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3 Great Stocks That Pay You Each Month

By Neha Chamaria – Sep 26, 2021 at 9:06AM

Key Points

  • Dividend stocks that pay each month is one of the easiest way to supplement your income.
  • Stag Industrial and Realty Income are excellent monthly-paying REITs, with one even attaining Dividend Aristocrat status.
  • Pembina Pipeline's high yield is alluring, and its dividends are bound to grow.

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You can not only earn monthly income from these stocks but also expect fatter dividends from time to time.

Dividend stocks are an excellent source of supplemental income at all times, but there's nothing like receiving some extra income every month. Although reinvesting dividends is the only foolproof way to grow your wealth over time, the monthly dividend income can often help cover your monthly bills, especially during tough times.

Even better, in a world where most stocks pay dividends quarterly, a handful of companies don't just pay a dividend every month but also increase dividends regularly. That's an absolute win-win for investors. Here are three such top dividend growth stocks that pay monthly.

These monthly dividends keep getting bigger

It's unusual to find an energy stock among top dividend payers, but Pembina Pipeline (PBA -1.64%) is a fine exception that doesn't just pay stable dividends but also increases them regularly and cuts a dividend check every month. The stock yields a hefty 6.5%.

A notepad with a total of monthly bills.

Image source: Getty Images.

Pembina, among the largest midstream and energy infrastructure companies in Canada, proved its mettle when it maintained its dividend payout last year, even as several energy companies suspended or cut dividends as the oil markets crashed. Ninety-four percent of its income is from fee-based contracts, which is why Pembina could not only pay but also increase dividends every year since 1998. Its dividends grew at a compound annual rate of 4.9% in the past decade.

Pembina's growth has largely come from acquisitions, and it has made some really big ones over the decades. Unfortunately, it just lost out on a megadeal to buy Inter Pipeline, but its relentless pursuit and the size of the deal reflects Pembina's hunger for growth. Rest assured, Pembina will soon find other acquisition opportunities, and that should continue to fire up its dividends and high yield.

A solid bet on high-growth industries

Personal consumption spending and GDP growth largely drive industrial activity in an economy, and we're seeing encouraging data points on both fronts in the United States. On Sept. 22, the Federal Reserve projected GDP growth of 5.9% for 2021 and confirmed that economic activity remains strong.

As a pure-play industrial REIT, Stag Industrial (STAG 0.43%) is an excellent dividend stock to bet on industrial growth in the United States. As of the end of the second quarter, Stag Industrial owned 501 properties across 39 states, with a near-equal mix of publicly traded and private tenants. To give you an idea of the diversification, here are its top seven tenants and the percentage of annual base rent they bring in:

  • 3.9%
  • XPO Logistics: 1.2%.
  • Eastern Metal Supply: 1.1%.
  • FedEx: 1%.
  • American Tire Distributors: 0.9%
  • Westrock Company: 0.9%.
  • Penguin Random House: 0.9%.

I really like the diversification, as it can hugely help mitigate risks. Notably, Stag Industrial has properties across 45 industries, and its top 20 tenants bring in less than 20% of annualized base rent. As for growth, almost 40% of Stag Industrial's portfolio handles e-commerce activities, which means as a Stag Industrial shareholder, you're not only directly betting on the industrials sector, but you're also indirectly betting on megatrends such as e-commerce.

Last quarter, Stag Industrial increased its same-store growth estimate to 3.25%-3.75% for 2021 and upped its acquisition spending target for the year to $1.2 billion. Not many know that Stag Industrial also raises dividends regularly, albeit modestly. At its current monthly payout, the stock is offering an annual dividend of $1.45 a share and yields 3.5%.

A monster dividend stock in the making

Realty Income (O 0.14%) is another fantastic monthly dividend-paying REIT, and going by its latest growth move, income investors have a lot to be excited about.

Realty Income is already a beast, owning more than 6,700 properties in 58 industries across 50 states in the U.S., U.K., and Puerto Rico catering to more than 600 clients. Again, it's a hugely diversified REIT, and you might want to see how defensive industries bring in most of Realty Income's revenue:

  • Convenience stores: 11.6%.
  • Grocery stores: 10.5%.
  • Drug stores: 7.6%.
  • Dollar stores: 7.4%
  • Health and fitness: 6.2%.

Yet Realty Income wants a bigger piece of the $12 trillion global net-lease addressable market, and it just struck an all-stock deal to acquire VEREIT (VER) in an all-stock deal. The two have several overlapping clients, and the acquisition will add more than 3,500 properties to Realty Income's portfolio. Also, the company plans to spin off all office properties into a separate REIT after the acquisition to ensure it remains concentrated in defensive industries. That should appeal risk-averse investors.

Here's the best part: Realty Income has increased dividends for 26 years and yields a solid 4.2%, making it one the best Dividend Aristocrats you could buy right now.

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, and Stag Industrial. The Motley Fool recommends PEMBINA PIPELINE CORPORATION, WestRock, and XPO Logistics and recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

Stocks Mentioned

Realty Income Stock Quote
Realty Income
$62.90 (0.14%) $0.09 Stock Quote
$94.13 (-1.44%) $-1.37
FedEx Stock Quote
$181.41 (0.53%) $0.96
Pembina Pipeline Corporation Stock Quote
Pembina Pipeline Corporation
$35.95 (-1.64%) $0.60
Stag Industrial Stock Quote
Stag Industrial
$33.06 (0.43%) $0.14
VEREIT Stock Quote
XPO Logistics Stock Quote
XPO Logistics
$38.14 (1.76%) $0.66
WestRock Stock Quote
$37.85 (-0.45%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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