More than 100 stocks pay a monthly dividend. That gives income-seeking investors lots of options.
Many monthly dividend stocks have been reliable income producers over the years. However, one stands out as the best of the best: Realty Income (O 0.18%). Here's why it's the top choice for investors seeking a reliable monthly income stream.
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Achieving its mission
Realty Income calls itself The Monthly Dividend Company. And, for good reason. The real estate investment trust (REIT) has a 57-year record of providing reliable monthly dividends to its investors. It has now declared 669 consecutive monthly dividends.
However, paying a monthly dividend is only the starting point. The REIT's stated mission is to "deliver dependable monthly dividends that increase over time." It has a long history of increasing its monthly dividend. Realty Income has raised its payment 134 times since its public market listing in 1994, growing its payout at a 4.2% compound annual rate. It has increased its payout for 114 consecutive quarters and 31 straight years.
While many monthly dividend stocks provide a reliable income stream, Realty Income provides reliable income growth.
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Key Data Points
Build to continue delivering sustainable income growth
Realty Income is in an excellent position to continue paying its monthly dividend, which currently yields more than 5%. The REIT owns a diversified portfolio (retail, industrial, gaming, and other properties) secured by long-term net leases with many of the world's leading companies. Net leases generate very stable rental income because tenants cover all property operating costs, including routine maintenance, real estate taxes, and building insurance. Meanwhile, most of its tenants operate in industries that are resistant to the economic cycle, such as grocery and convenience stores.
The REIT pays out a conservative percentage of its stable income in dividends (about 75%). That enables it to retain meaningful cash to reinvest in new income-producing properties. Realty Income also has one of the strongest balance sheets in the REIT sector, giving it ample financial flexibility to invest in new properties. Additionally, the company has several other funding sources, including joint ventures, a private capital fund, and other strategic partnerships.
Realty Income also has a long growth runway. The REIT estimates that there's $14 trillion of real estate across the U.S. and Europe suitable for net leases. It routinely expands its opportunity set by adding new investment verticals. For example, it recently expanded into Mexico and has started investing in data centers. That company's diversification gives it the flexibility to focus on the best investment opportunities available.
The quintessential monthly dividend stock
While many companies pay monthly dividends, Realty Income is what other monthly dividend stocks strive to be. It has increased its high-yielding payout like clockwork for 114 consecutive quarters. That steady growth should continue, driven by the strength of its portfolio, financial profile, and growth prospects. These factors make Realty Income the best high-yield dividend stock to buy for a reliable monthly income stream.
