicians, celebrities and people of note.

This keeps eyeballs returning to the site, which in turn justifies the advertising spending that pays Twitter’s bills.

As a practical matter, a Biden presidency would make Twitter far less relevant. Biden is unlikely to rule by tweet. A Democratic administration also would be more likely to force the site to crack down on controversial posts or to accuse the site of facilitating hate speech.

Longer term, there are serious political issues regarding Twitter and other social media platforms that will have to be worked out. First Amendment protections will need to be balanced against concerns about hate speech and fake news. That promises to be messy and might force changes in Twitter’s business plan. But in the short-term, the constant noise of the Tweeter-in-chief should be good for Twitter’s bottom line.

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Market value: $718.8 billion
Dividend yield: N/A

Along the same lines, social media giant Facebook (FB, $251.96) should benefit from another four years of Trump in the White House.

Like Twitter, Facebook tends to take abuse from all sides. To those on the left, Facebook is a forum for fake news and disinformation. To the right, Facebook represents the thought police, effectively censoring many right-wing voices.

To some extent, both criticisms have some merit. At the very least, Facebook is guilty of perpetuating the echo chamber effect in which users only interact with like-minded people and read curated content they’re likely to agree with.

Social media probably will come under real regulatory scrutiny at some point. Former presidential candidate Elizabeth Warren already made it her goal to break the company up.

That day is unlikely to come under a Trump presidency. After all, the 2016 Trump campaign ran what arguably was the most successful Facebook marketing campaign in history. It went a long way to delivering him the presidency.

Furthermore, the more riled up people are about politics, the more they’re likely to continue reading political feeds on Facebook, meaning more ad revenue for FB. So, while President Trump bashes Facebook publicly, make no mistake: A second Trump administration won’t lay a finger on the on the company.

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Lockheed Martin

Market value: $105.4 billion
Dividend yield: 2.6%

Defense and aerospace companies tend to do well under Republican administrations because strong military spending tends to be a Republican priority.

This might hold less true over the next four years. That’s because regardless of who takes the White House, the focus is likely to be normalizing the economy after the upheaval of the COVID-19 pandemic. But all else equal, a Republican administration likely means more defense spending than a Democratic administration.

This brings us to Lockheed Martin (LMT, $377.10), maker of Black Hawk helicopters, F-16 Fighting Falcon jets and the Orion spacecraft.

Lockheed didn’t perform particularly well during the Clinton years, but it enjoyed a nice run during George W. Bush administration. Having two major wars certainly helped. The shares stagnated in the first half of Barack Obama’s presidency, though they enjoyed a nice string of positive years during Obama’s second term.

This aerospace and defense blue chip has done well during the Trump presidency, rising about 58% since election day 2016. LMT shares remain reasonably priced at less than 17 times next year’s earnings estimates, which is about in line with its average over the past year. The shares also yield a respectable 2.6% in dividends.

Lockheed is a survivor and should do just fine regardless of who wins in November. But given the company’s history, expect it to be among the better stocks to buy under a Trump presidency.

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GEO Group

Market value: $1.3 billion
Dividend yield: 17.5%

Certain sectors of the stock market are probably best not discussed in polite company. Prison real estate firms are one of them. While every civilized society needs a functioning criminal justice system, including prisons, there’s something about making a for-profit business out of it that seems a little distasteful.

This brings us to The GEO Group (GEO, $11.00), one of the largest publicly traded prison landlords.

Joe Biden has pledged to end the use of private prisons at the federal level, and others in his party have taken the sentiment further. Elizabeth Warren went so far as to pledge to withhold federal funding from states that use private prisons.

It’s possible that GEO and other private prison operators could work out a deal with a Biden administration to build and lease prisons that the government in turn operated. But you’d still have the potential issue of a shrinking prison population, as a Biden administration might be much more lenient on petty and nonviolent drug-related crime.

The possibility of a Biden win is one reason why GEO trades at a gargantuan 17% dividend yield. But if President Trump manages to pull off a second term, Geo Group might be one of the best stocks to buy for a rapid rebound.

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Market value: $366.2 billion
Dividend yield: 1.7%

Walmart (WMT, $129.30), the world’s largest retailer, is doing just fine throughout the COVID-19 crisis. Unlike many other retailers, which were forced to close, Walmart was considered an essential business and allowed to stay open.

But Walmart’s outperformance isn’t just a post-COVID phenomenon. Walmart has been aggressively building out its e-commerce presence, including online grocery ordering, pickup and delivery. While is still the undisputed leader in modern retail, Walmart is the only retailer that can credibly compete with Amazon at any real scale.

Furthermore, with the economy in bad shape and unemployment at levels previously thought unimaginable, consumers likely will be trading down for the next several years to discount retailers like Walmart.

All of these trends were in place long before the election was on anyone’s mind, and all will continue regardless of who takes the White House in November. But a Trump presidency should be a better scenario for the Bentonville giant due to its more relaxed stances on labor issues. You’re less likely to see a hike to the federal minimum wage or a push to unionize or provide more generous health benefits under a Trump administration. As the largest private employer in America, that’s a big deal.

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VanEck Vectors Russia ETF

Assets under management: $990.3 million
Dividend yield: 6.5%
Expenses: 0.67%, or $67 annually for every $10,000 invested

This final pick – VanEck Vectors Russia ETF (RSX, $22.28) – will no doubt sound controversial to some.

Tensions with Russia have been a defining characteristic of the last three presidential administrations. George W. Bush had a falling out with Russian President Vladimir Putin over the Iraq War, Ukrainian politics and the Russia-Georgia conflict. Barack Obama tried to “hit the reset button,” but relations never really improved and actually worsened due to the conflict in Syria.

Then came the allegations that Russia tampered in the 2016 election, helping to get Trump elected. And more recently, there were allegations that Russia put a bounty on U.S. troops in Afghanistan.

Suffice it to say, there’s not a lot of trust between Russia and the West in general and Russia and the U.S. in particular.

But President Trump has generally preferred to give Russia its space and appears to enjoy his working relationship with Putin. All other things equal, that’s a win for Russian equities.

The country’s stocks are not for the faint of heart. They tend to be volatile and have major exposure to fossil fuels. You should be very careful investing in this space. The VanEck Vectors Russia ETF helps you do that somewhat by diversifying your risk across 27 stocks at present.

Author: Charles Lewis Sizemore

Source: Kiplinger: 10 Best Stocks to Buy If President Donald Trump Wins Re-Election

Remember when 1,000-point moves in the Dow where a big deal?

Lately, they’ve become almost commonplace. The Dow fell by just shy of 1,000 points on March 3 after rallying by more than 1,200 points on March 2. This follows a week in which the Dow closed down by more than 1,000 twice and down 879 another day.

That’s some monster volatility. Yet despite the market turmoil, a handful of defensive dividend stocks are keeping their heads above water. It’s an eclectic group, but you do see some common threads. Many are in basic industries that aren’t particularly sensitive to economic growth or virus fears, such as packed foods and grocery stores. Many are low-beta stocks – shares that are less volatile than the broader market. And most pay above-average dividends, which helps to smooth out the ups and downs of the share price swings.

These survivors also are a little off the beaten path and don’t have much representation on the major stock indexes. That matters because when investors dump index funds, the mega-cap stocks that dominate the Dow, S&P 500 and Nasdaq often get hit hard.

“Aggressive selling in the indexes can translate into aggressive selling in historically strong stocks such as Apple (AAPL), Microsoft (MSFT) and the other trillion-dollar names,” says Mario Randholm, portfolio manager at alternative investments firm Randholm & Co. “It’s hard to picture a scenario in which all these dominant names will continue to outperform during a broad-market selloff.”

Today, we’re going to take a look at 11 low-beta, defensive dividend stocks that have been keeping their heads above water. As of the time of this writing, all were not only outperforming the market since the correction began Feb. 19, but most were clinging to at least modest gains. Those gains might prove to be tenuous if the market takes another leg down. But at the very least, these stocks seem better-positioned to sustain less damage than most of their peers.

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Flowers Foods

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Market value: $4.8 billion
Dividend yield: 3.3%

We’ll start with Flowers Foods (FLO, $22.88), a packaged bakery goods company selling its wares under Nature’s Own, Wonder, Dave’s Killer Bread, Sunbeam and other brands. The company is headquartered in Atlanta and operates 47 bakeries spread across the country.

Consumption of bread, snack cakes and tortillas isn’t much of a concern during a recession. Indeed, stressed consumers often trade down to cheaper options and succumb to eating comfort food.

“Flowers Foods has been a staple in our all-weather portfolios for months,” according to Sonia Joao, a Registered Investment Advisor (RIA) based in Houston, Texas. “Our clients appreciate the fact that it’s a sleep-at-night investment that won’t give them heartburn.”

Flower Foods’ status among defensive dividend stocks garnered it a place among our best retirement stocks to buy in 2020. It’s a low-volatility play with a beta of just 0.33. The benchmark beta is set against (in this case, the S&P 500) is 1, so this effectively means FLO is approximately one-third as volatile as the broader market.

Flowers not only has survived the market’s turbulence so far, but has put up a small gain since the start of the correction. It pays a nice 3%-plus dividend to boot.

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B&G Foods

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Market value: $1.1 billion
Dividend yield: 11.5%

Along the same lines, we have B&G Foods (BGS, $16.53), a provider of frozen vegetables, canned goods and other processed foods. The company has a portfolio of more than 50 brands, including Green Giant, Skinnygirl, Snackwell’s, Molly McButter, Mrs. Dash and a host of others. It even makes Ortega-brand taco shells and hot sauce. The company’s strategy has long been to buy familiar brands that have fallen somewhat out of favor, then reposition them.

The story here is a familiar one: Demand for basic consumer staples stocks doesn’t change much regardless of the state of the economy. And because B&G Foods isn’t a major holding in most investors’ portfolios, there aren’t a lot of people dumping it to raise cash. B&G is up a whopping 21% since Feb. 19.

Just keep your eye on this one. Since 2016, B&G’s stock has dropped from more than $50 per share to just $16.53 at time of writing. So, while the recent strength has been refreshing, this is a stock that has taken its lumps. Wall Street has pushed back against the company’s high debt load and its exceptionally high dividend yield of over 11%.

B&G’s earnings currently aren’t enough to finance its dividend. However, management confirmed in its recent quarterly conference call that it was a priority to keep the dividend at its current levels and that it expected cash flows (which is what dividends are actually paid out of) to be more than sufficient to cover it.

That remains to be seen, of course, and a deeper dive into the dividend is beyond the scope of this article. But even if BGS halved its dividend to pay off its debt, you’d still be getting a 5%-plus yield on a company trying to improve its financial foundation. If nothing else, B&G is worth consideration as a short-term trade to buck the trend of a down market.

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Market value: $23.5 billion
Dividend yield: 2.2%

Grocery store chain Kroger (KR, $29.34) has been something of a comeback kid of late. Between the end of 2015 and the third quarter of 2017, the stock lost more than half its value. Investors fretted that’s (AMZN) aggressive entry into the grocery market would destroy traditional grocers like Kroger.

Well, no one wants to compete with Amazon. But Kroger hasn’t been sitting around waiting for Jeff Bezos to show up with a steamroller to run over their business. The company has made major investments in technology. Kroger has introduced automated warehouses and massively upped its game in online grocery ordering. It also has gone head-to-head with Amazon’s Whole Foods Market by aggressively rolling out its own organic lines.

Furthermore, Amazon’s ability to take the grocery world by storm was never entirely realistic. Building out the infrastructure to deliver and store perishable fresh foods that require refrigeration was never going to be cheap or easy, and existing players such as Kroger already have that infrastructure in place.

Kroger hasn’t turned into a juggernaut, but it’s becoming quite the defensive dividend play. At time of writing, KR, which yields a modest 2.2% dividend, is essentially flat since the selloff started on Feb. 19.

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Weis Markets

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Market value: $1.0 billion
Dividend yield: 3.3%

Another grocery chain doing a fine job of keeping its head above water is Pennsylvania-based Weis Markets (WMK, $37.36). Weiss owns and operates 200 retail food stores in Pennsylvania, Maryland, Delaware, New Jersey, New York, Virginia, and West Virginia. The company has been in business since 1912.

There’s honestly not that much to say about Weis Markets. It’s a regional grocery chain catering mostly to small- and medium-sized towns in the northeast. Nothing more, nothing less.

But this lack of excitement is a desirable trait in defensive dividend stocks, and what makes WMK interesting in this environment. Whether the economy booms or busts this year, Americans will still depend on their neighborhood grocery store for their basic necessities, and Weis will be there to serve them.

Weis Markets pays a respectable dividend yield at 3.2%, and the payout ratio of 53% shows that there is plenty of room for modest income growth going forward. It’s also a remarkably low-beta stock with a mere 0.05 reading.

WMK shares are mildly positive since the selloff began on Feb. 19 and are more or less flat since June 2019. You won’t get rich on Weis Markets. But it’s not a bad place to hide out during an exceptionally rough stretch in the broader market.

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Core-Mark Holding

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Market value: $1.2 billion
Dividend yield: 1.7%

Food seems to be a recurring theme among the survivors of this volatility, and Core-Mark Holding (CORE, $27.22) is no exception. Core-Mark sells and distributes food products to convenience stores.

Calling it “food” might be generous, as we’re talking mostly about convenience-store junk food. But these are precisely the kinds of purchases that people tend to make regardless of the health of the economy. And in fact, junk food is what economists call an “inferior good,” meaning that consumers tend to buy more of it as their incomes fall.

Core-Mark serves a diverse base of customers scattered across 43,000 locations, of which 55% are chains and 45% are independents. The company counts 7-Eleven, Circle K, Shell (RDS.A), Murphy USA (MUSA) and even Walmart (WMT) among its customers.

Interestingly, convenience stores are a highly fragmented industry. Core-Mark estimates that 63% of all convenience stores are single-store operators. In a fragmented space like this, it pays to have Core-Mark’s economies of scale.

The stock’s dividend is nothing to write home about at 1.7%, but that’s still better than what most bonds pay these days. Its beta of 0.78 is low, too, though not exceptionally so.

Core-Mark’s shares are up about 18% since Feb. 19, however, owing to a nice earnings surprise in its most recent quarterly results. Longer term, CORE shares have been trending lower since mid-2019 and have been mostly rangebound for the past five years. Translation: This stock might hold up well in a correction or bear market, but you might not want to hold onto it for a full cycle.

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Federal Agricultural Mortgage Corporation

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Market value: $805.1 million
Dividend yield: 4.3%

The Federal Agricultural Mortgage Corporation (AGM, $75.16), or “Farmer Mac,” might not be in the food business, per se, but it helps to finance it.

Farmer Mac can be thought of as a farm-financing equivalent to Fannie Mae or Freddie Mac. It’s a government-sponsored enterprise (GSE) formed in 1987 and it operates in the secondary markets. AGM doesn’t make agricultural loans directly, but rather it buys the loans from financial institutions and repackages them into bonds and bond derivatives. Fannie Mae and Freddie Mac do the same thing with mortgages, buying them from banks and packaging them into bonds for investors.

Thus, it’s immediately noting though that, like Fannie Mae and Freddie Mac, Farmer Mac got into financial trouble during the 2008 financial system meltdown.

Nonetheless, Farmer Mac pays a nice yield at 4.3%, and the shares have enjoyed a fantastic run since the third quarter of 2015, tripling in value. AGM also has been doling out massive dividend increases over the past half-decade, which is what you want to see out of defensive dividend stocks.

Farmer Mac’s shares are essentially flat since Feb. 19, which is encouraging. It’s important to note that the daily trading volume on these shares is relatively low, so be careful placing any large orders.

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Public Storage

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Market value: $38.0 billion
Dividend yield: 3.7%

There are few stocks that are as conservative and bond-like as self-storage real estate investment trust (REIT) Public Storage (PSA, $217.72). As the largest self-storage landlord in the world, Public Storage owns more than 170 million rentable square feet of storage facilities.

Self-storage is not only a recession-resistant industry; it’s actually counter-cyclical, as unemployed or underemployed workers are often forced to downsize during recessions. Moving to a smaller home often means needing a place to store furniture and other belongings.

Simplicity is what makes this such a nice business. Unlike apartment or office tenants, who are constantly on-site and regularly need face time with the property manager for repairs and other concerns, self-storage tenants rarely visit the property. They also tend to be sticky. Once you’ve taken the trouble to move your belongings, you’re not likely to take the trouble to move them out, even after regular rent increases.

Public Storage, a popular retirement stock pick, doesn’t have an exceptionally high yield, but at 3.7%, it’s definitely respectable. The shares haven’t rallied during this period of volatility, but they haven’t cratered either; they’re virtually unchanged since Feb. 19.

Come what may in 2020, Public Storage would seem like a reasonably defensive dividend stock to use for parking cash.

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Market value: $6.1 billion
Dividend yield: 4.2%

Along the same lines, CubeSmart (CUBE, $31.50) has managed to weather the storm. Like Public Storage, CubeSmart is a self-storage REIT. The company, which owns a portfolio of 1,172 properties, has a strong presence in the top 25 U.S. metro areas by population and is the largest self-storage operator in New York City.

If you like Public Storage, you should like CubeSmart, too. What it might lack in Public Storage’s history and larger name recognition, it makes up in higher yield and faster growth rate. CubeSmart sports a dividend yield of 4%-plus and has been growing that payout at a healthy clip. Since 2015, the REIT has increased its dividend at a 16.9% annualized compound growth rate, which was more than enough to double it over that period.

More growth is likely to come, as CubeSmart pays out only 76.3% of its funds from operations (FFO) as dividends. FFO is a measure of earnings for REITs that accounts for the high depreciation and other charges typical for real estate, and 76.3% is a relatively low payout ratio. Better still, CUBE holds a place among truly low-beta stocks with a reading of just 0.25.

CubeSmart is up slightly since February 2019, and while continued buoyancy isn’t guaranteed, there aren’t too many safer corners of the market.

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Market value: $2.8 billion
Dividend yield: 1.1%

During times of rampant fear, who wouldn’t want to own a company with “safe” in its name?

Safehold (SAFE, $58.40) is another REIT, but one with a quirky business model. The company allows property owners to separate the more lucrative building lease from the generally less lucrative ground lease. Essentially, a building owner can sell the land under the building to Safehold as a way of unlocking capital while continuing to collect rent on the building itself.
Arrangements like these can often be tax-efficient ways to raise capital.

As far as REITs go, Safehold’s yield of 1.1% is paltry. But the stock has been a growth machine over its short life, nearly tripling in value since its 2017 launch. Shares are up about 10% since Feb. 19 and show no sign of slowing down.

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Virtu Financial

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Market value: $3.9 billion
Dividend yield: 4.7%

If there was a major market rout happening, you’d never know it from looking at the shares of Virtu Financial (VIRT, $20.53). The shares are up 16% since Feb. 19 and have shown no signs of slowing down.

Virtu provides market making and liquidity services to the financial markets worldwide. In plain English, that means they create trading volume when it’s needed. Remember: Every seller needs a buyer to make a transaction. And the biggest impediment to the proper functioning of the market is a liquidity drought. We saw it in 2008 and again during the 2010 and 2015 flash crashes.

When liquidity dries up, the wheels on the market machine grind to a halt. You can think of Virtu as the grease that keeps the wheels moving smoothly.

Over the past five years, Virtu’s share price hasn’t moved much. But the shares have been showing a lot of momentum in 2020 and pay an attractive dividend of 5.1%. So, even if the share price gains taper off a little, you’re still getting a very attractive income stream at current prices.

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Domino’s Pizza

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Market value: $13.1 billion
Dividend yield: 0.9%

Lastly, we’ll look at pizza delivery chain Domino’s Pizza (DPZ, 339.47), which has been popular among the Wall Street crowd for some time.

Domino’s has been a king among defensive dividend stocks and growth stocks alike. It was the best stock of the 2010s. And it has held up well since we highlighted it among stocks that could benefit from the COVID-19 coronavirus scare. At a time when people are reluctant to spend time in public places, having a hot pie delivered to your door seems like a reasonable choice.

Of course, there is a lot more to the Domino’s story than just coronavirus avoidance. Pizza is one of those guilty little pleasures that people are unlikely to forgo during hard economic times. In fact, with the growing trend of health consciousness, you could argue that pizza joints fit the profile of classic sin stocks such as tobacco or booze. During recessions, consumers tend to use victimless vices like these as escapes.

Furthermore, Domino’s has been a tech leader within the food services industry, which is part of why its stock has enjoyed such an epic run. DPZ shares have shot roughly 2,300% higher over the past decade. That includes a 14% return since Feb. 19.

Domino’s is the lightest dividend on this list, at just 0.9%. But it’s a stock doing phenomenally well at a time when the rest of the world is hanging on for dear life.

Author: Charles Lewis Sizemore

Source: Kiplinger: 11 Defensive Dividend Stocks for Riding Out the Storm

High-yield monthly dividend stocks allow you to better align your income with your spending obligations – something most income payers don’t offer.

The typical American’s life tends to be organized around monthly payments, yet somehow, monthly dividend stocks are the exception, not the norm.

Your mortgage, your car payment, your phone bill … even your Netflix payment is on a regular monthly payment plan. That’s perfectly fine when you’re working and are used to getting one or two paychecks every month. Budgeting is simply a matter of making sure your regular monthly income covers your monthly expenses with a little left over for emergencies.

But once you retire, the situation changes. Sure, the Social Security check still comes monthly, and if you’re lucky enough to still get a pension, your income generally comes in monthly as well. But the payout from the vast majority of your investments tends to be a lot more sporadic. Most stocks pay their dividends quarterly, and most bonds pay interest only semiannually.

“Cash flow mismatch is a common problem for recent retirees of all income levels,” says Mario Randholm, founder of alternative investments specialist Randholm & Co. “And the cash drag from keeping more cash on hand to compensate for erratic income reduces long-term returns.”

High-yield monthly dividend stocks can be part of the solution. Stocks that pay monthly dividends better align your income to your spending.

You shouldn’t buy a stock simply because it pays a monthly dividend, of course. That would be as ridiculous as choosing a mortgage bank based on the specific day of the month your payment would be due. Clearly, the stock needs to meet your criteria for yield, quality or growth prospects. But if a stock checks all the right boxes, why not also enjoy a monthly payout?

Here, we’ll look at 10 high-yield monthly dividend stocks to buy in 2020.

1 of 10

Main Street Capital

Market value: $2.7 billion
Dividend yield: 5.7%

Let’s start with Main Street Capital (MAIN, $43.11), a blue-chip business development company (BDC). Main Street provides debt and equity capital to middle market companies that are generally too large to go to the local banks for capital, but not quite large enough to do a proper stock or bond offering.

The capital Main Street provides typically is used to support management buyouts, recapitalizations, growth investments, refinancings or acquisitions.

BDCs are similar to real estate investment trusts (REITs) in that they are required to pay out substantially all of their earnings in the form of dividends. This is good news for income investors, of course, as many BDCs end up being high-yield dividend stocks, some of which pay monthly.

But there is one downside: It can be difficult to maintain a steady payout when you can’t keep extra cash on hand. For this reason, many BDCs end up having to cut their dividends after a slow quarter or two.

That’s obviously upsetting to investors. However, Main Street avoids this problem by keeping its regular dividend comparatively low and then topping it off twice per year with special dividends that can be thought of as “bonuses.” This makes it among the most conservatively managed high-yield monthly dividend stocks to buy, but shareholders aren’t complaining.

At current prices, Main Street yields an attractive 5.7%. The special dividends over the past 12 months have added an extra 1.2% for a total yield of about 7%. That’s far from shabby.

2 of 10

Armour Residential REIT

Market value: $1.0 billion
Dividend yield: 11.8%

For high current yield, it’s hard to beat the mortgage REIT (mREIT) industry. Mortgage REITs are essentially publicly traded hedge funds with a single strategy: They borrow short-term funds cheaply and then invest the proceeds in longer-term, higher-yielding securities such as mortgage bonds.

Armour Residential REIT (ARR, $17.26) is a mortgage REIT that invests primarily in mortgage-backed securities (MBSes) issued by Fannie Mae, Freddie Mac and Ginnie Mae, though it also buys non-agency mortgage securities issued by private banks.
Armour trades at a price-to-book ratio of 0.73, which essentially means it’s worth more dead than alive right now. In other words, you could hypothetically buy up the entire company, close it, then sell off its assets for spare parts and still walk away with a profit of 27%.

ARR shares currently yield nearly 12%. Yields that high often indicate an elevated level of risk, and indeed, Armour’s monthly dividends have shrunk over the years amid a difficult environment for mREITs. But the potential value proposition and high current yield make ARR worth a look for more risk-tolerant income investors.

3 of 10

Dynex Capital

Market value: $387.6 million
Dividend yield: 10.7%

Armour isn’t alone – mortgage REITs are well-represented among high-yield monthly dividend stocks. Dynex Capital (DX, $16.89), for instance, is another high-dividend mortgage REIT with an attractive monthly payout.

Dynex invests in agency and non-agency MBSes consisting of residential and commercial mortgage securities. It’s a smaller REIT, with a market cap of around $390 million. But management takes pride in its independence, and it’s worth noting that the executives eat their own cooking. Across the first eight months of 2019, five company insiders engaged in (legal) insider buying.

The company’s strategy is to diversify its risk across various agency and non-agency mortgage assets, with an emphasis on shorter-duration holdings to reduce interest-rate risk.

Dynex yields a very respectable 10.7% and trades at a modest 8% discount to book value. But keep in mind that smaller stocks like this can be volatile, and given the small market cap you might want to be careful entering and exiting. If you place a large order on a day when trading volume is light, you could end up moving the price.

That’s not a deal-breaker by any stretch. But it’s definitely something to be aware of.

4 of 10

AGNC Investment

Market value: $9.4 billion
Dividend yield: 11.1%

We’ll take a look at one last mortgage REIT in AGNC Investment Corporation (AGNC, $17.32).

You might notice that “AGNC” sounds a lot like “agency” when you sound it out. That’s intentional. The company invests in residential mortgage pass-through securities and collateralized mortgage obligations in which the principal and interest payments are guaranteed by government-sponsored enterprise or by a United States government agency.

AGNC is one of the biggest and most liquid mortgage REITs with a market cap of more than $9 billion. Perhaps because of its size and status as one of the blue chips in this space, AGNC isn’t quite as cheap as some of its peers, though it’s still very reasonably priced. It trades almost exactly at its book value.

Of course, if you’re reading this, you want to know about the dividend.

The REIT switched from a traditional quarterly dividend to a monthly dividend back in October 2014. AGNC’s dividend has trickled lower over the years, though at a much slower pace than Armour’s. Regardless, at current prices, the stock yields a very handsome 11%. And that high yield has helped AGNC deliver positive long-term total returns (price plus dividends) despite industry-wide price weakness.

5 of 10

Realty Income

Market value: $25.0 billion
Dividend yield: 3.6%

You can’t have a list of monthly dividend stocks and not include the company that, in its own promotional materials, calls itself “The Monthly Dividend Company.”

Realty Income (O, $76.63) is, hands down, one of the single best long-term income investments in the history of the U.S. stock market. Since going public in 1994, the REIT has grown its dividend at a 4.5% annual clip. It also has made 592 consecutive monthly dividend payments and has raised its dividend for 88 consecutive quarters.

But it’s more than just an income machine, Realty Income has managed to deliver compound annual average total returns of 16.8% per year. Translation: This REIT provides growth, too.

Perhaps the most remarkable aspect of that track record is that Realty Income has managed to do it with what might be the most boring portfolio of any traded REIT. The typical Realty Income property is a Walgreens (WBA) pharmacy or a 7-Eleven convenience store.

Realty Income is by no means the highest-yielding monthly dividend stock in this list. At current prices, it only yields 3.6%. But if you’re looking for a stable, long-term monthly dividend payer that won’t give you any drama, O shares are a solid choice. Indeed, Realty Income is probably the closest thing to a bond you’re ever going to find in the stock market.

6 of 10

STAG Industrial

Market value: $4.1 billion
Dividend yield: 4.6%

Continuing the theme of boring, we come to mid-cap REIT STAG Industrial (STAG, $30.99). While “STAG” might stir up images of an aggressive young buck of a company, nothing could be further from the truth. STAG is an acronym for “single-tenant acquisition group.”

In a nutshell, STAG runs a portfolio of single-tenant light industrial buildings. Its typical property might be a distribution center or a light manufacturing facility. It’s the sort of gritty property that undergirds the economy, but it’s not the sort of structures you’d generally want to have in your backyard.

You would, however, like to see it in an investment portfolio.

Shares yield a respectable 4.6%. And the REIT has a long history of raising its dividend. Since converting to a monthly payout in 2013, STAG has raised its dividend at least once per year.

STAG isn’t by any means a get-rich-quick stock, but it likely won’t give you many headaches, either. Consider this among the most drama-light monthly dividend stocks to buy.

7 of 10

EPR Properties

Market value: $5.6 billion
Dividend yield: 6.4%

Let’s take a look at one final REIT: EPR Properties (EPR, $70.92).

EPR formerly was known as Entertainment Properties, which was an appropriate name. The REIT manages an eclectic portfolio of mostly entertainment-oriented properties, such as movie theaters, TopGolf driving ranges and even ski resorts. And beyond its core entertainment portfolio, EPR also owns a portfolio of educational facilities rented to private schools and early childhood centers.

EPR’s portfolio is much different from virtually every other REIT you’re going to find. That makes it difficult to classify. You see, it’s not exactly a retail REIT, but it’s not a lodging REIT either. Sector specialists tend to overlook it, making EPR something of an orphan stock.

This helps to explain why EPR tends to be relatively cheap for a REIT its size. No one quite knows what to do with it.

That’s good for us, though. Its quirkiness allows us to collect more income. At current prices, EPR yields an attractive 6.4%. The REIT has been paying its dividend on a monthly basis since 2013.

8 of 10

Grupo Aval Acciones y Valores S.A.

Market value: $8.9 billion
Dividend yield: 4.4%

Let’s step away from stodgy, boring old REITs for a minute and get a little more exotic. While the U.S. is the world’s largest and most developed market, it’s not the only game in town. Living standards are rapidly rising in the developing world, creating fantastic opportunities for investors willing to roll the dice on emerging-markets stocks.

Colombian banking group Grupo Aval Acciones y Valores S.A. (AVAL, $7.98) is an interesting way to play the rise of the Latin American middle class. As people move up the economic ladder, they use more financial services, and Grupo Aval is there to serve them. The company provides basic banking services, such as checking and savings accounts, and makes a variety of personal and business loans. The company also has brokerage and investment banking arms and insurance operations.

Emerging markets have been a difficult asset class in recent years, lagging the performance of the U.S. market by a wide margin. But these things tend to be cyclical, and emerging markets as a group are certainly priced to outperform their American peers.

Grupo Aval has been paying monthly dividends since 2014 and at current prices yields 4.4%. Note that, due to currency fluctuations, the dividend may appear to change from month to month. That’s perfectly normal and to be expected for foreign companies trading in the U.S. market. But foreign high-yield monthly dividend stocks? That’s a rarity.

9 of 10

Global Water Resources

Market value: $290.1 million
Dividend yield: 2.2%

For another outside-the-box option, consider Global Water Resources (GWRS, $13.47), a water resource management company that owns, operates, and manages regulated water, wastewater and recycled water utilities primarily in metropolitan Phoenix, Arizona.

The company was founded in 2003 and serves approximately 55,000 people in 21,000 homes.

Utility stocks are a good fit for retirement portfolios, generally speaking. They tend to be relatively stable, at least relative to the rest of the stock market, and place a strong emphasis on dividends.

The problem is that most traded utilities focus on electricity, and that market is changing. As solar and battery technology make it easier and cheaper with every passing year to go “off the grid,” electric utilities find themselves in the unwelcome situation of having to make power available at all times to consumers that may not want or need it.

Water is a different story. Unless you plan on digging a latrine or installing a septic system, you’re going to need a proper wastewater system. And unless you’re wildly eccentric and plan on collecting rainwater in a cistern, you’re going to need basic water service.

Global Water is the lowest-yielding stock on this list by a considerable gap, at just 2.2%. But that’s better than you’ll find in most pockets of the bond market, it’s better than the dividend yield on the S&P 500, and most importantly, it’s growing. Many monthly dividend stocks (including some on this list) feature stagnant or even slowly decreasing payouts, but GWRS has been improving its regular dole, albeit slowly, for years.

10 of 10

Oxford Lane Capital

Market value: $491.9 million
Distribution rate: 19.5%*
Expenses: 12.87%**

If you’re looking to spice up your portfolio a little, Oxford Lane Capital (OXLC, $8.31) might be a decent option.

Let’s be clear: Oxford Lane is riskier than most of the high-yield monthly dividend stocks in this list. But there is nothing wrong with taking a little extra risk if you’re diversified and keep your position sizes reasonable.

Oxford Lane is a closed-end fund (CEF) that invests in collateralized loan obligations (CLOs).

CLOs got a bad rap during the 2008 crisis, and justifiably so. But it’s important not to throw out the baby with the bathwater. The basic principle of pooling relatively risky loans together for diversification is a solid one, assuming you’re being paid enough to accept the risk and that you don’t overdo it. The problem in 2008 was that the process simply got out of hand. Banks lent too aggressively to too many questionable borrowers, then dumped the risk onto naïve investors.

Wall Street being Wall Street, there will always be shenanigans. But these days, the questionable behavior seems to be revolving around tech IPOs rather than debt instruments.

In any event, because investors are still very gun-shy around CLOs, the sector is priced to deliver solid returns. OXLC currently sports a dividend yield of nearly 20%.

Obviously, a yield that high doesn’t come without risk. But if you’re looking to juice your monthly income and don’t mind being aggressive with a little of your capital, OXLC is worth a look.

* Distribution rate can be a combination of dividends, interest income, realized capital gains and return of capital, and is an annualized reflection of the most recent payout. Distribution rate is a standard measure for CEFs.

** This figure includes management, incentive and other fees, as well as a 4.78% interest expense that will vary over time.

Author: Charles Lewis Sizemore

Source: Kiplinger: 10 High-Yield Monthly Dividend Stocks to Buy in 2020

Your bills generally come monthly. Your mortgage, your car payment, your utility bills … even the gym membership and Netflix subscription come due once per month.

Yet that’s not how most investments typically work. Bonds tend to pay their coupon payments semiannually, and stocks tend to pay their dividends quarterly. You can get paid much more frequently, however. A number of monthly dividend stocks and funds can help you better align your investment income with your living expenses.

Investors received a stark reminder of how important stable income is during the market turmoil of February and March. Not only did the stock market take a nosedive, but many seemingly reliable dividend payers were forced to cut or suspend their payouts.

Furthermore, the coronavirus lockdowns have disrupted the livelihoods of millions of Americans, leaving many to dip into already depleted portfolios to pay their bills.

“Income security is the single biggest concern I’m hearing from my clients,” says Sonia Joao, a wealth manager based in Houston, Texas. “Many of my clients are at that critical age when they become targeted for early retirement, and that’s now more likely than ever with companies being forced to reduce headcount. Replacing that lost income is our top priority.”

Today, we’re going to take a look at 11 of the best monthly dividend stocks and funds that have so far managed the coronavirus with their payouts intact. Not all of these will be exceptionally high yielders. In this environment, it’s better to take a lower but reliable yield than to reach for an unrealistically high yield, only to watch it evaporate before the next payment.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 2 of 12

Realty Income

A 7-Eleven location in Madison Heights, Michigan. It is the world’s largest chain of convenience stores. Headquartered in Japan, there are currently a total of 39,000 locations worldwide.

MARKET VALUE: $18.8 billion


Realty Income (O, $54.86), a triple-net retail real estate investment trust (REIT), is perhaps most renowned among monthly dividend stocks. The REIT’s identity revolves around its monthly dividend to the point that it trademarked its nickname, “The Monthly Dividend Company.”

Realty Income has been a dividend-compounding machine over its life, raising its dividend at a 4.5% annual clip since going public in 1994. The company has made 597 consecutive monthly payments (and counting) and raised its dividend for 90 quarters in a row.

Landlords have really been hit hard by the coronavirus lockdowns. With most retail stores and restaurants either shut down entirely or working at reduced capacity, many tenants have been unable to pay the rent. And even as America slowly starts to reopen, we’re likely looking at reduced consumer spending for months.

All the same, Realty Income’s management doesn’t seem to be sweating much. In a recent interview with iREIT editor Brad Thomas, Realty Income CEO Sumit Roy said that the “dividend is sacrosanct to who we are.”

Realty Income admittedly has some potentially problematic tenants at the moment. Gym chains LA Fitness and Life Time Fitness make up a combined 5.8% of revenues, and gyms remain closed in much of America. Movie theaters such as Realty Income tenants AMC Entertainment (AMC) and Regal Cinemas also make up 6.3% of revenues, and it might be close to a year before theaters see crowds returns to pre-COVID-19 levels.

But many of its tenants are “essential” retailers such as Walgreens (WBA) and 7-Eleven. Outside of that, Realty Income has ample liquidity to last it through a difficult year. Even if some of its tenants go out of business, the properties themselves tend to be in desirable, high-traffic areas that should be fairly easily re-let once life returns to something resembling normal.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 3 of 12

Stag Industrial

MARKET VALUE: $3.8 billion


Apart from best-in-class REITs such as Realty Income, retail REITs likely will face a very difficult operating environment for the rest of this year. Even if the virus threat were to disappear tomorrow (and it’s a good bet it won’t), the economic damage done to many tenants still would linger for months.

But other pockets of the real estate market are far less affected. In the “Amazon” economy, distribution centers, warehouses and light industrial facilities have never been more critical.

This brings us to Stag Industrial (STAG, $25.81).

Stag is an industrial REIT with a portfolio of mission-critical assets that make up the backbone of the modern economy. The company reports that 43% of its portfolio is engaged in e-commerce activity. Perhaps not surprisingly, (AMZN) is STAG’s largest single tenant, making up nearly 2% of rental revenues. Some of its other major tenants include the U.S. government, DHL Supply Chain and even Ford (F).

Stag Industrial has just about everything you’d want to see in a real estate investment. It has low tenant concentration risk, low debt (4.4x EBITDA), and it is largely immune from coronavirus disruptions. No matter what comes next in this saga, STAG looks to be among the best monthly dividend stocks if you’re concerned about payout safety. And at today’s prices, you’re locking in a 5.6% yield.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 4 of 12

LTC Properties

Rochester Hills, Michigan, USA – August 13, 2014: An upscale senior center on Rochester Road in Rochester Hills, Michigan.

MARKET VALUE: $1.4 billion


For one final REIT, let’s take a look at LTC Properties (LTC, $35.28).

In case you’re wondering what LTC does, the name says it all. “LTC” stands for long-term care. The company’s portfolio is invested about 50/50 in skilled nursing facilities and in senior housing properties. LTC has more than 180 investments spanning 27 states and 30 distinct operating partners. And importantly, LTC is a landlord, not a nursing home operator.

In the immediate short term, the Covid-19 crisis has created major risks to the sector. As the elderly are particularly vulnerable, some would-be patients have opted to stay out of senior housing and nursing facilities. It’s a legitimate problem, but again, it’s short term in nature.

Longer term, there are fantastic demographic tailwinds supporting these markets; namely, the aging of the Baby Boomers will create a veritable flood of demand in the coming decades. And these longer-term demographic trends are already set in stone.

Furthermore, LTC has the financial strength to ride this out. Its debt-to-EBITDA ratio is a modest 4.6, and the dividend accounts for only about 74% of funds from operations (FFO, an important REIT profitability metric). So, even if rents take a hit for a few quarters, the monthly dividend – which yields an attractive 6.5% – shouldn’t be at significant risk.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 5 of 12

Main Street Capital

MARKET VALUE: $1.7 billion


Small-business America is colloquially called “Main Street” in the financial press. And of course, it goes without saying that Main Street has been hit particularly hard by the coronavirus lockdowns.

But if you believe in the resilience of the American economy – of the proverbial Main Street – then consider an investment in Main Street Capital (MAIN, $26.91).

Main Street Capital provides debt and equity capital to middle-market companies that aren’t quite big enough to access the capital markets on their own.

Importantly, Main Street maintains a conservative dividend policy. As a business development company (BDC), it is required to pay out 90% of its income as dividends to maintain its beneficial tax status. But because its earnings can be somewhat lumpy, MAIN keeps its regular monthly dividend relatively modest, then makes semiannual special dividends to top up their investors to the 90% threshold. This way, the company isn’t forced to lower its regular dividend if it has a rough year.

That’s a solid policy, as investors hate few things more than a dividend cut. And it’s coming in particularly handy this year. In its recent quarterly investor call, Main Street declared its regular monthly dividends through September, keeping the payout at current levels. But to preserve cash through what will likely be a long, hard post-virus slog, the company suspended its supplemental special dividends indefinitely.

That’s OK. The regular dividends alone add up to a dividend yield of 9.1%, which is among the best you can get from monthly dividend stocks. It’s certainly not too shabby in a world of near-zero bond yields. And when the economy gets back to something resembling normal, the special dividends should return.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 6 of 12

Gladstone Investment

High angle full length portrait of bearded businessman wearing hardhat walking across production workshop accompanied by female factory employee, copy space

MARKET VALUE: $367.5 million


Along the same lines, Gladstone Investment (GAIN, $11.12) is another monthly dividend stock worth considering.

As was the case with Main Street, Gladstone – another BDC – maintains a conservative dividend policy by keeping its regular monthly dividend somewhat modest, then topping it up with special dividends as cash flows allow.

Gladstone makes debt and equity investments primarily in mature, lower middle market companies with $20 million to $100 million in revenue, attractive fundamentals and strong management teams. The company’s policy is to generally keep about 75% of the portfolio in debt investments with the remaining 25% in equity investments.

Gladstone’s portfolio is divided across three main segments: manufacturing, business services/distribution and consumer products. Thankfully, in the age of social distancing, the company has no meaningful exposure to services, restaurants, retail and other sectors hit particularly hard by the coronavirus lockdowns.

Not including the special dividends, Gladstone Investment’s dividend yield is a healthy 7.6%. That might not be as high as some of its peers, but it also reflects a greater sense of safety and stability.

Although GAIN’s stock price is still well below its pre-COVID highs, it’s worth noting that the shares are trading at roughly the same prices they were last June.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 7 of 12

Shaw Communications

Calgary, Alberta. Canada Dec 28 2019. Shaw Communications telecommunications company sign from the top of a building location at Calgary. Shaw warns customers of data breach. illustrative.

MARKET VALUE: 8.5 billion


Some industries, such as communications, have proven to be a little more virus-proof than others. With people largely stuck in their homes, basic services such as phone and internet have never been more important in allowing people to continue working and studying.

Along those lines, Canadian telecom operator Shaw Communications (SJR, $16.50) is among the best monthly dividend stocks to put on your list. Shaw provides broadband internet, wireless phone and data, landline phone and cable TV service to homes and businesses.

Shaw’s stock price took a tumble in February and March, along with most other stocks, and it remains about 21% below its 52-week highs. The upside? At today’s prices, SJR yields just more than 5%.

With many stocks seeming to be melting up in April and May up just as quickly as they melted down in February and March, bargains like these are getting harder to find.

Shaw was not completely immune from the effects of COVID-19; the company had to temporarily lay off about 10% of its workforce in April, primarily in retail and sales roles. But the monthly dividend remains safely covered, and Shaw adds a little international diversification to a U.S.-heavy list.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 8 of 12

Vanguard Intermediate-Term Treasury ETF

Close up photograph of U.S. Savings Bonds, selective focus.

NET ASSETS: $6.1 billion


EXPENSES: 0.05%, or $5 annually on a $10,000 investment

Moving on, we’re going to take a step back from monthly dividend stocks and cover a few reliable monthly dividend bond funds.

We’ll start with the Vanguard Intermediate-Term Treasury ETF (VGIT, $70.44), a low-cost Vanguard index fund that provides exposure to U.S. Treasury securities with maturities of three to 10 years.

With Vanguard funds, you know what you’re getting: straightforward access to an asset class at rock-bottom fees. VGIT’s expense ratio is just 0.05%, making it almost free to own.

You’re not going to get rich owning the Vanguard Intermediate-Term Treasury ETF. At current bond prices, the fund sports a yield of just 0.4%. But the experience of 2020 has shown us that yield isn’t everything. Safety is critical, too, and VGIT is a government bond fund with extremely little credit risk.

Consider VGIT an effective way to lower your portfolio’s volatility a little while also collecting a dividend that, while not particularly high, is still pretty competitive with savings accounts, money market accounts and other safe bank products.

* SEC yield reflects the interest earned after deducting fund expenses for the most recent 30-day period and is a standard measure for bond and preferred-stock funds.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 9 of 12

Pimco Intermediate Municipal Bond Active Exchange-Traded Fund

NET ASSETS: $6.1 billion



Bonds are an important part of a diversified portfolio thanks to both their income potential and their ability to reduce portfolio volatility. But they’re not always the most tax-efficient vehicles. Bond interest generally is taxed as ordinary income, meaning you could be paying as much as 37% in federal income taxes on your payouts.

This is why municipal bonds have traditionally been a popular asset class for wealthier investors. Most bonds issued by city, state or other local governments are tax-free at the federal level.

This brings us to the Pimco Intermediate Municipal Bond Active Exchange-Traded Fund (MUNI, $54.36), an actively managed muni bond ETF run by one of the best-respected fixed-income firms in the word.

MUNI currently has around 200 underlying bond holdings with an average maturity of just 5.1 years. Its yield of 1.6% isn’t exceptionally high, but remember, it’s tax-free. If you’re in the 37% tax bracket, a 1.6% tax-free yield is equivalent to a 2.5% taxable yield.

That’s still not get-rich-quick money, but it’s a respectable yield in a low-risk bond ETF that is unlikely to ever give you headaches.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 10 of 12

Vanguard Short-Term Corporate Bond ETF

NET ASSETS: $24.6 billion



The most risk-free bonds are those issued by the U.S. government, as it is exceedingly difficult for the government to default. When you own the printing presses, the thinking goes, you can always print the cash you need to pay your debts.

Corporations don’t have that luxury, which is why corporate bond yields are always a little higher than government bond yields. But a diversified basket of high-quality corporate bonds is generally very low risk, and any small increase in risk is more than offset by the higher yield.

This brings us to the Vanguard Short-Term Corporate Bond ETF (VCSH, $80.86), another low-cost Vanguard index fund. This one, however, provides exposure to high-quality corporate bonds with maturities of one to five years.

The ETF yields a respectable 2.1% at current prices. Again, that’s not get-rich-quick money. But in this interest-rate environment, it’s not bad. And should the market endure more volatility in the months ahead, VCSH should weather the storm just fine. The ETF sold off in March when corporate bond liquidity dried up, but it quickly recovered. Now, Vanguard Short-Term Corporate Bond ETF sits just a couple percent below its 52-week highs.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 11 of 12

iShares Preferred and Income Securities ETF

Stacks of one hundred US dollar banknotes, illustration.

NET ASSETS: $24.6 billion



Preferred stocks are an interesting hybrid between stocks and traditional fixed income.

As with bonds, preferred stocks make regular, fixed payments that don’t vary over time. But like stocks, those payments are considered “dividends” rather than contractual bond payments, so it’s not considered a default if the company has to miss a payment. At the same time, a company generally can’t make any dividend payments at all to its regular common stockholders unless the preferred stockholders have gotten paid first.

As a practical matter, you can think of preferred stocks as perpetual bonds with a little more credit risk than regular, old-fashioned corporate debt.

This brings us to the iShares Preferred and Income Securities ETF (PFF, $34.26), a diversified ETF investing in preferred stock.

Owning individual preferreds can be risky due to the lack of liquidity. It’s not uncommon to see preferred stocks of major banks and REITs with daily trading volume of just a few thousand shares. Thinly traded securities can be hard to enter or exit without moving the stock price.

That’s the beauty of PFF. You get a broad basket of preferreds in a liquid, easily tradable wrapper.

You also get monthly dividends. At current prices, those dividends translate into a respectable 5.4%.

11 Monthly Dividend Stocks and Funds for Reliable Income | Slide 12 of 12

BlackRock Municipal 2030 Target Term Trust

MARKET VALUE: $1.6 billion



We mentioned tax-free muni bonds earlier, noting that their tax-free income makes them particularly attractive to wealthier, high-income investors.

Now, we’re going to look at a potentially more lucrative way to own them via a closed-end fund.

Closed-end funds (CEFs) are similar to ETFs, but with two critical differences. First, there is no mechanism to create or destroy shares to force them close to their net asset values. The number of shares is generally fixed. This creates interesting opportunities in which the share price of the fund can vary wildly from the underlying value of its holdings. If you’re patient, you can often buy them for considerable discounts.

The second difference is leverage. Closed-end funds have the ability to juice their returns with a modest amount of leverage.

With that said, let’s take a look at the BlackRock Municipal 2030 Target Term Trust (BTT, $22.50). BTT owns a diversified basket of muni bonds. The fund trades at a 7.6% discount to net asset value, meaning we’re getting a dollar’s worth of assets for about 92 cents. Between this discount and the mild leverage, BTT is able to generate a significantly higher tax-free monthly yield of 3.3%.

There’s one more wrinkle. BTT is designed to liquidate in the year 2030 at or near its net asset value of $25. So, if you hold BTT though its full term, you should enjoy capital gains of around $2.50 per share in addition to the steady stream of tax-free monthly income.

Author: Charles Lewis Sizemore

Source: Kiplinger: 11 Monthly Dividend Stocks and Funds for Reliable Income

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