As an investor, it doesn't get much better than receiving a dividend check. After all, that's about as passive as income can get.
Dividends are typically paid every quarter, but some stocks pay you every month. If you're a retiree or someone else who depends on dividend income to support yourself, getting paid monthly is ideal. Most bills are paid monthly, like rent or a mortgage, utilities, car payments, and insurance premiums. Having income that comes in every month can make it easier to pay those bills.
Only a handful of companies pay a monthly dividend. Keep reading to learn about two that are worth buying today.
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1. Realty Income
Realty Income (O 0.95%) calls itself The Monthly Dividend Company. The real estate investment trust (REIT) focuses on recession-proof retailers and related businesses and tends operate standalone locations. It's also a triple-net-lease REIT, meaning that its tenants pay for maintenance, insurance, and property taxes, which removes some of the risk facing the company.
For a reliable dividend payer, it's hard to find a better option than Realty Income. The company has paid 644 monthly dividends and has raised its dividend for 105 consecutive quarters. It currently offers a dividend yield of 5.8%.
The company also closed on its acquisition of Spirit Realty in January, showing its ability to grow both through company acquisitions and organically.
NYSE: O
Key Data Points
In addition to its growing monthly dividend and recession-proof model, Realty Income also has a bright growth opportunity in front of it. It just reported 21% revenue growth in the fourth quarter (ended Dec. 31, 2023) to $1.08 billion, driven by acquiring 1,016 properties over the last year to bring its total to 13,458 properties. For the year ahead, the company expects adjusted funds from operations (AFFO) of $4.13 to $4.21, representing 3% to 5% growth, and the stock trades at just 13 times that forecast.
Realty Income has seen costs rise due to higher interest rates, but like other REITs, the company should benefit from the expected interest rate cuts from the Federal Reserve later this year, which will lower borrowing costs and make dividend stocks like REITs more attractive compared to bonds.
With the interest rate environment likely to favor the company and it having one of the most resilient business models in the stock market, Realty Income is a great choice for dividend investors looking for a monthly check.
2. Stag Industrial
Another monthly dividend-paying REIT worth considering is Stag Industrial (STAG 0.03%), which is focused on operating industrial properties.
The company finished 2023 with 569 buildings and 112.3 million square feet, and, like Realty Income, the company operates as a triple-net-lease landlord, helping to defray some of the risk in owning property.
The company tends to focus on warehouses, light manufacturing, and office space. It also doesn't develop its own properties, choosing instead to acquire and add value afterward, which helps it save on operations.
NYSE: STAG
Key Data Points
In its fourth quarter (ended Dec. 31, 2023), net income jumped 40% to $41.7 million as the company managed to hold expenses nearly flat even as it grew rental income by 7% to $182.6 million. It posted a strong occupancy rate at 98.2%, showing its buildings are nearly all occupied, and it continued to grow its acquisition base, making two new acquisitions of roughly 400,000 square feet total in the quarter.
Stag's diversification gives it an opportunity to capitalize on a range of different properties that could come up for sale, and Stag should also benefit from falling interest rates, which should also benefit its industrial tenants as industrials tend to be cyclical businesses.
Stag currently offers a dividend yield of 4%. While that might not be as high as some other REITs, the stock has a long-term track record of steady growth and its monthly dividend payout is a nice bonus for investors who are looking for more frequent payments.
