A handful of companies choose to send their shareholders a check each month instead of every quarter. That's an appealing proposition, especially for investors who rely on portfolio income to afford their lifestyle.
STAG Industrial (NYSE: STAG), Vermilion Energy (NYSE:VET), and LTC Properties (NYSE:LTC) are three such businesses. Let's look at the bull case for owning each to see if any of them could be worth buying today.
Consumers have been shifting their shopping habits in favor of e-commerce sales for more than two decades. This reality is finally catching up with retailers, which are now scrambling to rightsize their footprint. However, for every loser, there's often a winner, and one hidden beneficiary of this trend is the warehouse industry. After all, e-commerce goods need to be stored somewhere so they can be shipped quickly when purchased.
This is a trend that STAG industrial has been capitalizing on for years. STAG is a real estate investment trust (REIT) that specializes in acquiring warehouse properties that house a single tenant. The company's business model is to raise capital from investors, buy warehouses on the cheap, and then lease them out to tenants under favorable terms. STAG then passes its rent checks back to investors in the form of a growing monthly dividend. That lifts the share price, and the cycle repeats anew.
This playbook has worked like a charm thus far: STAG's investors have enjoyed a total return of nearly 250% since its 2011 IPO, crushing the market in general.
Looking ahead, the warehouse market remains huge, so STAG looks well positioned to keep chugging along for years to come. With its shares currently yielding 5% and the wind at its back, STAG is a monthly dividend payer that certainly deserves consideration.
Many oil and gas producers set up shop in unstable parts of the world. That can seem like a savvy decision when everything is going well, but when there's a political upheaval or even an armed conflict, it can be a recipe for disaster.
Vermilion Energy is an oil and gas producer that takes a far more conservative approach to capital deployment. The company only invests in politically stable parts of the world -- think France, Canada, and Germany -- which helps to keep the oil flowing even when there's civil unrest elsewhere. This cautious method of asset acquisition hasn't harmed shareholders at all. In fact, Vermilion's long-term returns have been nothing short of amazing.
The bull case for owning Vermilion's stock from here centers around its recently completed Corrib gas field in Ireland. This project was a huge drag on the company's financial statements for years during construction, but it recently turned into a productive project and a financial asset. When that's combined with Vermilion's other assets, the company looks positioned to deliver steady production growth over the long term. That should allow its dividend payout to steadily tick higher over time.
On the flip side, this company's Achilles' heel is that its financial results will wax and wane along with oil and gas prices. However, Vermilion's conservative business practices allowed it to maintain its payout through the recent downturn. With a current yield of 6% and a time-tested business model, this is another monthly payer that deserves some attention.
Like STAG, LTC Properties is a REIT that's riding a megatrend to success. LTC specializes in acquiring assisted-living and skilled-nursing facilities. Given the rapid graying of the U.S. population -- the number of 85-year-olds and over is expected to double over the next two decades -- this is a market that is built for some serious growth.
Investors should note that LTC doesn't actually run the senior-living facilities themselves. That work is outsourced to a handful of top-notch operators. Instead, think of LTC as a landlord that collects monthly rent checks. This removes a lot of operational risks and allows the REIT to remain focused on what it does best: acquiring new properties.
Since the U.S. healthcare real estate market is highly fragmented and worth more than $1 trillion, investors shouldn't have to worry about LTC saturating its market opportunity anytime soon. That means the company will likely keep its 20-year streak of dividend payments alive for many more years to come. With shares currently offering up a 5% yield, there's plenty of reason to expect big things from this company over the long haul.
The Foolish bottom line
There's an argument to be made that all three of these monthly dividend stocks deserve some attention from investors, but I must admit that STAG Industrials and LTC Properties are my two favorites on this list. Both companies have plenty of room left for growth, high dividend yields, monthly payments, and major tailwinds at their backs. If you're an income investor, it doesn't get much better than that.