These Three Stocks Offer Steady Dividend Income — and High Yields

It’s rare, but some companies operate with monthly dividend payments — and a high yield. This is an attractive choice for retirees and others who live off the income that their investments generate.

Here, we’ll look at three such companies that make a dividend payment every month and that are also offering high dividend yields:

Risky Dynamo: Dynex Capital

Dynex Capital (DX)  is a mortgage real estate investment trust, or REIT, that was founded in the 1980s and is currently valued at $600 million. Dynex Capital invests in mortgage-backed securities (MBS), with those assets being partially financed via debt in order to increase the company’s return on equity via the leverage effect.

Like many other mortgage REITs, Dynex Capital has seen its book value come under pressure in recent quarters, as rising interest rates hurt the fair-market value of the MBS that Dynex Capital holds on its balance sheet. That said, hedges prevented some of these losses, and cash flows remain reliable for now.

During the most recent quarter, Dynex Capital generated earnings available for distribution of $0.24 per share, which pencils out to an annual run rate of $0.96 per share. That would be less than the current annual dividend, but the result was negatively impacted by one-time expenses related to a CFO change. It is thus likely that profits this year will be higher than the third-quarter run rate, with analysts currently predicting earnings-per-share of $1.25 for 2022.

The company pays out a dividend of $0.13 per share per month, which equates to a dividend yield of 12% at current prices — in other words, investors get paid 1% of their investment per month, which is highly attractive for those seeking a big income yield.

There is some uncertainty around future profits, however, thus it is not guaranteed that dividends will always be this high. Investors thus have to live with a somewhat elevated risk of a dividend reduction in the future. But even if the dividend were to be cut by one-third, for example, the dividend yield would be still pretty high, at 8%,…


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