There are many ways to grow the amount of passive income you collect each month. One of the easiest is to invest in stocks that pay a steadily rising monthly dividend. Several real estate investment trusts (REITs) pay a growing monthly dividend, making them a simple way to collect a rising passive income stream.
Here are three REITs that can help you grow your monthly passive income.
Built for this
Realty Income (O 1.10%) bills itself as The Monthly Dividend Company. The REIT has lived up to that name over the years. It recently declared its 623rd consecutive monthly dividend since its formation 53 years ago.
Realty Income doesn't simply offer a durable dividend. The REIT has a long history of increasing its payout. It has given its investors a raise 115 times since its initial public offering (IPO) in 1994, including for the last 98 consecutive quarters. Overall, Realty Income has grown its payout at a 4.4% compound annual rate during that timeframe.
The REIT should have no problem growing its monthly dividend in the future. It will continue benefiting from contractual rental rate increases on its existing properties and a steady stream of new additions to the portfolio. Realty Income expects to acquire more than $5 billion of properties this year. It will finance these deals with its post dividend cash flow (the REIT retains about a quarter of its income for reinvestment purposes), debt financing backed by its top-tier balance sheet, and additional equity issuances. Because of that, it should have no problem continuing to grow the dividend.
A steadily growing payout
Gladstone Land (LAND 2.07%) has a solid dividend growth track record. The farmland REIT has paid 111 straight monthly dividends since its IPO in 2013. Meanwhile, it has increased the payment 26 times over the last 29 quarters, growing it by more than 50% overall.
Gladstone's goal is to increase its dividend at a rate that outpaces the annual inflation rate. Given its lease structure, it has a solid foundation to achieve that goal. The REIT leases farms to farmers under long-term net lease contracts that feature annual escalation clauses (usually tied to the inflation rate) or participation features (it gets a cut of a farm's gross revenue, which also rises with inflation). Meanwhile, the REIT's other big growth driver is acquisitions. It will steadily acquire farms and other farm-related real estate, adding additional rental income streams to support steady dividend growth.
Steadily rising toward the sky
SL Green Realty (SLG 2.59%) has done an excellent job growing its dividend over the years. The office REIT has increased its monthly dividend for 11 straight years.
One of the keys to the REIT's success has been its ability to build one of Manhattan's largest and highest-quality office portfolios. It has developed some of the city's skyline-defining towers, enabling it to attract quality tenants. The company's recently completed and award-winning One Vanderbilt tower is a 1.7 million-square-foot skyscraper that's become the headquarters of many of the world's leading companies. Meanwhile, its next skyline-defining tower, One Madison Avenue, promises to be an equally transformative investment when the company completes the 1.4 million-square-foot tower next November. These new developments will enable SL Green to continue growing its rental income so it can keep paying a rising dividend.
Grow your monthly income without having to do any work
Monthly dividend-paying REITs are great for generating passive income. Even better, several have long histories of increasing those payouts. That makes it really easy to collect a steadily rising monthly passive income stream.