Move Over Realty Income! Stag Industrial Inc Is Packing a Dividend Punch

When it comes to paying dividends, Realty Income's streak of 65 consecutive quarterly dividend hikes is nothing short of impressive—STAG Industrial looks like it may be trying to follow that lead.

Jan 29, 2014 at 11:03AM


STAG Industrial (NYSE:STAG) wants to give you your money sooner. That's a good thing for investors. Here's why.

Paying monthly
Many dividend investors are looking for a way to replace their salaries. One way is to build a collection of quarterly dividend payers with different payment schedules so you receive a roughly equal amount of dividends every month. That's harder than it sounds. Another way is to buy securities that pay monthly.

Realty Income (NYSE:O), the Monthly Dividend Company, is the poster child for monthly distributions. It's been paying monthly since 1995 and has long made a point of presenting itself in a way that would appeal to individual investors. That's the exact group that would be most interested in buying and holding a stock that could act as an income replacement.

That works well for Realty, too, since individual investors tend to be less fickle than institutional investors concerned more with the next quarter's total return than month-to-month dividends. It's one of the reasons companies like American Realty Capital Properties (NYSE:VER) have followed Realty's monthly dividend lead. And, in the middle of 2013, STAG Industrial announced it would go the monthly route, too.

According to CEO Ben Butcher, STAG went monthly " recognition that these dividends belong to our shareholders and should be delivered to them sooner rather than later!" That's a beautiful sentiment, and one that I wish more companies shared. But it gets better than that.

Increasing quarterly
Realty Income's other defining trait is the regularity with which it increases its dividend -- 65 consecutive quarterly dividend hikes. That's over 16 years of quarterly increases. While American Realty has used acquisitions to take the size crown from Realty Income in the triple-net lease space, it can't come close to matching the dividend consistency Realty has shown -- including right through the deep 2007 to 2009 recession.

To American Realty's credit, however, it has been increasing on a quarterly basis -- basically mimicking the successful record of Realty Income. STAG, meanwhile, seems to be telegraphing that it has the same intention. In December, the company announced: "In an effort to continue its policy of sharing revenue growth with the Company's stockholders, the Board anticipates evaluating its dividend policy on a quarterly basis."

STAG is clearly saying all the right things and following the impressive lead of Realty Income and, to a lesser degree, American Realty. And all three are triple-net lease REITs, letting their lessees pay for virtually all of the costs of the properties they're renting. It's a great model.

The big differences, however, come in size and focus. STAG is tiny compared to Realty Income and American Realty, which are basically Nos. 1 and 2 based on size. That means STAG should be able to grow more rapidly since smaller acquisitions will be more meaningful to performance.

In addition, STAG focuses on secondary markets. That puts it up against mom and pop type investors that don't have the institutional backing STAG does. It's the same edge that has helped regionally focused Whitestone REIT (NYSE:WSR) grow in its core Arizona and Texas markets.

Interestingly, retail-focused Whitestone is another monthly payer. However, it hasn't increased its dividend in several years, and that doesn't look like a trend that will change any time soon. That's not nearly as desirable, and it helps explain why Whitestone yields around 8.4% and STAG yields about 5.9%.

Going monthly and increasing regularly
If you're an income investor looking to replace a paycheck, buying monthly dividend payers is a prefect choice for your portfolio. Realty Income has proven its chops on this front, but look for American Realty and STAG to offer similar consistency. If you want a high yield, Whitestone might be to your liking, but you'll be trading income growth for income now.

Nine for high-yielding stocks
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Reuben Brewer has a position in Realty Income. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers