Real estate investment trusts (REITs) are a good deal for the trust operators themselves -- who get a big tax benefit by passing at least 90% of the REIT's taxable income on to shareholders in the form of dividends -- and the shareholders, who get the dividend income as well as any growth in the stock price itself. The majority of the more than 200 publicly traded REITs out there pay quarterly, but there are a handful that pay monthly, which is a nice way to smooth out the income stream.
Of course, the trusts have to make money to share money. Here are a couple of REITs with good track records to consider for a monthly dividend.
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STAG Industrial is profiting from buying and selling
STAG Industrial (STAG +2.26%) is a Boston-based buyer and operator of single-tenant industrial properties, with a current portfolio of 517 buildings comprising 103.4 million square feet in 40 states.
The company has grown by acquisition since going public in 2011, buying 24 buildings for $427.2 million in 3Q21 alone, including expanding in California's Central Valley and entering the Salt Lake City market. It also made 150% nominal gain of its all-in cost basis on its three-year investment in a 350,000-square-foot building it just sold to a large e-commerce company that had been its tenant for the facility in Taunton, Massachusetts.
High occupancy rates and escalating rent also has enabled the company to recently issue what it calls the highest guidance in its 10-year history and same-store net operating income (NOI) growth of 3.25% to 3.75%, as well as report a 15.2% increase year over year in core funds from operations (FFO), a key measure of a REIT's profitability.
STAG also just completed what it calls the nation's largest rooftop community solar project. The company is leveraging 23 acres of unused rooftop space at a warehouse site in Hampstead, Maryland, to generate enough electricity to power nearly 1,500 local homes and businesses. That's the third such project the REIT has completed in Maryland alone.
STAG has been paying a monthly dividend of $0.121 per share throughout 2021, raising it ever so slightly from the $0.120 it paid for all of 2020. That was good for a yield of 3.20% at the time of this writing.
Gladstone Commercial does GOOD with tenants who can pay
Gladstone Commercial (GOOD +1.88%) is a McLean, Virginia-based buyer, owner, and operator of net leased industrial and office buildings, with a portfolio as of Sept. 30 that comprised 127 properties and about 15.7 million square feet in 27 states.
Business is good. Gladstone reported in a Dec. 1 update that its tenants had paid 100% of their November rent and that its properties were 97.8% occupied. In total, so far this year, Gladstone said, it extended, expanded, and/or leased 1.6 million square feet for tenants with average weighted leases of 7.7 years and rent increases of 7.1%.
A model of consistency, Gladstone Commercial has been paying a dividend of right around $0.12 per share since 2006. The downside here is that the payment hasn't grown since 2006, either. That said, its yield of 6.27% at the time of this writing is pretty close to the current inflation rate, so at least you'd be treading water here. And that does compare favorably to the FTSE NAREIT All Equity REITs yield of 2.84% for November and 1.26% for the S&P 500.
The industrial sector's promise and predictable monthly payouts
Both of these REITS are in the red-hot industrial sector and building on solid records of investor return -- including not reducing or eliminating dividends during the worst of the pandemic as many other REITs did -- and carry promise for monthly rewards for years to come for those seeking monthly payouts.
