In this article, we discuss 10 high-yield monthly dividend stocks for August. You can skip our detailed discussion on dividend stocks, and go directly to read 5 High-Yield Monthly Dividend Stocks for August.
Due to elevated inflation and risks of recession, global economic growth is expected to fall to 2.9% in 2022, from 5.7% in the last year, according to World Bank. Considering the current situation, investors are gravitating toward dividend stocks in an effort to protect their investments. The main reason for the popularity of dividend stocks in volatile markets is that these companies often have higher-quality earnings, which are subsequently offered to shareholders as dividends. Moreover, strong dividend yields can support companies during a market crash, generating passive income for investors, as Morgan Stanley reported.
The historical performance of dividend companies shows that these stocks have outperformed non-dividend stocks as they focus on growing their cash flows and repurchasing shares. According to a report by Factset, dividend stocks had an annual average return of 9.7% from 1993 to 2015, compared with an average return of 4.18% of non-dividend stocks during the same period. Additionally, the report mentions that focusing on yields is crucial to dividend investment, especially the respective company’s historic average yield and its basic fundamentals. Companies that have strong track records of dividend growth appeal to investors more because they give them a clear insight into their potential income from these stocks.
Dividend companies like Altria Group, Inc. (NYSE:MO), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM) have above-average yields and also possess strong dividend histories. In addition to these stocks, some companies that pay monthly dividends to shareholders also have high yields, which benefit investors. In view of this, we will discuss 10 high-yield monthly dividend stocks.
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Our Methodology:
The stocks mentioned below pay monthly dividends to shareholders and have yields over 9%, as of August 2. These stocks are ranked from the lowest yield to the highest.
10 High-Yield Monthly Dividend Stocks for August
10. Horizon Technology Finance Corporation (NASDAQ:HRZN)
Dividend Yield as of August 2: 9.17%
Horizon Technology Finance Corporation (NASDAQ:HRZN) is an American specialty finance company that provides structural debt products to life sciences and tech companies.
At the end of Q1 2022, Horizon Technology Finance Corporation (NASDAQ:HRZN) reported $14.5 million in cash and had a credit facility capacity of $187.8 million. The company’s total assets amounted to over $541.5 million at the end of the quarter, up from $514 million in the previous quarter. Though Horizon Technology Finance Corporation (NASDAQ:HRZN) hasn’t raised its monthly payouts since 2016 but the company has been making consistent dividend payments for the past 10 years. It currently pays a monthly dividend of $0.10 per share, with a yield of 9.17%, as of August 2.
As per Insider Monkey’s Q1 2022 database, 7 hedge funds owned stakes in Horizon Technology Finance Corporation (NASDAQ:HRZN), up from 6 in the previous quarter. The collective value of these stakes is over $6.8 million. Ken Griffin and Paul Tudor Jones were the company’s most prominent stakeholders at the end of March 2022.
In addition to famous dividend stocks like Altria Group, Inc. (NYSE:MO), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM), Horizon Technology Finance Corporation (NASDAQ:HRZN) can be a good addition to investors’ dividend portfolio because of its monthly payouts.
9. Prospect Capital Corporation (NASDAQ:PSEC)
Dividend Yield as of August 2: 9.34%
Prospect Capital Corporation (NASDAQ:PSEC) is a New York-based publicly-traded business development company. The company was part of 6 hedge fund portfolios in Q1 2022, according to Insider Monkey’s database. The collective value of stakes owned by these hedge funds stood at over $18.4 million.
Prospect Capital Corporation (NASDAQ:PSEC) reported solid financials in its Q1 2022 earnings report. The company had $36.4 million available in cash, with total assets of roughly $7.5 billion. The company also holds a strong dividend history, making dividend payments since its inception in 2004. The cumulative value of these dividend payments stands at $3.5 billion.
Prospect Capital Corporation (NASDAQ:PSEC) pays a monthly dividend of $0.06 per share and this July marked the company’s 59th consecutive monthly distribution to shareholders. As of August 2, the stock’s dividend yield came in at 9.34%.
8. Dynex Capital, Inc. (NYSE:DX)
Dividend Yield as of August 2: 9.43%
Dynex Capital, Inc. (NYSE:DX) is a Virginia-based financial services company that provides services in risk management and capital allocation. The company’s free cash flow generation has remained stable over the years, with an FCF of nearly $147 million in 2021. It reported cash of $325.6 million at the end of Q2 2022, with total assets standing at over $3.2 billion.
Dynex Capital, Inc. (NYSE:DX) had to slash its dividend in 2020 in recognition of the Covid-19 pandemic. However, the company maintained its payments throughout these months. It offers a monthly dividend of $0.13 per share, with a yield of 9.43%, recorded on August 2. The company’s dividend payout ratio stands at 36.7%.
In June, Keefe Bruyette raised its price target on Dynex Capital, Inc. (NYSE:DX) to $18.50 while upgrading the stock to Outperform. The firm presented a positive stance on mortgage-backed securities.
At the end of Q1 2022, 6 hedge funds were bullish on Dynex Capital, Inc. (NYSE:DX), compared with 4 a quarter earlier. The combined value of stakes owned by these hedge funds stood at nearly $19 million. With stakes worth over $11.6 million, Balyasny Asset Management was the company’s leading stakeholder in Q1.
7. Ellington Financial Inc. (NYSE:EFC)
Dividend Yield as of August 2: 11.23%
Ellington Financial Inc. (NYSE:EFC) is a real estate credit company that has expertise in diversified credit, mortgage, and related markets.
In Q1 2022, Ellington Financial Inc. (NYSE:EFC) reported cash and cash equivalents of $363.5 million and other assets of $632.5 million. The company generated nearly $33 million in free cash flow during the quarter and paid $11.6 million in dividends. This shows that the company has enough cash to support its shareholders’ obligations. Ellington Financial Inc. (NYSE:EFC) pays a monthly dividend of $0.15 per share, raising it twice in 2021. As of August, the stock’s dividend yield stood at 11.23%.
Appreciating the company’s core earnings and stable dividend, Piper Sandler set a $17 price target on Ellington Financial Inc. (NYSE:EFC) in July, with an Overweight rating on the shares.
According to Insider Monkey’s data, Ellington Financial Inc. (NYSE:EFC) was part of 7 hedge fund portfolios in Q1 2022, the same as in the previous quarter. The stakes owned by hedge funds hold a collective value of over $25.6 million.
6. Ellington Residential Mortgage REIT (NYSE:EARN)
Dividend Yield as of August 2: 11.28%
Ellington Residential Mortgage REIT (NYSE:EARN) acquires real estate-related assets and specializes in residential mortgages. In Q1 2022, the company reported cash and cash equivalents of nearly $30 million, with other assets amounting to over $11.3 million. The company generated $6.89 million in free cash flow during the quarter, up from $6.2 million in the previous quarter. Dividend payments represented $1.3 million of the free cash flow, signaling strong cash flow generation.
Ellington Residential Mortgage REIT (NYSE:EARN) currently pays a monthly dividend of $0.08 per share, with a dividend yield of 11.28%, as of August 2.
In June, Piper Sandler lowered its price target on Ellington Residential Mortgage REIT (NYSE:EARN) to $9 with an Overweight rating on the shares, in view of the firm slashing specialty finance price targets due to possible recession. However, analysts are positive about major dividend stocks, such as Altria Group, Inc. (NYSE:MO), AT&T Inc. (NYSE:T), and Exxon Mobil Corporation (NYSE:XOM).
The number of hedge funds tracked by Insider Monkey owning stakes in Ellington Residential Mortgage REIT (NYSE:EARN) fell to 4 in Q1 2022, from 8 in the previous quarter. These stakes hold a combined value of over $9.76 million. Renaissance Technologies was the company’s leading stakeholder in Q1.
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Disclosure. None. 10 High-Yield Monthly Dividend Stocks for August is originally published in Insider Monkey.
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