There are many ways to start earning passive income in 2024. Investing in real estate or buying dividend stocks is a great way to begin.
One super easy way to start collecting passive income each month is to combine those options by investing in real estate investment trusts (REITs) that pay monthly dividends. Stag Industrial (STAG +0.38%), Agree Realty (ADC +0.19%), and Realty Income (O 0.26%) are three top monthly dividend REITs to buy this January to earn income every month in 2024.
1. Dual growth drivers
NYSE: STAG
Key Data Points
Stag Industrial is an industrial REIT that owns warehouses and light manufacturing facilities leased to high-quality tenants. The company pays its investors a $0.1225 per share dividend each month ($1.47 annually). That gives it a 3.8% yield at the recent share price. At that rate, a $1,000 investment in Stag Industrial would produce $3.16 of income each month ($37.90 annually). The more you invest in shares of Stag, the more income you can collect each month.
The industrial REIT has steadily increased its dividend payment over the years, driven by rising rental income and a growing real estate portfolio. Leases across the company's portfolio escalate by more than 2.6% annually, providing it with built-in growth. Meanwhile, it can often capture even higher rental rates when existing leases expire, given the strong demand for industrial real estate in its markets. It recently signed two early lease renewals with a tenant at 49% above the prior rate with a 3% annual rental rate escalation for the life of the 63-month term.
Stag Industrial also routinely acquires hundreds of millions of dollars in real estate each year. It had closed $245 million of deals by the end of the third quarter of last year and had another $67.5 million lined up to close early in the fourth quarter. Meanwhile, it had about $3.1 billion of potential deals in the pipeline. Rising rents and acquisitions will increase Stag's rental income, which should allow the REIT to continue growing its dividend.
2. Plenty of capacity to continue investing
NYSE: ADC
Key Data Points
Agree Realty is a retail REIT focused on owning single-tenant properties leased to tenants in sectors resistant to disruption from e-commerce and recessions. Top sectors include grocery stores, home improvement, and tire and auto services. The company invests in net lease properties and ground leases, which generate stable and steadily rising rental income.
The REIT complements the steady rise in its rental income by making new investments. Last year, it spent over $1.3 billion to add 319 properties to its portfolio. Agree Realty acquired almost $1.2 billion of income-producing properties while investing the rest into development projects, including its developer funding platform. The company entered 2024 with over $1 billion of liquidity, giving it plenty of capital to continue making new investments.
Agree Realty's rising rental income and growing portfolio have enabled it to steadily increase its monthly dividend, which yields 4.7%. It raised its monthly payment by 2.9% in December to $0.247 per share ($2.964 annualized). Agree Realty has grown its payout at a 6.1% compound annual rate over the last decade.
3. A big deal sets the stage for more growth in 2024
NYSE: O
Key Data Points
Realty Income owns a diversified portfolio of retail, industrial, gaming, and other properties. The REIT has been steadily expanding into new areas to drive growth. It recently made deals to invest in data centers, launch a credit investing platform, and further expand into Europe. That diversified portfolio generates a very stable and growing rental income.
Realty Income is in the process of meaningfully expanding and diversifying its portfolio by acquiring fellow REIT Spirit Realty in a $9.3 billion deal. The deal will increase its cash flow per share by more than 2.5% in 2024. Meanwhile, the company still has plenty of financial capacity to make additional investments to push its growth rate into its 4% to 5% annual target range this year.
The REIT's growing income will allow it to continue increasing its dividend, which yields 5.3%. Realty Income has raised its monthly payment 123 times since its public market listing in 1994, including five times last year.
Great ways to generate monthly income in 2024
Stag Industrial, Agree Realty, and Realty Income pay monthly dividends backed by rental income. Even better, those payouts have steadily risen over the years, which should continue. That makes them great ways to collect a growing monthly income stream in 2024 and beyond.
