The attraction of a stock that pays its dividends monthly is investors are provided a regular recurring stream of income, a feature retirees especially find beneficial.
In a world with near-0% interest rates punishing savers -- and the potential for them to turn negative, as has occurred in Europe and Japan -- investors are increasingly turning to monthly dividend payers to generate income.
Read on to find out more about two worthy dividend stocks that reward shareholders with cash every 30 days.
The triple net lease benefit
There are good reasons why Realty Income (NYSE:O) sits atop the list of monthly dividend-paying stocks investors seek out. The commercial real estate investment trust (REIT) has a long history of not only paying a dividend, but increasing it, too. It's also member of the Dividend Aristocrats, a group of stocks that have hiked their payout for 25 consecutive years or more.
Realty Income, in fact, has raised its dividend 107 times since it began paying one 51 years ago, most recently this past June during the depths of the pandemic. The REIT has made over 600 consecutive monthly payments since its founding.
That kind of strength is based on its financial stability, which comes in part from specializing in long-term triple net leases, or those where the tenant is responsible for paying the insurance, maintenance, and property taxes on the property.
The average lease is almost 10 years long and the properties are spread across 300 companies in 50 different industries, with no one tenant accounting for 10% or more of its revenue. That ensures that even in today's dicey real estate market, its downside is protected.
Realty Income's monthly dividend currently yields 4.4%.
Drilling down to what matters
Pembina Pipeline (NYSE:PBA) might not have as long of a history of raising its monthly dividend as Realty Income, having increased it for only nine straight years, but it's hiked the payout an average of around 4.5% a year over that time, including the 5% increase in January.
The pipeline giant is focused on transporting and storing natural gas from Canada's western provinces. It saw its growth trajectory upset by the tumult of the pandemic: Shares lost nearly three-quarters of their value in March. The stock has more than doubled since those lows and analysts are looking for continued recovery.
The U.S. Energy Information Administration forecasts natural gas imports to the U.S., 99% of which come from Canada, will fall to 7 billion cubic feet per day (Bcf/d) this year, down from 7.4 Bcf/d in 2019. That's the lowest level since the 1990s, but the agency also sees it rebounding sharply in 2021, rising to as much as 7.9 Bcf/d.
Although the decline in demand and pricing for natural gas because of the pandemic hurt Pembina, the pipeline operator remains financially sound and is prudently managed, deferring several billion dollars' worth of projects that had been slated for development.
Payouts vary from month to month. But with solid management, investors can still count on receiving Pembina Pipeline's healthy monthly dividends -- which currently yields 7.3% -- for many years to come.