Real estate investment trusts (REITs) are beloved by income investors. Since REITs are required to pay 90% or more of their taxable income in the form of dividends, they can offer attractive dividend returns and reliable passive income.
While most REITs pay dividends quarterly, there are several monthly dividend-paying REITs that have high yields right now. If you're looking for monthly passive income, here's why Realty Income (O -0.20%), EPR Properties (EPR 0.24%), and Stag Industrial (STAG -0.23%) are for you.
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Realty Income
Known for its reliable monthly dividend payments and massive portfolio of real estate properties, Realty Income is one of the largest and most popular net-lease REITs. It's first and foremost a retail REIT and has over 11,000 retail properties in its portfolio.
Despite the challenging impacts of the pandemic on the retail and hotel industry, Realty Income has managed to expand its revenues by 39%, when compared to the full year of 2019. This is largely thanks to the massive expansion of its portfolio in 2021 where the company spent $6.4 billion, acquiring another REIT and adding brand new asset classes to its portfolio including hotels, casinos, and office space. And Q1 2022 is showing continued momentum as the company expands its European presence.
Adjusted funds from operation (AFFO), an important metric that illustrates the profitability of a REIT, grew 14% year over year. Revenue grew 17% quarter over quarter and 82% from last year, while occupancy remains strong at 98%.
Realty Income made it onto the famed Dividend Aristocrat list in 2020, a designation only given to dividend stocks that have consistently increased dividends for 25 years. As of March 2022, the company has raised dividends 115 times and paid 622 consecutive monthly dividends, achieving a compounded annual dividend growth rate of 4.4% since its IPO. Today, its dividend return sits around 4.26%, and its monthly dividend pays investors $0.247 per share. The pandemic proved to be a valuable opportunity for Realty Income to take advantage of market opportunities, add value for shareholders, and solidified its position as one of the best dividend REITs.
EPR Properties
EPR Properties is a diversified REIT that owns a suite of 355 properties in the entertainment industry, including casinos, ski resorts, theme parks, water parks, museums, zoos, movie theaters, and music venues, along with many others. Unsurprisingly, the pandemic absolutely crushed EPR's business model.
Mandated closures and lack of demand by consumers for public-entertainment experiences meant most of its properties were closed for the majority of 2020. However, increased vaccination rates in 2021 and 2022 have led to a major resurgence in demand for experiences and travel, giving EPR Properties a much-needed boost.
Its performance still hasn't returned to pre-pandemic levels, but 2021 and Q1 2022 are showing promising signs for the company. Its portfolio is 96% leased as of March 2022. Revenues have grown by 40%, FFO grew by 123%, and net operating income (NOI) went from a net loss to a net gain of $0.48 per share.
EPR cut its dividend payouts notably in 2020 in response to the COVID-19 pandemic. This was a smart move to conserve cash during a very uncertain time. But as things have started to recover and reopen, the company has reinstated its monthly dividend, maintaining its payouts for the past 11 months.
In March 2022, it raised its dividend to $0.2750 per month, which nets investors just over a 5% dividend yield today. Given the likelihood of future dividend raises, EPR is a great dividend play, offering a much higher potential return over the long term.
Stag Industrial
Stag Industrial, unlike some of its peers, specializes in U.S.-based industrial real estate, primarily within the e-commerce industry. In total, it has interest or ownership in 551 industrial properties across 40 US states. Stag Industrial is the only industrial REIT to offer monthly dividend payments instead of quarterly, making it an attractive entry into this booming real estate sector. Industrial REITs have become one of the top-performing industries in commercial real estate. The lack of supply and increased demand have been driving rents up and bringing vacancies to record lows.
Performance has remained strong for Stag Industrial throughout the global pandemic. Net income was up 130% year over year, core FFO per share was up 8.2%, and the occupancy rate is sitting at a healthy 96.9% for its portfolio.
Share prices have taken a hit recently, thanks to market volatility, which has pushed the REIT's dividend return to a competitive 4.19% -- over double the average dividend yield among other industrial REITs. Given the continued demand for this growing sector and the further rise of e-commerce, I think industrial real estate growth is just getting started, and one of the reasons I'm super bullish on Stag right now. Stag is going on its 12th year of dividend increases and has been paying monthly dividends since late 2013, making it one of the best monthly dividend-paying stocks.
