There are some good reasons to consider adding stocks that pay monthly dividends to your portfolio. Some folks, like retirees and income-focused investors, or those with otherwise irregular income streams, might prefer monthly over quarterly payouts.
More frequent payouts also can enable more frequent reinvestments, which are especially convenient for those in dividend reinvestment plans (DRIPs) for that stock. The investment income, if you keep it, also can compound more quickly.
About 60 stocks pay monthly dividends right now, and while some offer eye-popping yields north of 15%, others pay a respectable rate and have a business model and track record that won't keep you up at night.
A favorite of mine is Agree Realty (ADC -0.48%), a real estate investment trust (REIT) that owns about 1,900 retail sites spread across all 48 contiguous states.
A focus on large retail spaces and household names
Agree focuses on large retail spaces with a largely investment-grade tenant list dominated by the likes of Walmart, Home Depot, Kroger, and Tractor Supply.
Agree's properties are 99.7% leased, with a weighted-average remaining lease term of approximately 8.8 years overall and even higher -- about 13 years -- for the 66 properties leased to leading retailers that Agree added in the first quarter of this year.
This retail REIT also has a fortress balance sheet with an investment grade rating of Baa1 from Moody's and BBB from S&P and net debt to recurring EBITDA of 3.7 times. That's along with the liquidity to spend $1.2 billion on new properties by year-end while building on its record of reliably growing well-covered dividend payouts.
A yield that's not eye-popping, but steady as it goes
Agree stock is now yielding about 4.5%. That payout's hardly eye-popping but it is reliable and well above that of the benchmark SPDR S&P 500 ETF at 1.51%.
That exchange-traded fund also serves as a useful comparison to show what a solid long-term investment Agree has been, outperforming that benchmark over the long term, which is what dividend investors probably should be considering.
ADC Total Return Level data by YCharts
As you can see above, this retail landlord has crushed the greater market, turning a $1,000 investment at the turn of the century into $21,300 now, compared with only about $4,500 for the benchmark ETF I chose.
An agreeable choice looking back and going forward
The chart below shows how steadily Agree has raised its dividend since it began paying monthly in January 2021. Meanwhile, the share price has ended up largely unchanged. Both speak to the resiliency of this real estate dividend stock. There were no dividend cuts and the stock's price has recovered nicely since the pandemic plunge and through the recent market turmoil caused by inflation and interest rate hikes.
ADC Dividend data by YCharts
That kind of strong performance can't be guaranteed, of course, but for those who like monthly income with a nice opportunity for capital growth over time, Agree merits strong consideration.
