Passive income can be a beautiful thing. You rake in cash for nothing more than owning an asset. In the case of real estate investing, that means making money without having to manage the property or even owning it directly.
That's the case with real estate investment trusts (REITs), which own and operate income-producing assets and, in exchange for pass-through income tax status, must distribute at least 90% of their taxable take as dividends.
There are about 220 publicly traded REITs, including nearly 20 that pay monthly dividends instead of quarterly. I own several of these monthly paycheck providers.
Here's a quick look at three of them, beginning with a chart that shows their yield performance over the past three years, which includes the spike that occurred when the stock market plunged during the initial COVID-19 shutdowns.
ADC Dividend Yield data by YCharts.
1. Agree Realty
Agree Realty (ADC 1.16%) is a retail REIT that just raised its dividend by nearly 8% to $0.234 a month, building on a record of payout growth that has averaged 5.5% over the past 10 years.
Agree also has been growing its portfolio, adding 228 properties in the first half of 2022 and giving it at this point 1,607 net-leased buildings and ground leases in 48 states. There's more to come, too. The company has invested about $860 million in new properties so far this year and plans to end the year at $1.5 billion to $1.7 billion in acquisition spending.
Agree stock currently yields about 3.6% at a share price of about $80 that keeps bouncing around its 52-week high, reflecting the continuing confidence the market has in this company and its rock-solid list of investment-grade, big-name tenants and a fortress balance sheet.
2. Gladstone Commercial
Gladstone Commercial (GOOD 1.29%) is a diversified REIT that owns a mix of 136 office and industrial properties in 27 states and boasts of never cutting or suspending its dividend since its IPO in 2003. It's also the highest-yielding stock in this trio, currently paying a nice 7.2%.
Gladstone is currently paying out $0.1254 a share per month after raising it by $0.00125 last December. That's not much, but it's enough to extend its current streak of annual dividend increases to three. And like Agree, Gladstone is consistently adding to its portfolio, most recently paying $32 million for the Aug. 5 acquisition of two buildings occupied by Garden State Bulb Company in New Jersey in a sales-leaseback deal.
In the second-quarter earnings report, company president Buzz Cooper said the company had already bought seven industrial properties so far this year and would be focusing on opportunities in that sector.
3. STAG Industrial
STAG Industrial (STAG 0.20%) is a pure-play industrial REIT with a portfolio that as of Q2 numbered 559 buildings covering about 111 million square feet in 40 states. The company began paying dividends monthly in 2013 about two years after its IPO and is now yielding about 4.2% while paying $0.121667 per month per share after raising the payout by an annualized 11% over the past three years.
Amazon is STAG's largest single tenant, but it only accounts for about 3% of the REIT's rent, and the top 20 altogether only account for 17% of the rent roll. That diversification extends into STAG's geographic markets and the industries it serves.
STAG also grew its portfolio by nine buildings in the second quarter and its funds from operations (FFO) per share, a key measure of REIT profitability, by 18% year over year. Combine that performance and a war chest of about $1 billion for more acquisitions and it stands to reason that STAG can continue to deliver steady monthly payouts and a good chance for share-price appreciation going forward.
A smooth monthly ride from these steady payers
The S&P 500 is close to 1.7% now, well below each of these. It has risen as the market has fallen, but it would drop if the market continues to rally since yield equals share price divided by dividends. Of course, so would the yield on each of these stocks, but the monthly income they provide and the strength of their businesses make them good candidates for long-term buys, especially for people who want to bolster their retirement income or generally smooth out their monthly income in general.
