When it comes to stocks you can trade on Robinhood’s (NASDAQ:HOOD) brokerage platform, certain types of stocks may first come to mind. For example, shares in well-known companies, like Apple (NASDAQ:APPL). Or, meme stocks like AMC Entertainment (NYSE:AMC) and GameStop (NYSE:GME).
But these aren’t the only types of securities you can buy on the platform. Dividend-focused investors may find the brokerage app to be a great place to build a portfolio of income producing stocks. Not only can you buy and sell popular stocks known for their yields, such as dividend aristocrats.
You can also use the service to trade more obscure high-yield plays. Including, dividend stocks that payout on a monthly basis. Based on your personal investing objectives, dividend stocks that pay out 12 times per year may be more appealing than ones that follow the typical quarterly (four times per year) schedule.
So, which Robinhood stocks should you take a look at, if monthly dividend income is what you’re looking for from your investments? Consider these seven, a mix REITs (real estate investment trusts), BDCs (business development companies), and even an oil & gas royalty trust:
- EPR Properties (NYSE:EPR)
- Horizon Technology Finance (NASDAQ:HRZN)
- LTC Properties (NYSE:LTC)
- Main Street Capital (NYSE:MAIN)
- Realty Income Corp (NYSE:O)
- San Juan Basin Royalty Trust (NYSE:SJT)
- SL Green Realty (NYSE:SLG)
Robinhood Stocks: EPR Properties (EPR)
Dividend Yield: 6.87%
Typically, REITs own assets such as apartment complexes, office buildings, and retail shopping centers. But EPR Properties is not your typical REIT. Holding a unique mix of amusement parks, casinos, and movie theatres, this landlord calls itself “the leading diversified experiential real estate investment trust (REIT).”
Of course, this REIT and its unique asset mix found itself in trouble, when Covid-19 first started to spread in early 2020. Pre-Covid, it traded for around $70 per share at the time. After the outbreak first started to spread, EPR stock plummeted to prices under $15 per share, as “social distancing” threatened its steady rental income.
In response to the pandemic, it was forced to suspend its monthly dividend. However, in the months following its share price collapse, it began to make a recovery. Thanks to the end of lockdowns, and the “reopening” of bricks-and-mortar businesses, shares have bounced back, and trade for around $44 per share today. The realty trust also resumed paying out its monthly dividend back in July.
At current prices, EPR sports an annual yield of 6.87%. It may be pulling back now, as fears that the Omicron variant of Covid-19 will mean a trip back to the “new normal” for entertainment/leisure businesses. Yet with signs that there will not be another round of lockdowns, buying now could enable you to get in at a favorable entry point.
Horizon Technology Finance (HRZN)
Dividend Yield: 7.22%
A BDC or business development company, HRZN stock is kind of like investing in a venture capital fund and a closed-end fund at the same time. This BDC makes debt/equity investments in venture-capital backed companies in both healthcare and technology.
Thanks to its debt investments, Horizon is able to pay its investors a monthly dividend of 10 cents per share ($1.20 annually). Based on its current stock price ($16.61 per share), that means buying it today gets you an annual yield of 7.22%.
That said, there may be one area of concern here: a rich valuation. As a Seeking Alpha commentator argued last month, due to its high yield, HRZN stock now trades at a high premium to its net asset value (NAV). As interest rates remain near historic lows, this may not matter. Investors will continue to buy it, in order to get a payout that’s above today’s very high levels of inflation.
Yet if the Federal Reserve ends up raising rates next year, Horizon could pull back, as its yield will look less juicy on a risk-adjusted basis. So, what’s the best move here? Unless you believe that interest rates will stay low longer than expected, you may just want to keep this on your watchlist of Robinhood stocks for now, and hold off buying.
Robinhood Stocks: LTC Properties (LTC)
Dividend Yield: 7.27%
Focused on senior housing and nursing properties, LTC is another one of the specialty REITs. What also makes it more niche is how it does not just typical sale-leasebacks of properties, but makes mezzanine, preferred equity, and other types of investments in this area as well.
However, there may be a reason why investors have bid LTC stock down so far this year, and why shares today yield around 7.27% — the risk of a dividend cut. The REITs funds from operations (FFO) has yet to get back to pre-pandemic levels. As a result, the stock has what could be viewed as a dangerously high payout ratio.
Even so, going contrarian on the belief that a dividend cut is imminent may be the right call. As a commentator from The Motley Fool discussed on Nov. 11, management seems confident that it will be able to improve its FFO numbers. This in turn may mean that the current rate of payout will stay intact.
Besides an above-average yield, there may be upside potential for shares as well. It’s down around 17% year-to-date, and well below the $50 per share it traded for pre-Covid. If management’s plans pan out, this REIT could end up experiencing its own “return to normal,” bouncing back in a big way.
Main Street Capital (MAIN)
Dividend Yield: 5.86%
Like Horizon Technology Finance, Main Street Capital is a BDC. Except while Horizon was more venture capital-focused, this one operates more like a traditional private equity firm. Making debt/equity investments in middle-market deals, it quickly turns around, and pays out these earnings via a monthly dividend.
Paying out 21 cents per month, based on the current MAIN stock price ($44.33 per share), it has an annual dividend yield of 5.86%. Up 38.62% so far this year, you may see its stock chart, and think the wiser move is to wait for it to sell off once again. Especially as it trades at an 83% premium to its net asset value.
However, just because it’s richly-priced doesn’t mean it’s due for a share price drop. Regarded as one of the highest-quality BDCs out there, it will likely continue to trade at a large premium to its book value. Then again, a rise in interest rate could impact it, much like rising interest rates would affect HRZN stock.
It’s up to you whether buying MAIN stock today is the play, or holding off for now is the better option. But as one of the strongest monthly-dividend payers out there, it’s well worth keeping an eye on it.
Robinhood Stocks: Realty Income Corp (O)
Dividend Yield: 4.48%
Put simply, you can’t talk about monthly dividend stocks without talking about Realty Income. After all, “the monthly dividend company” is literally its motto. With its portfolio of triple-net lease (NNN) freestanding retail properties, which it leases out to high-quality, well-known retail tenants, it’s considered a blue chip among real estate investment trusts.
Paying investors 25 cents per share, 12 times per year, O stock today has a forward annual yield of 4.48%. Not as juicy as the names mentioned above. Still, you may not want to skip on including it in your portfolio of Robinhood stocks paying out monthly.
Why? First, it’s well diversified. Its largest tenant (7-Eleven) makes up just 5.7% of its annual contractual rental revenue. It’s also well-diversified geographically. Second, you may be opting for a lower yield now buying this instead of higher-yielding REITs.
Third, it’s managed to grow its dividend 25 years in a row. Realty Income has also had an average yield of 4.3% over the past five years. With strong chances of continuing to provide solid, consistent returns to investors, if you’re looking for monthly dividend stocks, this should be one of the first to consider.
San Juan Basin Royalty Trust (SJT)
Dividend Yield: 11.84%
Thanks to the stunning rebound in energy prices, oil & gas royalty trusts have come back in vogue. San Juan Basin Royalty Trust is no exception. Holding an interest in 119,000 net producing acres, and 825.9 net wells located in New Mexico, the trust suspended its monthly dividend for a few months in 2020.
But resuming its dividend in October of that year, when oil and gas was starting to come back, investors who bought this when times were tougher have been rewarded. They’ve received both variable payouts and stock price appreciation.
Having said all of this, it’s not as if it’s too late to buy SJT stock. With a forward yield of 11.84%, this continues to be a high-yield stock. Yes, given this yield is dependent on energy prices, which are outside its control — it’s a bit riskier than some other monthly dividend stocks. Yet as inflation remains high, and the Fed is still hesitant to quickly change monetary policy, high oil and gas prices may stick around.
Trading for around $5.89 per share today, San Juan Basin Royalty Trust is obscure compared to other dividend plays. However, with its New York Stock Exchange listing, it’s liquid, and can be put in the Robinhood stocks category.
Robinhood Stocks: SL Green Realty (SLG)
Dividend Yield: 5.38%
A major owner of Manhattan office properties, you may be familiar with SL Green Realty. What you may not be familiar with, is the fact that this REIT makes monthly dividend payouts. Paying shareholders 30 cents per month, the stock’s effective forward annual yield at present comes in at 5.38%.
Yes, investors have soured on SLG stock lately, as they have with other office REITs. With Omicron dimming hopes a full return to the office is in the cards for 2022, the market has pushed this New York-focused office landlord down around 4.6% in the past week.
Nevertheless, as my InvestorPlace colleague Tezcan Gecgil argued back in October, you may still want to buy SL Green, despite the uncertainty. Although this stat is from before the Omicron news, as of October, the realty trust’s occupancy rates in New York City were back to 94%.
It’s also capitalized on record high real estate prices due in large part to very low interest rates. With the proceeds, it’s been able to pare down debt, and buy back shares. If you believe the market’s overreacting to the Omicron news, you may want to lock down this stock at today’s prices (around $71.61 per share).
On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.