While total dividends matter to investors, it's always nice to receive frequent payments. Finding companies that pay dividends monthly can also help with your budgeting based on the timing of your bills (e.g., monthly rent or mortgage payments, utility bills, etc.).
Most dividend-paying companies make payouts quarterly, or four times a year. But some pay monthly. Real estate investment trusts (REITs) can be a fertile source for finding qualifying stocks that pay monthly dividends. That's because they have to pay out at least 90% of the taxable income as dividends in order to qualify for their favorable tax status.
Naturally, finding those with secure payouts matters most. These two REITs not only pay monthly dividends, but they also have a history of increasing them.
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1. Realty Income
Any monthly dividend list naturally starts with Realty Income (O 1.79%). In fact, it bills itself as "The Monthly Dividend Stock." The company was founded 55 years ago, and the board of directors has increased dividends annually (typically, more than once per year) for 30 consecutive years.
NYSE: O
Key Data Points
The REIT owns nearly 15,500 commercial properties with most of its rental income, about 80%, coming from the retail sector. While that may make some investors nervous due to online shopping's popularity, Realty Income mitigates the risk by renting to those that have strong omnichannel presences or have businesses in which people continue shopping in stores.
These include groceries, convenience stores, dollar stores, home improvement, drug stores, and restaurants. And it rents to large companies, like Dollar General, Walgreens Boots Alliance, and FedEx, that should have greater financial strength than smaller operators.
Its results don't show any weakness in light of e-commerce's influence on shopping. And Realty Income appears to manage its properties well based on a couple of important metrics. Occupancy was nearly 99% and it renewed expiring leases at 5% above previous rates.
The company continues to grow adjusted funds from operations (AFFO), a key measure for REITs since it measures cash available for distribution. Third-quarter AFFO was $1.05 a share, up from $1.02 a year ago.
Realty Income, while paying dividends monthly, typically raises dividends quarterly. It last boosted the monthly payout from $0.263 per share to $0.2635 starting in October. A year ago, it paid $0.256.
The stock has a 5.5% dividend yield compared to the S&P 500's 1.2%.
2. Stag Industrial
Stag Industrial (STAG 1.27%) has also built an impressive history of raising dividends, and investors have gotten used to regularly higher payments. It has increased payments annually since it became a public company in 2011.
NYSE: STAG
Key Data Points
As the name suggests, the company owns industrial properties located in the U.S. These mostly consist of warehouses and distribution centers, which are in demand given companies need to ship and store its merchandise, particularly as they continue embracing e-commerce to serve their customers.
Same-store cash net operating income, which compares properties that were in the portfolio a year ago, grew 4.4% to $138.2 million. Its occupancy for its total portfolio was 97.1%.
Stag has raised dividends annually, typically with January's payment. That means investors can expect another increase soon. It pays $0.1233 per share each month, up from $0.1225 last year. At the current rate, Stag's stock has a 4% dividend yield.
