With banking sector fears once again dominating headlines, investors should consider the consistent passive income potential of monthly dividend stocks to buy. Typically, companies that provide passive income do so on a quarterly basis. However, the schedule of life (such as rent and utility bills) occurs monthly. Therefore, this distinct segment should be attractive.
Now, with greater conveniences come greater risks. Generally, monthly dividend stocks to buy tend to be riskier than their quarterly paying counterparts. At this juncture, economic vagaries make this category somewhat hazy due to less-robust financial profiles. Still, if you can handle the heat, these monthly dividend stocks to buy deserve consideration.
Permian Basin Royalty Trust
Sabine Royalty Trust
Cross Timbers Royalty Trust
PermRock Royalty Trust
U.S. Global Investors
Broadmark Realty Capital
Realty Income (O)
When it comes to monthly dividend stocks to buy, no discussion may be complete without mentioning Realty Income (NYSE:O). A common staple in this space, Realty represents a real estate investment trust (REIT) that targets free-standing, single-tenant commercial properties in the U.S., Spain, and the U.K. Although it features a massive footprint, O stock has been volatile so far this year, declining more than 4%.
Nevertheless, prospective investors will align themselves with a fairly solid business. For example, Realty’s three-year revenue growth rate pings at 5.1%, above nearly 69% of the REITs industry. Also, its EBITDA growth rate during the same period is 6%, better than 60% of its rivals.
For passive income, the enterprise carries a forward yield of 5.01%. For comparison, the real estate sector’s average yield is 4.46%. Also, the company features 30 years of consecutive dividend increases. Finally, Wall Street analysts peg O as a consensus moderate buy. Their average price target stands at $69.89, implying almost 15% upside potential.
Permian Basin Royalty Trust (PBT)
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A hydrocarbon specialist, Permian Basin Royalty Trust (NYSE:PBT) focuses on oil and natural gas. Per its public profile, Permain’s revenue stems from oil and gas pumped from the geologic formation for which it is named (the Permian Basin in west Texas) as well as a few locations in other parts of the state. Due to geopolitical relevancies, PBT represents a strong performer.
Since the Jan. opener, PBT gained nearly 5% of its equity value. During the past 365 days, PBT skyrocketed to the tune of 64%. Financially, the underlying enterprise maybe even more attractive. Notably, Permian has no debt, affording it incredible flexibility as it navigates multiple economic variables.
Operationally, the hydrocarbon specialist features a three-year revenue growth rate of 38.5%. As well, its EBITDA growth rate during the same period stands at 40.2%. For profitability, its net margin comes in at a whopping 98.31%. Finally, Permian’s forward yield comes in at 1.2%, which is on the low side of the energy industry. Still, with its frequency and relevant business, PBT may be one of the monthly dividend stocks to buy.
Sabine Royalty Trust (SBR)
Headquartered in Dallas, Texas, Sabine Royalty Trust (NYSE:SBR) is an express trust formed to receive Sabine Corporation’s royalty and mineral interests in certain producing and proved undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. However, unlike Permian Basin Royalty above, SBR has been volatile this year. Since the January opener, shares dropped nearly 14% in equity value.
Still, for risk takers, Sabine justifies at least consideration for monthly dividend stocks to buy. Perhaps most prominently, the company benefits from excellent strengths in the balance sheet. That’s not difficult to say because the trust has no debt. In addition, Sabine is an operational monster. Its three-year revenue growth rate comes in at 39.1%, beating out 90.42% of the industry. As well, its book growth rate during the same period stands at 26.5%, above nearly 91% of its rivals.
Lastly, for passive income, Sabine carries a forward yield of 8.21%. That’s well above the energy sector’s average yield of 4.24%.
Cross Timbers Royalty Trust (CRT)
Also headquartered in Dallas, Texas, Cross Timbers Royalty Trust (NYSE:CRT) features a royalty business associated with oil-producing properties in Texas, Oklahoma, and New Mexico. Theoretically, Cross Timbers should benefit cynically from geopolitical flashpoints choking hydrocarbon resources to western countries. Unfortunately for stakeholders, CRT fell more than 32% since the Jan. opener.
Nevertheless, for risk-tolerant contrarians, Cross Timbers may represent one of the monthly dividend stocks to buy. Primarily, the company carries zero debt on its books. Again, without this encumbrance, the enterprise enjoys incredible flexibility to handle various economic headwinds. Also, its Altman Z-Score pings at 36.11, reflecting extremely low bankruptcy risk. Further, Cross Timbers enjoys a consistent track record, posting 10 years of profitability over the past decade. Interestingly, CRT’s Shiller price-earnings ratio sits at 9.41 times, below the sector median of 16.41 times.
Finally, Cross Timbers carries a forward yield of 12.99%. Again, that’s conspicuously above the energy sector’s average yield of 4.24%.
PermRock Royalty Trust (PRT)
Headquartered in Fort Worth, Texas, PermRock Royalty Trust (NYSE:PRT) is a Delaware statutory trust formed to own a perpetual interest in oil and natural gas-producing properties, according to its website. Unfortunately, like some of the other monthly dividend stocks to buy, PermRock failed to capture the upside inherent in its underlying narrative. Since the Jan. opener, PRT gave up 10% of its equity value.
For full disclosure, in the past 365 days, PRT gave up more than 34%. However, daring investors may want to consider the positives; namely, the company carries zero debt on its books. Further, its Altman Z-Score pings at 41.56, reflecting an extremely low risk of imminent bankruptcy.
Nevertheless, it’s one of the higher-risk monthly dividend stocks to buy. For instance, the company’s three-year revenue growth rate fell to 20.6% below breakeven. It’s a similar situation for its EBITDA growth rate during the same period. Ultimately, though, investors may be attracted to PermRock’s forward yield of 9.31%. As well, while the payout ratio is high at 86.14%, it’s not ridiculously so.
U.S. Global Investors (GROW)
For those that want to diversify away from the energy sector, U.S. Global Investors (NASDAQ:GROW) may interest adventurous market participants. Billed as an innovative investment manager with vast experience in global markets and specialized sectors, acquiring shares of GROW in some ways allows you to trade with the pros. Unfortunately, the pros lost 11% of equity value since the Jan. opener.
That’s not all. In the past 365 days, GROW tanked more than 48%. It goes without saying that these shares aren’t for the faint of heart. Still, what might entice speculators is that U.S. Global Investors features a strong balance sheet. Aside from its rich cash position, it features an Altman Z-Score of 9.57, reflecting a very low risk of bankruptcy.
Operationally, the company’s three-year book growth rate pings at 38.1%, beating out nearly 95% of companies in the asset management industry. Also, its operating margin stands at 43.49%, outpacing 74.62% of the competition. For passive income, GROW carries a forward yield of 3.47%. That’s a bit higher than the financial sector’s average yield of 3.18%.
Broadmark Realty Capital (BRMK)
Headquartered in Seattle, Washington, Broadmark Realty Capital (NYSE:BRMK) is a specialty real estate finance company investing in opportunities throughout the small to the middle market. On paper, Broadmark sounds incredibly dangerous. With the banking sector flashing red, growth-oriented initiatives don’t seem particularly enticing. However, BRMK gained more than 22% of its equity value since the beginning of this year.
In fairness, Broadmark is in the middle of a recovery trek. During the past 365 days, BRMK hemorrhaged more than 48%. Therefore, those worried about downside risk shouldn’t get involved. On the positive side, the company does feature a relatively decent balance sheet. For instance, its cash-to-debt ratio is 0.52 times, ranking better than 86.55% of the REITs industry.
For passive income, Broadmark carries a forward yield of 9.4%. Moreover, its payout ratio is elevated but manageable at 65.63%. Interestingly, Broadmarket represents one of the few monthly dividend stocks to buy with analyst coverage. In this case, it’s a hold. However, the average price target is $6, implying over 34% upside potential.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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