Dividend stocks can be great for generating passive income. While most make payments every quarter, a handful pay investors each month. The latter approach is ideal for investors who need consistent cash flow to help cover their recurring expenses.
Canadian pipeline operator Pembina Pipeline (PBA 3.71%), farmland REIT Gladstone Land (LAND 3.15%), and office REIT SL Green Realty (SLG 6.15%)are three dividend stocks that pay every month. Here's a closer look at this monthly dividend trio.
Plenty of fuel to maintain its high-yielding payout in 2021
Pembina Pipeline has gone to great lengths to ensure its dividend's sustainability amid all the turbulence in the energy sector in recent years. The pipeline company focused on growing its fee-based businesses by investing in expansion projects and acquiring assets backed by long-term take-or-pay contracts. This approach helped stabilize its cash flow. Meanwhile, it has also worked to enhance its financial profile by protecting its investment-grade credit rating and keeping its dividend payout ratio at a comfortable level. It thus has the financial flexibility to continue expanding.
The company entered 2021 on solid ground. It expects to generate enough cash after paying its dividend this year to fully fund its expansion program. Its 6.6%-yielding monthly payout is on a firm foundation. Meanwhile, if market conditions improve, Pembina could use the extra cash it generates to give its investors another raise this year.
More growth ahead in 2021
Gladstone Land has steadily grown its dividend over the years. The farmland REIT has given its investors a raise 20 times over the last 23 quarters, boosting its payout by 49.7% overall. That upward trend seems likely to continue in 2021.
Two factors drive that view. First, the company's stated goal is to grow its payout at a rate that outpaces inflation. On top of that, the REIT has been actively acquiring new farmland in recent months, which should help grow its cash flow and ability to increase the dividend. It bought $162 million of properties in December alone, expanding its portfolio to $1.2 billion of farmland. Meanwhile, with a solid financial profile and a massive addressable market, Gladstone Land should be able to continue growing its portfolio, cash flow, and 3.7%-yielding dividend in the coming years.
Standing tall amid the storm
SL Green Realty recently declared its 10th consecutive annual dividend increase. That's impressive considering that 2020 was a rough year for the office sector, especially in New York City, where SL Green is the largest landlord. While the company experienced some headwinds from the pandemic, it has navigated it admirably.
One of the highlights has been its ability to sell assets at excellent prices and take advantage of falling interest rates to refinance some of its properties. That has given the REIT the cash to pay down debt, buy back stock, and even pay a special dividend. Plus, it should see balance sheet enhancements from expected improvement in the office sector this year as the vaccine rolls out. SL Green's dividend -- which currently yields 6.2% -- is on an increasingly sustainable foundation.
Excellent options for a steady monthly paycheck
Pembina Pipeline, Gladstone Land, and SL Green Realty have long histories of paying monthly dividends. Even better, all three have routinely given their investors a raise. They're ideal options for those seeking passive income options to help offset their monthly expenses.