3 High-Yield Dividend Stocks to Buy in May for Monthly Passive Income
119min read In a market where the S&P 500’s dividend yield hovers near 1.5%, investors seeking reliable passive income are turning to high-yield dividend stocks. To qualify for this list, we prioritized monthly-payout stocks with yields above 4%, robust dividend sustainability, and catalysts for future growth. Here are three top picks for May 2025:
1. EPR Properties (EPR): "The Entertainment REIT with 7%+ Monthly Income"
Yield: Over 7% (monthly).
Sector: Real Estate Investment Trust (REIT).
EPR Properties invests in experiential real estate, including movie theaters, entertainment venues, and outdoor recreation spaces. Its long-term net leases (typically 10–15 years) ensure stable cash flows, while annual dividend growth of 3%–4% fuels compounding returns.
Why Buy Now?
- Payout Safety: A 69%-72% payout ratio of Funds from Operations (FFO) leaves ample room for reinvestment.
- Growth Catalysts: Plans to invest $200M–$300M annually in new properties, including experiential attractions like eat-and-play venues.
- Valuation: Trading at 14x FFO, below its 5-year average of 16x, offering upside.
Risk Note: Exposure to discretionary spending could pressure occupancy during recessions, but its diversified tenant base (including chains like AMC) mitigates this.
2. Realty Income (O): "The Monthly Dividend Champion with 5.5% Yield"
Yield: 5.5% (monthly).
Sector: Diversified REIT.
Realty Income, known as the “Monthly Dividend Company,” owns over 7,000 properties leased to tenants like Walmart, Home Depot, and 7-Eleven. Its 130 dividend increases since 1994 (110 consecutive quarters) underscore its reliability.
Why Buy Now?
- Payout Safety: A low 67% payout ratio allows reinvestment of ~$900M annually in new properties.
- Balance Sheet Strength: $2.5B in liquidity and a BBB+ credit rating support expansion.
- Growth: Acquired $3.8B in properties in 2024, targeting 4%-5% annual dividend growth.
Risk Note: Rising interest rates could pressure REIT valuations, but its net lease structure (tenants cover expenses) limits operating costs.
3. PennantPark Floating Rate Capital (PFLT): "The 12% Monthly Dividend BDC"
Yield: 12.04% (monthly).
Sector: Business Development Company (BDC).
PennantPark invests in senior-secured debt of middle-market firms, benefiting from rising interest rates. Its 10.6% average yield on loans and first-lien position in 99.8% of investments provide a safety net.
Why Buy Now?
- Payout Safety: A 90%+ debt portfolio in secured loans and a 10% discount to book value offer downside protection.
- Growth Catalysts: $13.8M average loan size limits concentration risk, while floating-rate loans rise with Fed rate hikes.
- Valuation: Trading at $10.90, below its $12 book value, offering a margin of safety.
Risk Note: BDCs face credit risk if borrowers default, but PFLT’s conservative lending (e.g., $13.8M average loan) and focus on first-liens reduce this exposure.
Conclusion: A Balanced High-Yield Portfolio for May 2025
These three stocks offer a risk-adjusted mix of yield and growth:
1. EPR Properties (EPR): High yield (7%) with exposure to experiential real estate, a sector rebounding post-pandemic.
2. Realty Income (O): A “recession-resistant” dividend stalwart with a 5.5% yield and 25+ years of growth.
3. PennantPark (PFLT): The highest yield (12%) but with caveats—investors should allocate no more than 5% of their portfolio to BDCs.
Key Data-Driven Takeaways:
- EPR’s dividend has grown 3% annually since 2010, outpacing inflation (avg. 2.5%).
- Realty Income’s payout ratio of 67% is 20% below the average REIT, signaling safety.
- PFLT’s 12% yield is 1.5x the average BDC yield, justified by its secured loan portfolio and 10% discount to book value.
Final Recommendation:
Pair these picks with dividend reinvestment plans (DRIPs) to accelerate compounding. For maximum safety, allocate 40% to Realty Income, 30% to EPR, and 30% to PFLT, rebalancing quarterly. Avoid chasing yields above 10% without verifying payout ratios—CMB.TECH (65% yield) and other ultra-high picks flagged in the data are not recommended due to unsustainable risks.
Invest wisely, and let these stocks work for you every month.
