Over the last several years, monthly dividend stocks have been highly sought after. As a result, prices of the most well-known monthly dividend payers have already been bid up, causing their yields to drop. Looking at the market today, you would be lucky to find a blue-chip monthly dividend stock paying more than six percent. However, that doesn’t mean investors looking to earn a monthly income have to settle for a low yield. If they are willing to dig into the not-so-hot areas of the stock market, they might just find a hidden dividend-paying gem with a double-digit yield.
For instance, Horizon Technology Finance Corp (NASDAQ:HRZN) pays monthly dividends of $0.10 per share. At its current price, that translates to an annual dividend yield of 10.9%. Horizon is a business development company, or BDC. For those not in the know, business development companies are like venture capital firms, as they invest in privately held companies. But because many BDCs trade on major stock exchanges, retail investors can get a piece of the action too. Horizon invests in companies in the technology, life science, healthcare information and services, and cleantech industries. Here’s the neat part: instead of making equity investments, Horizon focuses on making loans to these companies. This not only reduces the level of risk, but also allows the company to collect a predictable stream of income from its debt investments.
Source: Income Investors
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