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3 Stocks That Pay You Each Month

By Neha Chamaria - Mar 31, 2020 at 10:00AM

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These monthly dividend stocks are good income buffers during these challenging times.

With the coronavirus pandemic bringing jobs, businesses, global trade, and economies to a grinding halt, it's a great time to consider dividend stocks for their passive income. But while most dividend-paying companies make quarterly payments, there are a handful of good stocks that pay dividends monthly.

A real estate investment trust (REIT) often pops into mind when you think about monthly dividend-paying stocks, given that such REITs are required to pay at least 90% of their taxable income as dividends to shareholders, and can therefore often afford stable monthly payouts. I like two REITs in particular -- an industrial and a healthcare REIT. The third stock I like is an oil and gas play.

Each of these companies not only pays a dividend each month but also boasts a good dividend track record and strong growth potential to support those dividends.

An indirect bet on e-commerce

STAG Industrial (STAG -0.74%) is a pure-play industrial REIT that owns and leases out industrial properties like manufacturing and office buildings, warehouses, and distribution centers to single tenants. As of Dec. 31, 2019, the company owned 450 buildings spanning roughly 91 million square feet across 38 states in the U.S.

Such single-tenant leases have two direct advantages: They diversify STAG's portfolio, and tenants typically bear the property's operating expenses as long as they use them.

A calendar with payday marked with a circle.

Monthly dividend stocks are a great way to supplement your income. Image source: Getty Images.

STAG counts top-notch industrial companies among its top 10 customers, including e-commerce giant; the federal government's General Services Administration; freight and logistics providers XPO Logistics, FedEx, and DHL Supply Chain; and automaker Ford.

STAG's biggest opportunity growth lies in e-commerce as more and more sellers look to serve customers directly, a move that'll also require them to increasingly tap warehouse and distribution center operators like STAG. In 2019, nearly 43% of STAG's portfolio handled e-commerce activity, signifying the growth potential. Overall, STAG ended 2019 on a strong note, with a 95% occupancy rate and 23% growth in funds from operations.

STAG has increased its dividends every year since 2011, and the stock currently yields 6.6%. The e-commerce boom should supplement a diversified portfolio and support STAG's monthly dividends in coming years. 

Healthcare prospects can support monthly dividends

LTC Properties (LTC 1.02%) is one of the best monthly dividend stocks to profit from an unmistakable demographic trend: the growth in the U.S. population of ages 65 and above. According to Population Reference Bureau's "Aging in the United States" bulletin:

The number of Americans ages 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, and the 65-and-older age group's share of the total population will rise from 16 percent to 23 percent.

The bulletin further projects a more than 50% increase in the number of Americans aged 65 and above requiring "nursing home care" between 2017 and 2030.

Pie charts showing LTC Properties' portfolio diversification.

Data as of Dec. 31, 2019. Image source: LTC Properties.

With its specialization in senior housing, divided almost equally between assisted living and skilled nursing facilities, LTC is primed to benefit from the demographic shift. As of Sept. 30, 2019, LTC's 200 properties, spread across 28 states, were leased out to a mix of well-known healthcare service providers like Brookdale Living and Prestige Healthcare, and generated around $137 million in rental income.

LTC has paid a dividend every month since 2005, and its annual dividend per share has risen from $1.58 in 2010 to $2.28 in 2019. The stock yields a hefty 7.3% currently, partly because of the coronavirus sell-off. While the high yield may not be sustainable, healthcare's growth potential makes LTC Properties a great monthly dividend stock to consider.

Few oil and gas stocks pay monthly dividends

Pembina Pipeline (PBA -0.27%) is a Canada-based energy infrastructure company that offers a wide range of midstream and marketing services to energy companies. Pembina recently acquired Kinder Morgan Canada and the U.S. side of the Cochin pipeline in multibillion-dollar deals and has several growth projects in the pipeline.

Because the majority of Pembina's earnings are from fee-based, long-term contracts, it can earn steady cash flows and support stable dividends. Pembina has, in fact, grown its dividends at a compound annual growth rate of 4% since 2010, and the stock currently yields a whopping 8.4%. The coronavirus market meltdown has driven Pembina's dividend yield through the roof, but Pembina has taken some measures in response to the COVID-19 pandemic to protect shareholder value: 

  • Potential to raise $200 million to $500 million Canadian dollars from sale of non-core assets.
  • Immediate halving of, or by CA$900 million-CA$1.1 billion, planned capital spending for 2020 to preserve cash and capital.
  • Maintaining limited exposure to direct commodity markets (read: oil prices).
  • Decently strong balance sheet with CA$1.5 billion in cash and available borrowing capacity.
  • Current dividend of CA$0.21 per share well covered by fee-based cash flows.

These factors suggest Pembina is a reliable monthly dividend stock to own. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, FedEx, Kinder Morgan, and Stag Industrial. The Motley Fool recommends XPO Logistics and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Pembina Pipeline Corporation Stock Quote
Pembina Pipeline Corporation
$37.22 (-0.27%) $0.10
STAG Industrial, Inc. Stock Quote
STAG Industrial, Inc.
$34.88 (-0.74%) $0.26
LTC Properties, Inc. Stock Quote
LTC Properties, Inc.
$44.75 (1.02%) $0.45
Ford Motor Company Stock Quote
Ford Motor Company
$16.03 (-2.44%) $0.40, Inc. Stock Quote, Inc.
$142.10 (-1.85%) $-2.68
FedEx Corporation Stock Quote
FedEx Corporation
$233.42 (-2.02%) $-4.80
Kinder Morgan, Inc. Stock Quote
Kinder Morgan, Inc.
$18.57 (-0.43%) $0.08
XPO Logistics, Inc. Stock Quote
XPO Logistics, Inc.
$58.30 (-4.55%) $-2.78

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