Most companies pay dividends quarterly and that can lead to some lumpiness in an investor’s income stream. Those desiring relatively consistent monthly dividend income would need to seek out companies paying on offsetting quarterly schedules, which would take some work to set up.
On the other hand, monthly dividend stocks make it easy to earn consistent passive income each month. Agree Realty (ADC 0.69%), EPR Properties (EPR -0.57%), Gladstone Land (LAND 0.82%), Realty Income (O 0.21%), and Stag Industrial (STAG 0.66%) stand out as great options among monthly payers. They offer attractive dividends currently yielding more than 3% that should increase over time, making them ideal for passive income seekers.
Shopping for passive income
Agree Realty currently has a 4.4% dividend yield. At that rate, it would turn a $1,000 investment into $3.67 of dividend income each month ($44 annually). That’s roughly three times the dividend income that an investor would earn in an S&P 500 index fund, given its current yield of around 1.5%.
The real estate investment trust (REIT) supports its payout with steady rental income produced from its large and growing portfolio of retail properties. Agree Realty owns over 1,900 properties that are triple net leased (NNN) to high-quality retailers in sectors resistant to economic downturns and disruption from e-commerce (e.g., grocery stores, tire and auto service locations, and convenience stores). The company has steadily grown that portfolio by acquiring additional income-producing properties. That has enabled Agree to consistently increase its dividend. The REIT has grown its payout at a 6.1% annual rate over the last decade.
A blockbuster yield
EPR Properties stock currently offers a 7.3% dividend yield. The REIT backs that payout with a growing experiential real estate portfolio featuring movie theaters, eat-and-play venues, experiential lodging, and other attractions. The company leases these properties back to operators under NNN agreements. EPR Properties recently signed a new agreement with one of its largest theater tenants following its parent’s bankruptcy filing to preserve most of its rental income while giving it some upside potential. That deal will lift a lot of uncertainty surrounding the REIT’s big-time dividend and could set the stage for future growth.
Gladstone Land pays a 3.3%-yielding dividend. The farmland REIT owns a large and growing portfolio of farms that it leases to tenants. Those agreements supply a steady base of rental income with some upside potential from a banner harvest in the form of participation rents at some farms, entitling it to a percentage of the farm’s revenue. Gladstone Land also acquires new farms to grow its rental income. The REIT’s growing revenue stream has enabled it to increase its dividend 31 times over the last 34 quarters.
A long track record
Realty Income has a simple strategy. It aims to invest in people and places to “deliver dependable monthly dividends that increase over time.” It has certainly delivered on that objective. The REIT has paid 637 consecutive monthly dividends and has increased its payout 121 times since its public market listing in 1994.
Realty Income owns a diversified and growing portfolio of income-producing real estate, including retail, industrial, gaming, and agricultural properties. The company’s high-quality real estate portfolio helps support its 5%-yielding dividend.
A growing portfolio supports a rising dividend
Stag Industrial’s dividend yields 3.9%. The industrial REIT supports that payout with a large and growing portfolio of warehouse and light industrial properties leased to credit-worthy tenants. The company consistently acquires additional income-producing industrial properties, often targeting opportunities with value-add upside potential through leasing, expansion, or development potential. Stag Industrial’s growing portfolio and value-add strategy increase its rental income, enabling it to steadily raise its dividend.
Excellent passive income producers
Agree Realty, Gladstone Land, EPR Properties, Realty Income, and Stag Industrial all pay higher-yielding monthly dividends backed by high-quality real estate portfolios. The REITs also steadily acquire additional income-producing properties, enabling them to increase their payouts. The combination of yield, monthly payment schedule, and income growth potential makes them great stocks to buy for those seeking to generate consistent passive income.
Matthew DiLallo has positions in EPR Properties, Gladstone Land, Realty Income, and Stag Industrial. The Motley Fool has positions in and recommends Gladstone Land and Stag Industrial. The Motley Fool recommends EPR Properties and Realty Income. The Motley Fool has a disclosure policy.