Industry sign banking maine form now
in the u.s about 3 000 stocks pay dividends of those only 53 pay monthly dividends according to suredivident.com however many of them are risky and should be avoided in this video i'm going to share the four best monthly dividend stocks with high dividend yields as high as 7.7 of the 53 monthly dividend stocks out there i consider these to be the safest relative to their peers but you should always do your own research before making any investment decisions some of these businesses are very complex and you should always do your own due diligence before investing in them real quick though there's one company that i decide to exclude from consideration and that is realty income which is arguably the most well-known monthly dividend stock out there and there's two primary reasons first i really like realty income and i personally own it myself and basically it's the go-to monthly dividend stock that most investors would consider first and so for this video i want to focus on companies that don't get as much attention second i want to find monthly dividend stocks with higher dividend yields than realtor income in my opinion realty income is very safe but you do pay a premium for that quality and that translates into a lower yield compared to others so i want to find stocks with higher dividend yields with companies behind them that are as close to inequality as realty income the first company on the list is stag industrial ticker symbol stag this is an equity read or real estate investment trust that acquires and operates industrial properties in the us think massive warehouses vital distribution centers light manufacturing facilities properties that are essential for many sectors of the economy in locations all across the country the company's portfolio is exposed to more than 45 industries across more than 60 geographic markets so exactly how big of a portfolio are we talking about at its ipo in april 2011 it owned just 93 properties covering 14 million square feet now as of the end of 2020 nearly 10 years later it owns 492 properties and is septupled to 98 million square feet which is a remarkable growth rate and it isn't likely to slow down because consider the growth of e-commerce less than 10 years ago online sales were only made up 5.4 percent of retail sales and has since increased to 14.3 percent as of 2020. but more importantly for stag retail inventory to sales has crumbled due to the pandemic and it may never go back to normal kovind may have permanently transformed the retail supply chain driving up secular demand for the warehouses and distribution properties stag operates already 40 of its portfolio is involved in e-commerce activity and that is certainly going to grow but that concentration is not obvious when you take a look at its top 10 tenants by annualized base rent or abr amazon only makes up 3.8 percent which is surprisingly low but reassuring fedex makes up one percent american tire makes a 0.9 penguin random house a publishing giant makes up another point nine percent then you have ford and costco that round out the top ten the top ten tenants make up only 12.3 percent the top 20 make up less than 20 so yeah the low concentration of its tenant base and why diversification of industry minimizes the risk of catastrophic revenue loss and it speaks to how vital these properties are for many companies so much so that if you take a look at stacks revenue it increased 19 percent between 2019 to 2020. operating income jumped a staggering 28 nothing in this company's performance gives me any hint that there was a global pandemic that the country went into a recession that s p 500 dropped 34 percent that unemployment rose to a record 14.7 and nearly 16 million people were out of work whether i look at it annually or quarterly it doesn't make a difference it consistently beat analyst estimates over the last four quarters in fact the company collected 99.6 percent of its base rent during the pandemic year a sample of industrial reits shows the sector maintaining a 96 collection rate during the death of the covid recession which is in stark contrast to lower than 50 for some retail rates during the same time period all of this goes to show how resilient stacks business model is its tenants depend on its properties because the assets are so critical to their operations right now stack pays a dividend of 4.5 percent that is slightly lower than its four-year average it has grown its dividend for only seven consecutive years but considering it has only been publicly trading since 2011 that shouldn't be a red flag in terms of dividend safety the payout ratio based on cash flow or ffo is around 80 which is reasonable for reits since they are legally required to pay up 90 of their net income to shareholders and it is comparable to realty income which currently stands at 83 based on cash flow in terms of dividend growth the company is projecting ffo of between 1.94 to 2 dollars per share for 2021. it had ffo of 1.89 per share for 2020 which comes out to an average of 4.2 percent growth expected for the coming year in comparison ffo increased 2.7 between 2019 to 2020 so that is a good sign that management is confident that growth will pick up this year which should translate into a higher dividend stag has rewarded its investors with not just a consistent income but growth by positioning itself as a leading industrial reit based on the cumulative total returns of the stock it has done comparable to the s p 500 between 2014 through 2019 and it had 22 percent higher returns over the same time period compared to the broader msci us read index which represents the market cap weight average performance of 137 reads over the long term the company expects the industrial market opportunity to be more than one trillion dollars in size currently stack only makes a point five percent of that target market which means there's a lot of growth potential for the company if you're interested in stag or any of the next monthly dividend stocks invest on weibo and get two free stocks worth up to eighteen hundred fifty dollars just by opening an account and depositing a hundred dollars weibull is an online trading platform that is commission free no mim deposits there's no cost to use a basic service so you get free money just by signing up and making a deposit so check it out by using the link in the description and by doing so you also help support this channel so thank you the next company is main street capital ticker simple main main is a business development company or bdc if you're not familiar with what these are at a high level they are a special type of company created by congress in the 1980s to make it easier for medium-sized businesses to get access to capital businesses in this size category are considered to be what is called middle market and there are an estimated to be 200 000 of them in the us that contribute around 33 to the nation's gdp and employ about 30 million people so it's a big segment of the economy they typically generate between 10 million dollars to 1 billion dollars in revenue and this is where these businesses have a problem because of their size they face challenges in accessing capital when they are looking to improve or grow their business since the 2008 2009 financial crisis banks face greater regulatory and compliance scrutiny and so they've generally shied away from lending to any company that is perceived as risky so banks tend to lend only to the larger upper market companies with quality balance sheets and years of stable growth on the other hand middle market companies are too big for angel investors or venture capital firms so bdcs fill an important gap by providing access to capital for these medium-sized companies mainly through loans or by taking an equity stake in them now what makes these companies special is somewhat similar to reits and mlps in that they don't pay corporate taxes as long as they distribute 90 of their income in the form of dividends this is why bdcs like main street tend to have higher dividend yields compared to a typical publicly traded company and even better bdcs that perform well often pay out special dividends on top of their regular dividends because they make so much money and they don't want to go under the 90 threshold and you can see for maine the frequency of these special dividends in this chart on a quarterly basis these peaks aren't dividend cuts but dividends above and beyond what is regularly paid out but like reads bdcs are structured as pass-through entities so a big portion of the dividends are going to be unqualified ordinary income taxed at a higher rates than qualified dividends however this can vary substantially between bdcs and ear over ear so investing in bdcs through a tax advantage account like an ira or a 401k might be a good idea to avoid the headache at tax time now they have to meet other requirements in order to maintain their special status such as holding at least 70 of their assets in private u.s companies and having a maximum debt to equity leverage limit of two to one unlike reits and mlps though there aren't as many bdcs out there as of this recording there are 44 publicly traded bdc's and main street happens to be the seventh largest by net assets and fifth largest by market cap it has 4.3 billion dollars in capital under management with 3.3 billion dollars managed internally and 1 billion dollars as an investment advisor to outside parties to understand maine's business you have to dive into its investment portfolio which can be separated into three major segments first 48 of the portfolio value is invested in underserved lower middle market or lmm these are companies with revenue between 10 to 150 million dollars and ebitda between 3 to 20 million dollars so for them maine provides the convenience of a one-stop shop access to capital through first lien debt senior secured debt and equity financing the pool of maine's prime customer base is estimated to be about 175 000 llm businesses which are the most underserved in access to capital and also there's generally less competition as of end of 2020 this segment of maine's portfolio works with 70 companies of those issued debt financing and 98 of them are at first link positions and 65 are at fixed interest rates the segment weighted average yield stands at 11.6 percent on the equity side it holds an average 38 ownership position in 99 of the companies and 60 of them pay dividends the average investment size is 18.4 million dollars at fair value diversified across more than 26 industries with no single industry having a concentration greater than 9 the geographic distribution by invested capital shows the highest concentration in the southeastern states at 30 percent followed by the west at 24 the second segment makes up 27 of the company's portfolio and it consists of private loan investments that provide a recurring source of income to complement the llm segment this involves 62 investments with a fair value of 740 million dollars and an average investment size of 12.2 million dollars this segment's average yield is 8.7 percent as of end of 2020 with 93 of them with floating interest rates 93 of these private loans are secured debt and 95 of them are first lien debt the third segment makes up 17 and this is the middle market investments that consists of 42 investments with a fair value of 446 million dollars with an average investment size of 11.6 million 92 percent of the middle market segment is secured debt 92 is firstly in term dem and the weighted average debt yield is 7.9 so the purpose of this segment is to provide liquidity for maine's future investments so it kind of acts like a savings account so putting it all together maine's total portfolio consists of 175 companies with a weighted average yield of 9.5 percent spread across 32 industries with no single industry making up more than six percent of the portfolio the largest single company makes up only two point seven percent of the portfolio's fair value considering the fact that currently the s p 500 is heavily weighted towards the tech sector and more than 26 percent with apple alone making up more than six percent of the index you could argue that maine's portfolio is a better risk adjusted investment than an s p 500 index fund based on exposure and diversification another important takeaway from the weighted average portfolio yield is that you can compare that to the average bdc industry yield which is typically between 13 to 15 percent maine's yield being lower than that indicates the bdc is of safer and higher quality compared to the industry average so with this portfolio how has maine performed as a business the company grew its investment income by 47.8 percent between 2015 through 2019 but more importantly its distributable net investment income or dni grew in lockstep and that is where the dividend payouts come from if we look further back maine has grown its net investment income by 222 percent since 2007 and its portfolio by 212 both on a per share basis not surprisingly 2020 saw a decline but its portfolio still grew so i expect maine to continue growing its dni moving forward when you compare maine to the broader market here you can see that since 2007 when the company started publicly trading up until the end of 2020 assuming dividends were reinvested its total returns beat its peer group by 141 percent it beat the s p 500 by 344 and it beat the russell 2000 by 380 percent maine currently pays a dividend of 7.25 based on a share price of 37 as of this recording that includes the monthly and special dividends over the past 12 months which comes out to 2.70 per share and stock prices currently 19 lower than its pre-covet peak back in february 2020 but back to its dividend it should be assuring that maine has continuously grown or maintained its payout for 14 years straight and then it is up 86 percent since its ipo and in terms of dividend safety even though the past 12 months of dividends surpasses the total nii per share of 2 dollars and 13 cents 2020 was an anomaly for almost any business i think it's more important to recognize that given its average portfolio yield stands at 9.5 percent that is more than enough to cover the dividend yield so i'm confident maine will recover and continue to reward its investors one last thing i want to point out is nav per share and why it's so crucial to see this increase for any bdc nav stands for net asset value and it basically tells you how much tangible assets the bdc owns net of liabilities as i mentioned before bdcs have to pay out 90 of their income which means they have to grow by taking on debt or issuing more shares which can dilute the shares held by existing shareholders nav per share tells you if the value of each share is rising over time for maine you can see here that the overall trend has been increasing which is a good sign if this were declining or flat that is a big red flag the next company on the list is gladstone investment corporation ticker symbol gain this is another bdc similar to main street and that it primarily targets lower middle market companies in the us but it has some key differences first gladstone is a much smaller company by net asset and market cap ranking at number 21 by both measures based on that assets it's about one-fourth the size of main street and this is reflected in its portfolio as well which is made up of just 28 companies that fit three loose categories manufacturing business services and distribution and consumer products and they are geographically dispersed across 17 states and 13 industries altogether adding up to 622 million dollars in total assets at fair value 59 of the assets are secured firstly in debt 17 are secured second lien debt and the remaining is made up of preferred and common equity positions the second difference you need to know is that gladstone is an externally managed bdc while maine is internally managed gladstone investment corporation pays a base management fee of two percent of assets to gladstone management corporation and additional incentive fees for performance you see gladstone investment corporation is part of a family of companies under the glass zone name it has an affiliate relationship with these other investm
nt companies and they're all managed by gladstone management corporation on the other hand main street pays a base management fee of one point three percent to an internal management team that has a five percent ownership stake in the company based on shares outstanding these fees ultimately come out of shareholder returns so the question is are main street investors better off than gladstone investors and the answer is not so simple while mainstream investors may pay less in fees gladstone arguably benefits from its close ties to three other investment companies connected through its management team that network effect may bring more business and expertise to glass zone so that it can compete better as a smaller player in the bdc industry so the key takeaway is the management fee and structure shouldn't be the only factor when comparing bdcs instead we need to look at other measures let's first start with the dividend glaston currently pays an all-inclusive trailing 12-month dividend of 92 cents which comes out to a generous 7.7 percent dividend yield based on current share price of 12 which is higher than main street however is that yield sustainable well just like main street we can't just look at payout ratios because kovat decimated earnings for a lot of companies in 2020 it's just not representative of where the company stands so instead we look at the weighted average portfolio yield and it stands at 11.9 percent as of endo 2020 and has been consistently around that level the past four quarters that comes to about 1.5 times higher than the dividend yield so i don't see gladstone having any problems paying the dividend but it is closer to the industry average of 13 to 15 compared to main street so by this measure gladstone's portfolio is inherently more riskier in terms of dividend growth it has grown it at about 2 since 2016 and has never missed a dividend since its ipo in 2005 and that dividend growth is sufficiently supported by an average four percent growth in its investment portfolio over the same time period the last thing we want to look at is the nav per share and here we can see that has generally been trending upward so gladstone has been rewarding its investors with a high dividend and modest capital appreciation since at least 2015. moving away from bdc's the next company is sl green realty ticker symbol slg slg is a fully integrated reit focused on acquiring managing and maximizing the value of manhattan commercial properties as of the end of 2020 it is the largest owner of office real estate in new york city holding interest in 88 buildings totaling 38.2 million square feet across the city this includes ownership interest in 28.6 million square feet of prime manhattan real estate and 8.7 million square feet securing debt and preferred equity investments or dpe you can see on this map that its largest ownership concentration is in the midtown area south of central park in locations at close proximity to subways and transit hubs followed by its midtown south locations and then the downtown properties round out its ownership portfolio arguably new york city was the epicenter of the covet pandemic from the very beginning and it is still not out of the woods yet however sl green managed to survive the crisis thanks to its financial strength and maintained and increased dividend managed to pay out a special dividend took advantage of its lower share price to execute a massive buy-back program and i think it has positioned itself to thrive when the manhattan market rebounds in q2 of 2020 sl green rapidly executed what it called the 1 billion plan to increase his cash balance as a defensive measure and you can see here how it managed to pull together a one billion dollar consolidated cash balance by the end of june fast forward to the end of 2020 it boosted its revolving credit facility to 1.5 billion and drew down his cash and cash equivalents to first pay a special dividend of a dollar 70 per share which comes out to a generous yield of 2.5 based on the share price at the time of the announcement and remember this doesn't even include the regular dividend speaking of which also in that same december announcement it increases regular dividend by 2.8 percent to 3.64 per share this makes it the 10th straight increase and while the growth rate has been flattening as you can see in this chart it remains to be seen how fast the company and the city will rebound on the other side of this pandemic second and more significantly it boosted its stock buyback program by 500 million dollars bringing the total repurchase to 3.5 billion and by repurchasing 32.4 million shares of common stock its outstanding shares is expected to fall by more than 30 percent from the last few years which is great news for existing shareholders because of the repurchase program sl green's ffo per share rose from seven dollars in 2019 to 7010 in 2020 even though the ffo fell from 605 million to 562 million due to asset sales and the pandemic and this decline was largely in line with management's initial guidance earlier in the year at 7.30 ffo per share for 2021 ffo per share is expected to come in at 6.50 which is more than enough to cover the dividend so with all that being said right now sell green's monthly dividend stands at 5.3 percent with a current stock price of about 69 per share which is about 30 percent lower prior to coven so it's great that this company has taken good care of its shareholders this year but what about its underlying business as the ffo would suggest same store rental revenue did decline year over year by about four percent and this was due to two specific reasons first lower operating expenses for tenants meant lower expense escalation revenue and second the company had to charge off unpaid rent i don't think this is terribly concerning in light of the fact that compared to the overall midtown manhattan market slg has maintained an above average occupancy rate looking back five years and while overall asking rents in manhattan declined by 0.3 percent year over year class a property asking rent actually increased 0.5 so lease demand for the property's slg owns remains steady if we take a look at the largest tenants based on annualized cash rent share viacom credit suisse sony td bank along with a handful of large law firms are at the top of the list with lease expiration staggered throughout the next decade and beyond and the makeup of slg's tenants by industry closely resembles the manhattan office market itself with tami macking up 36 which stands for technology advertising media and information companies financial services making up 24 and the legal industry making up 13 the vast majority of these companies have thrived in the post covent economy where social distancing isn't impacting their core businesses while it's too early to say how many of the companies in these industries will keep their employees in a work from home arrangement indefinitely many well-known names continue to make long-term commitments to prime real estate locations in new york city facebook tick tock aig and amazon are just some of the companies signing long-term leases for sizable commercial space which is a good sign for slg if you found this video helpful or useful in any way be sure to hit that like button down below and don't forget to subscribe and hit that notification bell so you don't miss out on any new videos thanks for watching and i'll see you guys next time
