Dividend stocks can be a great source of passive income. While most dividend payers cut checks quarterly, a few issue them every month.
That increased payment frequency makes them ideal options for those seeking a recurring income stream to offset their expenses. Three that currently offer recurring monthly payments are Canadian pipeline operator Pembina Pipeline ( PBA 2.60% ), industrial REIT STAG Industrial ( STAG -0.67% ), and farmland REIT Gladstone Land ( LAND 0.83% ). Here's a closer look at these monthly dividend stocks.
A pipeline of steady income
Pembina Pipeline pays its investors on the 15th of each month. The most recent payment was $0.1599 per share based on the current exchange rate. With shares of the Canadian pipeline operator trading right around $26.50 a piece these days, this rate implies a nearly 7.2% dividend yield. That's well above the market's average of less than 2%.
That payout is on a very sustainable foundation despite the current turbulence in the energy market. That's because Pembina gets 90% to 95% of its earnings from stable sources like fee-based contracts and only pays out 60% of its total cash flow via the dividend. On top of that, it has a solid investment-grade credit profile.
As a result, it has the financial flexibility to cover its payout and invest in expansion projects to grow its cash flow. It currently has several commercially secured projects under construction and many more in the pipeline. That gives the company plenty of fuel to continue its streak of increasing its dividend at least once each year.
Passive income from commercial real estate
STAG Industrial also pays its investors around the 15th of each month. The warehouse and industrial property owner currently pays out $0.12 per share every month. With its stock price recently around $30 a share, the REIT yields roughly 4.8%, which is well above the market's current average, making for an attractive income stream.
STAG Industrial backs its payout with solid financials and generates stable rental income. That durability was on full display this year as it collected more than 98% of the rent it billed during the second and third quarters, despite the turmoil in the real estate sector. The company complements that solid revenue stream with a conservative balance sheet. Those factors give it the flexibility to continue acquiring industrial properties, which helps grow its cash flow and dividend.
Harvesting a growing dividend stream
Gladstone Land pays its investors at the end of each month. The farmland owner currently cuts monthly dividend checks at a rate of $0.0449 per share. Given the stock's recent price near $15 per share, the REIT yields around 3.64%.
The company, which leases its farmland to farmers that harvest the crops, has an excellent dividend history. Overall, it has paid 92 consecutive monthly cash dividends since its initial public offering in 2013 while increasing its payout 20 times over the last 24 quarters. The company plans to maintain that upward trajectory.
CFO Lewis Parrish stated on last quarter's conference call that "paying dividends to our shareholders is paramount to our business plan and our goal continues to be to increase the dividend at a rate that outpaces inflation." Driving its ability to continue growing its payout will be rental increases on its farmland leases and a steady stream of new farmland acquisitions.
Great ways to collect more frequent payments
Pembina Pipeline, STAG Industrial, and Gladstone Land are in a select group of dividend stocks that pay their investors each month. That makes them better options for investors seeking passive income to help offset their recurring expenses. Even better, this trio has a history of increasing their payouts at least annually, which should also help counteract the impact of expense inflation.