Stocks With Monthly Dividends 2014: Realty Income Corp.

If you're on the hunt for stocks with monthly dividends, then you should look no further than Realty Income (O 1.97%), the REIT that trademarked itself as "The Monthly Dividend Company."

What it does
Realty Income a real estate investment trust that owns a diverse $11 billion portfolio of over 4,000 properties spanning 49 states and Puerto Rico. As a REIT, it is required by the SEC to distribute 90% of its income to shareholders in the form of dividends.

Realty Income has made 530 consecutive monthly dividend payments to its shareholders, and earlier this year surpassed a staggering $3 billion in total payouts.

Realty Income also has not been content to rest on its strong performance: It has increased its dividend payment each quarter over the last 17 years, and over its history has grown its dividend by an average annual rate of 4.6%.

Since it first went public 20 years ago, the REIT has delivered an average annual total return -- with dividends reinvested -- of 16.4%, outpacing its equity REIT peers, which on average have delivered a 10.9% return, and the 9.5% return offered by the S&P 500. Although that difference might not seem like much, $1,000 invested in Realty Income two decades ago would look vastly different than $1,000 placed in either its peers or the broader market:

Clearly it has had a remarkable run; the question now becomes, will that continue? And all signs indicate the answer is yes.

Why investors should consider it
To start, one of the most compelling things about Realty Income is its immense variety of properties it holds. Alongside its geographic spread, it has 231 different tenants spanning 47 industries, and no single tenant represents more than 5.4% of its revenue. Also, as shown below, no single industry represents more than 10% of its revenue: 

Source: Company Investor Relations.

In addition, 46% of the revenue Realty Income receives in rent comes from tenants that are deemed investment-grade, meaning they are among those businesses with the highest credit quality. This diversity helps insulate Realty Income against risk in the event of a tenant going out of business or an industry facing sizable difficulties.

Also worth noting is what Realty Income does with its portfolio to generate those prodigious returns. As you can see, even with the slight drop in earnings during the financial crisis, over the last 15 years it has watched its adjusted funds from operations -- essentially the earnings-per-share equivalent for REITs -- rise steadily:

This strong performance shows no sign of slowing, as management expects Realty Income's AFFO to stand between $2.55 and $2.57 in 2014, then $2.66$-2.71 in 2015.

Finally, without diving into too much detail, the management team at Realty Income also seems exemplary. Even with CEO John Case joining the company in 2010 and COO Sumit Roy coming on one year later, the average tenure of the executives stands at 13 years. And Case and Roy were not exactly new to the real estate landscape before they joined Realty Income: Roy was an executive director at UBS for seven years and Case was the co-head of real estate investment banking at RBS for 19 years.

When you combine outstanding historical performance, a high-quality portfolio of reliable revenue-generating assets, and a strong management team, there is clearly a lot to like about Realty Income, which makes it one company with a monthly dividend worth monitoring.