Investing can be a grind. Unless you are a successful day trader, it can feel like it takes forever for your portfolio to grow. It’s always nice to have some income in the meantime which is why dividend stocks are a welcome addition to any portfolio.
However, if you are like many people buying dividend stocks, you may not have much to invest—hence the need for income. Fortunately, there are some stocks that not only pay monthly dividends but are also under $5. Being able to buy monthly dividend stocks under $5 is great for any investor.
Here are some of the best monthly dividend stocks under $5 right now:
Monthly Dividend Stocks Under $5
- Orchid Island Capital, Inc. (NYSE: ORC)
- Credit Suisse Asset Management Income Fund, Inc. (NYSE: CIK)
- Neuberger Berman Real Estate Securities Income Fund Inc. (NYSE: NRO)
- Credit Suisse High Yield Bond Fund (NYSE: DHY)
Let’s take a closer look at each of these dividend stocks and why we picked them for this list.
Orchid Island Capital, Inc.
Dividend yield: 17.53%
Orchid Island Capital is a specialty finance company based in Vero Beach, Florida. It was founded in 2010 and it invests in residential mortgage-backed securities on a leveraged basis. The company operates to be taxed as a real estate investment trust (REIT). And REITs are required to pay at least 90% of their taxable income back to investors.
Currently, this monthly dividend stock has a market cap of close over $500 million. The stock is considered overvalued by some analysts and has an estimated negative return. However, it pays a high dividend yield. Its shares are trading a hair above the $3 mark, and the firm is currently paying dividends of $0.045 cents per share every month.
Credit Suisse Asset Management Income Fund, Inc.
Dividend yield: 9.89%
As the name implies, this stock allows you to invest in an income fund rather than the day-to-day operations of a company. In doing so, it gives you access to a team of credit professionals spanning over 1,000 corporate issuers. Technically, this is a bond fund but it trades as common stock. Under “normal circumstances,” the fund will invest at least 75% of its assets in fixed-income securities such as bonds, debentures and preferred stock.
The market cap for CIK is currently close to $150 million and it is trading at fair value. It has a bullish chart pattern, although its short- and medium-term outlooks are bearish at the moment. It is trading at about $2.81 per share and pays a dividend of $0.0225 per share every month.
Neuberger Berman Real Estate Securities Income Fund Inc.
Dividend yield: 8.22%
Neuberger Berman has a “focused, high-conviction strategy” that aims to buy income and long-term capital growth properties using a diversified portfolio. To achieve that diversity, it rotates property sectors and geographic regions based on economic factors. It also values ESG investing and has had a “socially responsive” investing team since 1989. Neuberger was founded in 2003 by Roy Neuberger and Roy Berman.
Currently, the stock is trading just below the $5 mark with a market cap of about $216 million. It is trading at a fair value according to some analysts with a bullish chart pattern. Its earnings per share is $1.749 and it pays a monthly dividend of around $0.03 per share.
Credit Suisse High Yield Bond Fund
Dividend yield: 9.35%
Credit Suisse’s High Yield Bond Fund is similar to its income fund, but it invests primarily in below-investment-grade U.S. fixed income securities. This makes sense as its primary objective is to seek high current income. It also trades as common stock.
This particular stock has a market cap of around $206 million and is trading at fair value. It also has a bullish chart pattern. As far as its dividends, the stock is trading at around $2 and receives monthly dividends of around $0.015 per share.
Are Monthly Dividend Stocks a Good Investment?
Monthly dividend stocks can be a good investment for those seeking regular income. Some dividends stocks can have dividends so high as to be unsustainable. I’ve selected primarily stocks from established companies that are less likely to disappear overnight.
Some of these stocks, such as those from Credit Suisse, have been paying a consistent monthly dividend dating back to the year 2000. That consistency can help reduce volatility for those heavily invested in stocks.
However, investors should keep in mind that these investments can be risky. For instance, Credit Suisse’s asset management fund invests in corporate debt rating Baa or lower by Moody’s or BBB or lower by the S&P. Because of these, these funds should be part of a broader portfolio and not a sole source of investment.
Overall, monthly dividend stocks under $5 can provide a regular source of income for newer investors. With a mix of broad-based index funds, bonds, and monthly dividends stocks, investors can take advantage of a dependable mix of growth and income.