Dividends are usually paid quarterly or semiannually, but let's face it: Your bills keep rolling in every month. Fortunately, there are a handful of companies that make monthly dividend payments.
If you're looking for stocks that provide monthly income, real estate investment trusts, or REITs, are a good place to start. Under SEC rules, they're required to pay 90% of their taxable incomes as dividends each year. Realty Income (O 1.46%), LTC Properties (LTC 0.28%), and STAG Industrial (STAG -1.29%) are three commercial REITs with strong track records of paying monthly dividends.
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1. Realty Income
Realty Income has trademarked the nickname "The Monthly Dividend Company." Its latest monthly dividend was $0.235, which amounts to a current yield of 4.45%.
Its portfolio consists mostly of triple-net, or NNN, leases, which mean the tenant is responsible for property taxes, maintenance, and insurance. That's understandably desirable from a landlord's perspective.
Although retail REITs were hit hard by the pandemic, Realty Income's portfolio has generally fared well. In the fourth quarter of 2020, it collected 93.6% of rents due, with the theater industry accounting for 80% of uncollected rents.
Many of its tenants are essential businesses that remained open throughout shutdowns and are less likely to close brick-and-mortar locations even as e-commerce accelerates. Its five largest tenants are Walgreens (WBA -0.23%), 7-Eleven, Dollar General (DG 0.82%), FedEx (FDX 0.11%), and Dollar Tree (DLTR -1.23%), including Family Dollar locations.
What's especially appealing about this retail REIT isn't just its history of monthly dividend payments -- 608 consecutive months and counting as of March 2021. The company has also increased its dividend payment every year since going public in 1994. Last year, it became a Dividend Aristocrat -- an elite status awarded to companies in the S&P 500 index with at least 25 years of consecutive annual increases.
2. LTC Properties
LTC Properties is a healthcare REIT with 184 properties, most of which are assisted living and skilled nursing facilities with triple-net leases.
The pandemic has obviously been brutal for the types of senior-care properties in the company's portfolio. The heavy toll of COVID-19 led to a drop in hospital referrals. Families have also been hesitant to move loved ones into senior care facilities. According to an analysis by CliftonLarsonAllen, skilled nursing facility occupancy was below 80% in all 48 continental states at the start of 2021.
However, LTC Properties has fared decently since it only leases the properties but doesn't actually operate the facilities. Management reported that 98% of rents were collected as due in Q4.
In the past five years, LTC Properties shares have dropped nearly 4%. By comparison, the S&P 500 index has risen 95% over the same period.
However, LTC's monthly dividend of $0.19 per share translates to a yield of 5.37%, making it a decent play for those seeking reliable income, considering that the current S&P 500 yield is below 1.5%. Plus, the company could benefit from an aging population that will drive higher demand for senior living in the years to come.
3. STAG Industrial
STAG Industrial owns 492 properties, mostly in the warehouse and industrial spaces. These tend to be stable even during downturns and are expected to be in greater demand as more shopping shifts to e-commerce.
With about 40% of its portfolio involved in e-commerce, STAG has held up well during the pandemic. Management reported that in Q4, 99.6% of rents were collected as billed.
The company's portfolio is appealing not just for its stability, but also for its diversification. Amazon (AMZN -1.14%) is its largest tenant, though it accounts for less than 4% of annual base rent (ABR). STAG's top 20 tenants make up less than 20% of ABR.
Don't expect huge gains out of STAG. However, its $0.121 monthly dividend gives you an annual yield of 4.37%. If you're looking for stable monthly income, STAG's dividend is a pretty safe bet.
