Quarterly dividends are fine if you're simply reinvesting those payments in more shares of the stock dishing them out, or accumulating cash to invest later.
If you're using dividend income to pay your monthly bills, however, a quarterly payment cadence can be a headache. In some months you may not receive all the cash you need to cover your basic cost of living.
So here's a rundown of three stocks that pay their dividends monthly rather than once per quarter. Notice that the yield on each is better than average, although there is a potential catch.
NYSE: O
Key Data Points
Realty Income
OK, Realty Income (O 0.91%) isn't a stock in the conventional sense. Although you buy and sell it just like a conventional equity, it's actually a real estate investment trust, or REIT. REITs simply own rental real estate, effectively allowing you to be a landlord. The bulk of these underlying rent payments is passed along to you in the form of dividends for as long as you own a stake in the trust.
Most real estate investment trusts are narrowly focused on one kind of property. For instance, there are hotel REITs, apartment REITs, and office REITs. There are even some REITs that own only mortgage loans or mortgage-backed securities.
Realty Income's focus is unusual even by REIT standards. The vast majority of its properties are retail store buildings. Its top tenants include Walgreens, Dollar General, Dollar Tree, and convenience store chain 7-Eleven. Its most served industry, however, is the grocery business (with convenience stores, dollar stores, and drugstores not far behind).
O Revenue (Quarterly) data by YCharts
This seems like a dangerous degree of exposure to economically sensitive companies. But Realty Income's tenants aren't nearly as fragile as more discretionary store chains like Macy's or Kohl's. Once a Walgreens or a 7-Eleven sets up shop, it tends to stick around, simply because it becomes a shopping staple in that area.
And Realty Income's historical results confirm this argument. This real estate investment trust has not only grown its bottom line in 26 of the past 27 years, it has also made a dividend payment every month for the past 53 years. Perhaps most important of all, this REIT has raised its monthly payout for 104 consecutive quarters now, which translates to a current dividend yield of 5.7%.
NYSE: EPR
Key Data Points
EPR Properties
If you think Realty Income's yield is impressive, try this on for size -- EPR Properties' (EPR +0.39%) annualized monthly dividend yield currently stands at 7.3%. This higher yield arguably comes at a potential price, though.
Like Realty Income, EPR Properties is a REIT. Unlike Realty Income, it doesn't focus on consumer staples retailing. EPR's specialty is entertainment. It holds a wide range of properties that are home to movie theaters, casinos, waterparks, restaurants, museums, resorts, ski lodges, and gyms.
These businesses are about as economically sensitive as you can get. That's why the REIT suspended its dividend in the latter half of 2020 and first half of 2021 and rekindled it below its pre-pandemic levels in the latter half of 2021. COVID-19 shutdowns just made it impossible to continue paying.
The company also dialed back its dividend payouts in 2008, in the midst of the Great Recession stemming from the subprime mortgage meltdown. Given its history, there's a good chance the next economic calamity will force the REIT's managers to make the same tough decision again.
Barring the unforeseeable outright disasters for the global economy, however (and the domestic economy in particular), EPR Properties' dividend pedigree is impressive. That's because consumer spending on entertainment and experiences is surprisingly resilient -- as long as these venues are up and running, and people can get to them.
Image source: EPR Properties Q3 2023 investor presentation.
Investors who've been keeping close tabs on this REIT of late will likely know the past couple of years haven't exactly been thrilling. Although EPR is doing fine in the so-so environment, viable opportunities for expansion remain limited.
That's changing, though. As CEO Greg Silvers explained on October's third-quarter earnings conference call, "With a committed development and redevelopment pipeline of approximately $235 million to be funded over the next two years with $173 million of cash on hand and no borrowings on our $1 billion unsecured revolving credit facility, we are well positioned to continue our growth without having to issue equity."
Main Street Capital
Last but not least, add Main Street Capital (MAIN +0.33%) to your list of monthly dividend payers worth a closer look. It's not a REIT. But it's not your typical for-profit corporation, either.
Rather, Main Street Capital is a private equity firm, meaning it provides capital to up-and-coming companies that need cash to reach the next stage of their potential growth. This cash can be provided in exchange for equity in one of the nearly 200 companies in its portfolio. More often than not, however, it's offered in the form of a loan.
It's a win for the borrower because the company in question may not otherwise qualify for a conventional bank loan. It's a win for Main Street Capital because these loans tend to be made at above-average interest rates. As of September, its average loan was yielding annualized interest payments in the ballpark of 13%.
NYSE: MAIN
Key Data Points
There is some risk here to be sure. Main Street Capital's target market is companies doing between $10 million and $150 million worth of business per year. Lots of today's mega-companies driving billions of dollars' worth of annual revenue started out this small. Plenty of other companies of the relatively small size have also ultimately failed, however, unable to reach their perceived potential. That's why Main Street Capital's loans are made at such high interest rates -- to reflect their risk.
On balance, though, Main Street Capital has enough performing loans on its books to support continued dividend payments. Despite the impact of the COVID-19 pandemic at the time, 2020's full-year dividend payment of $2.46 per share wasn't too far below 2019's pre-pandemic payout of $2.95. And this payment started growing again the next year, reaching record levels in the meantime.
This stock is currently yielding just under 7%, based on a monthly per-share dividend payment of $0.24.
