<div id="readability-page-1"><div id="blog-content"><img height="353" src="https://imageproxy.pbkrs.com/https://cdn.pixabay.com/photo/2015/06/10/16/35/mark-804936_960_720.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="500" original-src="https://imageproxy.pbkrs.com/https://cdn.pixabay.com/photo/2015/06/10/16/35/mark-804936_960_720.jpg"/>Image Source: Pixabay With most stocks distributing dividends quarterly, investors needing predictable monthly cash flow could desire more frequent payouts. This is where monthly dividend stocks come in. Monthly dividend stocks pay shareholders a dividend each month, for 12 total payments per year.However, not all monthly dividend stocks are buys. Just because a company pays a dividend each month, does not necessarily mean the dividend is supported with underlying earnings. We currently rate the following 3 monthly dividend stocks as sells.<h3> Stellus Capital (SCM) </h3>Stellus Capital Management provides capital solutions to companies with $5 million to $50 million of EBITDA and does so with a variety of instruments, the majority of which are debt. Stellus provides first lien, second lien, mezzanine, convertible debt, and equity investments to a diverse group of customers, generally at high yields, in the US and Canada.Stellus posted third quarter earnings on November 12th, 2025, and results were weak once again. Net investment income was $9.1 million, down from $10.3 million a year ago. On a per-share basis, NII fell from 39 cents to 32 cents. Core net investment income, which is an adjusted form of profit, fell from $10.6 million to $9.7 million, or from 39 cents per share to 32 cents. Total investment income, which is akin to revenue, was $26.28 million, down slightly from $26.5 million a year ago.Net asset value was down 16 cents per share, with eight cents of that attributable to dividend payments exceeding earnings, and eight cents to net unrealized losses from two debt investments. At the end of the quarter the investment portfolio was $1.01 billion at fair value across 115 companies, both up from $986 million and 112 companies, respectively, a year earlier.We believe there’s a high likelihood Stellus will need to cut its dividend again, but it’s continuing for now. If anything close to our earnings forecast comes to pass, the dividend will need a significant cut.<h3> Source Rock Royalties Ltd. (SRRRF) </h3>Source Rock Royalties, is a pure-play oil and gas royalty company focused on acquiring high-netback interests across the Western Canadian Sedimentary Basin. Operating a capital-light, non-operating model, the company generates top-line revenue through Gross Overriding Royalties (GORR), which are contractual slices of production from third-party working interests, and Fee Title mineral interests, which are leased to operators for lessor royalties and signing bonuses.Source Rock’s portfolio is heavily weighted (about 95%) toward light and heavy oil production in southeast Saskatchewan and Alberta’s Clearwater play, with assets operated by partners like Whitecap Resources and Rubellite Energy. Source Rock was founded in 2012 and headquartered in Calgary, Canada.On December 1st, 2025, Source Rock reported its Q3 results. Royalty revenue declined 25% year over year to $1.1 million, reflecting a 12% decrease in average daily production and a 14% decline in realized oil prices. Adjusted EBITDA fell 21% year over year to $1.0 million, or $0.02 per share, while FFO fell 13% to $0.9 million, or $0.02 per share, as lower commodity pricing more than offset reductions in administrative expenses.Net income grew year over year, with total comprehensive income of $0.3 million, translating to $0.01 per share, supported by lower depletion and share-based compensation costs.The dividend is covered by funds from operations (C$6 million last year vs. C$3.5 million in dividends paid). However, it exceeds EPS, which might prove a problem long term, especially if oil prices decline while reserves gradually deplete.<h3> Gladstone Investment Corporation (GAIN) </h3>Gladstone Investment is a business development company (BDC) that focuses on US-based small- and medium-sized companies. Industries which Gladstone Investment targets include aerospace &amp; defense, oil &amp; gas, machinery, electronics, and media &amp; communications.Gladstone Investment reported its second quarter (Q2 2025 ended September 30) earnings results in November. The company generated total investment income of $25.3 million during the quarter, which represented a 12% increase year-over-year. Gladstone Investment’s earnings-per-share totaled $0.24 during the fiscal second quarter, which was down from the previous quarter’s level.Gladstone Investment‘s net asset value per share totaled $13.53 on a per-share basis at the end of the quarter, which was up compared to the NAV-per-share that the company reported at the end of the previous quarter.Gladstone Investment’s net investment income per share can be a bit lumpy. During the Great Recession, the company’s profits declined substantially, but Gladstone Investment remained profitable. Over the last decade profits grew by around 3% annually, which is not a very high growth rate.Gladstone Investment’s dividend payout ratio, relative to its net investment income, has been close to or above 100% throughout parts of the last decade. While the company did not cut its dividend in recent years, it has not offered dividend increases for a couple of years, either. Due to the elevated payout ratio, the dividend cannot be described as low-risk.<hr/>More By This Author:10 Red Flag Monthly Dividend Stocks With Unsafe Payouts Monthly Dividend Stock In Focus: Gamehost Monthly Dividend Stock In Focus: First Capital Real Estate Investment Trust</div></div>

GAIN

This article discusses three monthly dividend stocks rated as sells: Stellus Capital (SCM), Source Rock Royalties Ltd. (SRRRF), and Gladstone Investment Corporation (GAIN). Stellus reported weak earnings with a high likelihood of needing to cut its dividend. Source Rock's royalty revenue declined significantly, raising concerns about its long-term dividend sustainability. Gladstone Investment showed a slight increase in investment income but has a high dividend payout ratio, indicating potential risks. Investors seeking monthly dividends should be cautious with these stocks due to their financial challenges.

3 Red Flag Monthly Dividend Stocks