At first glance, it may seem like there are no growth stocks with monthly dividends. After all, most of the stocks in this category provide a greater portion of their total returns from dividends compared to your typical growth stock.
Real estate investment trusts, business development companies (or BDCs), as well as oil and gas royalty trusts make up the bulk of monthly dividend stocks. However, while it may be difficult (if not impossible) to find a monthly dividend payer with exposure to fast-growing industries like AI or EVs, there are growth opportunities in this area.
For instance, there are monthly dividend stocks with big stock price growth potential, thanks to the current market environment. Knocked down significantly lower due to the spike in interest rates, whenever interest rates fall, these stocks could experience an outsized liftoff in price.
Also, there are REITs, BDCs, and royalty trusts that, besides paying out a large dividend, are focused on growing their cash flows over time. This suggests the potential for both dividend growth and price growth, over a long time frame.
So, what are the top seven growth stocks with monthly dividends? Take a look at these seven.
Agree Realty (ADC)
Agree Realty (NYSE:ADC) is a REIT focused on acquiring, developing, and leasing out retail properties. Agree’s portfolio includes 2,084 individual properties, located in 49 U.S. states, totaling 43 million square feet of gross leasable space.
Each month, investors in ADC stock receive a 24.7 cent per share dividend. Annualized, this payout gives shares a forward dividend yield of 5.1%. Although hammered lower by rising interest rates since 2022, ADC can grow in two ways. First, of course, from the normalization of interest rates.
Second, Agree recently reported steady funds from operations growth for the preceding quarter. Continued cash flow growth from the REIT points to higher dividends and a higher stock price over time. ADC’s dividend growth has averaged 6.49% annually over the past five years. Compound average annual total returns since ADC’s 1994 IPO come in at 11.3%.
Apple Hospitality REIT (APLE)
Richmond, Virginia-based Apple Hospitality REIT (NYSE:APLE) is another of the growth stocks with monthly dividends. Each month, investors in this REIT (which owns 220 branded hotels) receive an 8 cent per share dividend.
Annualized, this gives APLE stock a forward dividend yield of around 6.07%. Dividend growth with Apple Hospitality has not been steady, but this is mainly because of the pandemic. APLE suspended its payout in 2020, then begin paying a 1 cent per share monthly dividend in 2021, slowly raising payouts back toward pre-Covid levels.
While not back at its high-water mark (10 cents per share monthly), APLE’s focus on capital allocation, including making “opportunistic dispositions” and “accretive acquisitions,” points to continued cash flow growth, and in turn, a further increase in its payouts over time. For the opportunity for growth and monthly payouts, APLE is a top choice to consider.
EPR Properties (EPR)
EPR Properties (NYSE:EPR) is a net lease REIT that owns an interesting mix of properties. Property types include movie theaters, mini-golf courses, theme parks, ski resorts, and even the real property used to house private schools.
EPR stock was hit hard by the pandemic. However, more than three years later, revenue and earnings are now back up above pre-Covid levels, providing the cash flow necessary to sustain EPR’s 28 cent per share monthly dividend (forward annual yield of 7.56%).
Shares have experienced solid price appreciation this year, but admittedly, there are concerns about EPR’s performance deteriorating again, due to the current economic challenges. Then again, maybe not. The REIT recently raised FFO guidance for 2023. As pandemic-era issues (such as the bankruptcy of several key tenants) resolve, EPR is well-positioned to get fully back into growth mode, which bodes well for investors buying/holding the REIT today.
Horizon Technology Finance (HRZN)
Horizon Technology Finance (NASDAQ:HRZN) is a BDC that lends money to and makes venture capital investments in early-stage life science, renewable energy, and technology companies.
As is par for the course with BDCs, HRZN stock pays most of its earnings out as dividends. Each month, Horizon Technology Finance investors receive an 11 cent per share dividend. Annualized, this gives shares a forward dividend yield of 11.11%. Some may say it’s a bit of a stretch to say HRZN is one of the growth stocks with monthly dividends.
Shares have experienced meager price appreciation over a multi-year time frame. However, despite worries about the sustainability of its double-digit payout, last quarter’s 23.3% jump in net investment income per share suggests otherwise. With a high payout, plus rebound potential when interest rates come back down, an investment in HRZN today could really grow in the years ahead.
Realty Income (O)
Realty Income (NYSE:O) is arguably the most popular monthly dividend stock. This is another name most investors may not consider that a growth stock, yet an investment in O today could produce vigorous growth for your portfolio, for three reasons.
First, O stock has the potential to produce steady returns, from its high dividend payout. Each month, investors in Realty Income receive a 26 cent per share dividend, giving shares a 6.24% forward yield at current prices. As I’ve noted previously, O is also a dividend aristocrat, increasing its payouts for over 25 years in a row.
Second, after pulling back during the current rate hike cycle, the eventual lowering of interest rates may spark a recovery for the stock. Third, Realty Income’s recently-announced plans to acquire Spirit Realty Capital (NYSE:SRC) could help provide a boost. This transaction is expected to be accretive to earnings.
Sabine Royalty Trust (SBR)
While facing challenges now, Sabine Royalty Trust (NYSE:SBR) could become one of the top growth stocks with monthly dividends. Shares in Sabine, which holds royalty and mineral interests in a variety of oil and gas properties, soared when fossil fuel prices spiked in 2022.
However, SBR stock has fallen back in 2023. Lower oil and gas prices have resulted in lower monthly dividend payouts. Worries about a further drop in prices due to a global recession are currently clouding sentiment. Nevertheless, if you’ve yet to enter a position, SBR could produce strong growth for anyone buying in at current prices.
That is, if you’re confident the latest geopolitical strife leads to another spike in hydrocarbon prices. This could lead to significantly higher dividends for SBR (which while sporting a forward yield of 5.84% today, had a double-digit yield a year ago), and a strong rebound for shares.
Stag Industrial (STAG)
As this REIT’s name suggests, Stag Industrial (NYSE:STAG) owns and leases out properties like fulfillment centers, warehouses, and manufacturing facilities.
Yield-focused investors may find STAG less appealing, due to its lower yield compared to other monthly dividend stocks.
All of the names listed above have mid-to-high single-digit dividend yields and above. STAG stock, through its 12.25 cent per share monthly payout, has a forward yield of only 4.18%. However, what Stag lacks in yield could be more than made up for by consistent growth in the years ahead.
Per Stag’s latest financials, the REIT continues to report steady core FFO growth. As a Seeking Alpha commentator recently argued, two factors point to STAG being a steady winner for REIT investors. These are a strong deal sourcing strategy, as well as a focus on high-growth areas of industrial real estate like e-commerce.
On the date of publication, Thomas Niel did not hold (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.