10 Cheap Monthly Dividend Stocks with High Yields

In this article, we discuss the 10 cheap monthly dividend stocks with high yields. If you want to skip our detailed analysis of these stocks, go directly to 5 Cheap Monthly Dividend Stocks with High Yields.

The importance of dividend investing came back into the limelight in 2022 as the stock market crashed, inflation soared to new highs and the Fed became extremely hawkish. As cryptocurrencies and tech growth stocks fell to new lows, investors scrambled to find equities that are stable and also pay consistent income. As companies in the US begin massive layoffs, average retail investors are also on the lookout for dividend stocks that are reliable and can promise steady income.

Study after study has proven the effectiveness of dividend investing. For example, in a detailed report on dividend investing, Heartland Advisors quotes a research that tracked the total return of the US stock market for a period starting from 1802 and ending 2002. During this period, dividend stocks accounted for 5.8% of the 7.9% total annualized returns. The same study also mentions another research, from the London Business School, which highlights the importance of dividend investing when it comes to global markets. This study shows that from 1900 to 2005, the real stock market return across 17 countries was about 5%, while the average yield of those countries during this period was 4.5%.

However, the research report by Heartland Advisors emphasizes that the outperformance of dividend stocks when compared to their counterparts takes its real effect when seen with a long-term perspective. Several datasets in the report assume an investment time period of 20 years, while admitting that usually investors don’t hold stocks for two decades. Nonetheless, an important pattern observed in the study is that over 20-year periods, dividend payers usually outperform non-dividend payers. Therefore, it's important for income investors to find long-term dividend stocks and hold them if they truly want to enjoy the benefits of divided investing.

While this article takes a look at dividend stocks with high-yields, it must be noted that high yields come with some drawbacks. A detailed research report published by Fidelity in 2012 says that high-yield dividend stocks are more vulnerable to dividend cuts and suspensions. The study says that on average during the past two decades, 10% of stocks with the highest dividend yields suspended or cut their dividends. In 2009, this percentage spiked to a whopping 40%. Another important data point mentioned in the study shows that on average, the company that cut or suspended its dividend underperformed the market by more than 23% during the 12 months preceding the official announcement of the dividend cut or suspension.

That’s why, high-yield dividend stocks might be ok if you are looking for short-term gains, but if you are a long-term investor and plan to enjoy the benefits of reinvested dividends and want to avoid volatility and uncertainty, you should carefully choose dividend stocks that have sustainable yields.

Another important research report that is extremely relevant to today’s market environment is from Vanguard. This study, which was published in 2017, says that the best bet for investors who want to avoid risk is to invest for both dividends and capital appreciation. The study calls this a “total return perspective.” The study also says that “substituting dividend-oriented equities for fixed income significantly raises a portfolio’s risk profile” and decreases its downside protection. However, the report noted that dividend-oriented equities tend to have more sensitivity to interest rates, which make them susceptible to volatility when bond yields change. That’s exactly what’s happening in 2022, as several REIT dividend stocks jumped back in October 2022 based on the movements in the bonds market, while many others crashed.

The Vanguard study takes an in-depth look at the two famous perspectives in dividend investing. The first perspective is related to high-dividend yield investing, in which investors are always interested in high-yield dividend stocks. The other perspective focuses more on dividend growth and prefers companies that have a history of consistent dividend increases. The study also quotes the “dividend irrelevance theory” which contends that if a company is not paying dividends, it will be investing in its business or share buybacks, thus practically increasing investors’ returns. However, the 2022 stock market crash made it impossible to consider dividends “irrelevant” as it’s clear that mature dividend-paying companies that have strong businesses are the best bets for investors for at least several months to come as the world goes through many geopolitical and economic challenges.

In this article we picked relatively cheap stocks that pay monthly dividends. These stocks can be solid options for those who can tolerate risk and are looking for high-yield dividend stocks. As mentioned above, high-yield dividend stocks come with their peculiar risks, and one should always look to offset risks with diversification.

Cheap Monthly Dividend Stocks with High Yields

10. AGNC Investment Corp. (NASDAQ:AGNC)

AGNC Investment Corp. (NASDAQ:AGNC) is a US-based REIT that invests in residential mortgage pass-through securities and collateralized mortgage obligations. It’s one of the most high-yield monthly dividend stocks in the market as its yield came in at over 17% on November 5. Last month, AGNC Investment Corp. (NASDAQ:AGNC) said its board declared a cash dividend of $0.12 per share, payable on November 9 to shareholders of record as of October 31. The stock is in the limelight after the company beat analyst estimates for the third quarter. The company said its results were helped by its efficient asset repositioning and significant hedge position.

AGNC Investment Corp. (NASDAQ:AGNC) saw an uptick in hedge fund sentiment in the second quarter, as 18 funds reported having stakes in the company at the end of June, compared to 14 funds in the previous quarter.

9. Cross Timbers Royalty Trust (NYSE:CRT)

Cross Timbers Royalty Trust (NYSE:CRT) is currently in the news, but not for very positive reasons. Cross Timbers Royalty Trust (NYSE:CRT) recently said it was cutting its monthly dividend by about 25%. The company last month announced its monthly dividend of $0.1491 per share, as compared to its prior dividend of $0.2004. Still, the stock’s forward dividend yield came in at 7.75%, which makes the stock one of the decent options out there for investors looking for cheap dividend stocks. The stock is trading at around $20 as of November 5.

8. Dynex Capital, Inc. (NYSE:DX)

Dynex Capital, Inc. (NYSE:DX) is a Virginia-based mortgage REIT that invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. Dynex Capital, Inc. (NYSE:DX) also felt the heat due to the current macroeconomic situation during the third quarter. Its third-quarter earnings were hit amid spread widening. Dynex Capital, Inc. (NYSE:DX)’s book value plummeted by 15% in the quarter as compared to the previous quarter. Adjusted EPS in the quarter came in at $0.24, below the average estimate of $0.31. Dynex Capital, Inc. (NYSE:DX)’s management said that “extreme interest rate volatility” and spread widening were the reasons behind the weak quarterly results.

However, hedge funds started showing interest in the REIT in the June quarter. 13 hedge funds in our database reported owning stakes in the company at the end of the second quarter, compared to just 6 in the previous quarter.

7. Gladstone Capital Corporation (NASDAQ:GLAD)

Gladstone Capital Corporation (NASDAQ:GLAD) is a Virginia-based company that specializes in debt refinancing, debt investments in senior term loans, and revolving loans, among many other services. The company has a dividend yield of over 8%. On October 11, Gladstone Capital Corporation (NASDAQ:GLAD) announced a 3.7% increase in its monthly dividend. It announced a dividend of $0.07 per share of common stock for October, November, and December 2022.

As of the end of the second quarter, 7 hedge funds tracked by Insider Monkey had owned stakes in Gladstone Capital Corporation (NASDAQ:GLAD), compared to just 3 funds in the previous quarter. The biggest stakeholder of the company in our database was billionaire Izzy Englander’s Millennium Management, which owns a $3.8 million stake in the company.

6. Generation Income Properties, Inc. (NASDAQ:GIPR)

Trading at just around $5, Generation Income Properties, Inc. (NASDAQ:GIPR) is one of the cheap monthly dividend stocks available in the market. However, the company recently announced a 27% cut in its dividend for the last three months of this year. Generation Income Properties declared a dividend of $0.039 per share, which was 27.8% below the previous dividend of $0.054.

Generation Income Properties, Inc. (NASDAQ:GIPR) is a Florida-based REIT that has a portfolio of single-tenant properties.

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Disclosure: None. 10 Cheap Monthly Dividend Stocks with High Yields is originally published on Insider Monkey.