Dividend stocks are a great way to generate income from your investments. But if you're looking for consistent monthly income, you'll be hard-pressed to find a lot of options.
Most dividend stocks pay out on a quarterly basis, which can create lumpy investment income. Those that pay monthly are few and far between, which can make it difficult to find monthly dividend stocks that are trading at an appealing price. Two companies, however, fit the narrow bill and could provide a consistent $100 per month in your pockets, at least until their next dividend increase.
If you want $100 in monthly dividend income put $15,853 to work in a combination of Realty Income (O -0.17%) and SL Green Realty (SLG -0.53%). Both real estate investment trusts, or REITs, have seen their share prices beat up in a high-interest-rate environment, but now may be a great time to buy shares.
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The slow-and-steady retail renter
Realty Income owns a portfolio of over 13,000 properties, and rents primarily to retailers.
While recession fears abound, investors in Realty Income can rest assured that many of its tenants are in more defensive industry segments. All top 20 of its tenants fall into at least one of the following categories: non-discretionary, low price point, service-oriented, or non-retail -- like FedEx.
In other words, these tenants aren't going anywhere. That's evidenced by its 99% occupancy rate, with an average of 9.6 years remaining on its leases.
But since Realty Income has such consistent long-term renters, it can only escalate the rent they pay by 1% to 2% per year. That means it must continually acquire or develop new properties to grow. Its most recently announced acquisition, Spirit Realty, will cost in excess of $9 billion. It'll add over 2,000 new properties that are already rented to clients just like Realty Income's.
If you buy 195 shares of the REIT, it'll pay you about $50 per month for your investment of $9,756 as of this writing. With shares trading at just 12 times funds from operations, or FFO, there's a lot of potential upside in potential share gains as well.
Return to work could be great for this office-space company
SL Green specializes in managing commercial real estate, focusing primarily on office buildings in Manhattan. It has interest in 59 different buildings totaling 32.5 million square feet of space.
The pandemic, ongoing remote work, and high interest rates have all worked against shareholders over the past few years. Occupancy fell from 96% at the end of 2019 to 89.8% as of the end of the second quarter this year. Meanwhile, FFO per share fell 24% to $1.27 per share in the third quarter, largely because of higher interest payments to service its debt.
But there are signs it's turning the corner. For one, occupancy increased slightly last quarter to 89.9%. While it's not huge, it's certainly starting to move back in the right direction. Second, the Federal Reserve has indicated it might be done raising interest rates, which would take a lot of pressure off rising interest expenses weighing on SL Green's FFO.
As more businesses push workers to return to the office and interest rates stabilize and start to come down, SL Green could be a big beneficiary. In the meantime, it pays a dividend of $0.2708 per month. That's a cut from last year, but management is dedicated to preventing another cut, slashing general and administrative expenses, and securing the dividend for shareholders.
If you buy 185 shares of SL Green, it'll pay you about $50 per month for your investment of $6,099 as of this writing. With shares trading at less than 5 times its trailing-12-month FFO with signs of improvement on the horizon, it could be worth a small bet on the REIT, as it offers an ultra-high-yielding dividend in return.
