Stocks that pay dividends are a natural consideration for investors interested in building wealth over the years and for people in retirement focused on living on their investments.
Real estate investment trusts (REITs) can fill both those bills. There also are a few dozen REITs that pay dividends monthly instead of quarterly, which helps to smooth out the income stream.
Here are three to consider: Agree Realty (ADC 1.41%), Dynex Capital (DX 0.51%), and Gladstone Commercial (GOOD -0.67%). Each provides passive income and some chance of share price appreciation that can combine for solid, satisfying total returns.
ADC Dividend Yield data by YCharts.
Agree Realty
Agree Realty is a retail REIT with a growing portfolio of 1,404 properties in 47 states, much of that space occupied by high-grade rent payers like Walmart, Sherwin-Williams, and TJX Companies.
Agree has paid $0.227 per share monthly for the past four months, and its annualized dividend of $2.724 is a 9.7% increase over the first quarter of 2021. That's good for a yield of about 4.2% on a share price of around $63.50.
Agree is coming off a year in which it notched a company record of $1.39 billion in net-lease retail investments -- and the company says it plans to buy $1.1 billion more this year. That and a payout ratio of 70.47% based on 2022 earnings estimates bode well for the prospects of this monthly payout continuing to grow.
Dynex Capital
Unlike the other two equity REITs, Dynex Capital is a mortgage REIT (mREIT) specializing in buying and selling residential and commercial mortgage-backed securities. Typical of mREITs, Dynex Capital lends itself to investing for dividend flow over share-price growth. It's currently paying $0.13 per share a month, good for a yield of almost 9.8% on a share price of about $16.16.
Dynex has been paying that same amount monthly since June 2020, after dropping its payout from $0.15 per month. But a payout ratio of 21.20% based on cash flow helps lend confidence to the current level being either maintained or even increased.
The company's top officer shared that confidence in its Q4 and 2021 full-year results (released on Feb. 3). Chief Executive Officer Byron Boston said his company is anticipating the Federal Reserve's expected tapering of the bond purchases used to stimulate the economy during the pandemic.
"At Dynex, we believe we are well positioned to take advantage of the opportunities we are anticipating from this pivotal moment, " he said. "As a result, we are optimistic about our ability to continue building solid cash flow for our shareholders as the market evolves."
ADC Total Return Level data by YCharts.
Gladstone Commercial
Gladstone Commercial has a portfolio of 127 properties in 27 states, with a diversified list of 109 various industrial and office tenants evenly split between public and private companies. Its largest single tenant is General Motors, which accounts for 4% of its rental income. Close behind are Verizon, ADP, and Morgan Stanley.
Gladstone has already announced an ever-so-slight increase in its dividend for the first three months of 2022, hiking it by $0.000125 to $0.1254. That's good enough to mark three straight years of dividend increases and gives this stock a yield of a little more than 6.5% based on a share price of about $22.50.
In 2021, Gladstone invested about $46 million in four different markets, focusing on secondary growth markets where it determines it can produce higher yields. A payout ratio of 75.23% based on current cash flow also points to the stability and possible growth of those monthly dividends.
