Nowadays, it seems like a lot of stocks want to become monthly dividend stocks. The granddaddy of monthly dividend stocks is Realty Income Corp (NYSE:O). In fact, it even has a registered trademark: “The Monthly Dividend Company”.
There are number of attractive aspects to monthly dividend stocks, so let’s take a look at some of the monthly dividend stocks out there and see which might be possible candidates for your portfolio.
Monthly Dividend Stock #1: Realty Income
Speaking of Realty Income, the company just reported good earnings and has an occupancy rate of 98.6% — the highest quarterly earnings and occupancy rate in more than 10 years. AFFO per-share guidance has been confirmed and is slated to fall between $3.14 and $3.20 per share. In addition the company has announced its 82nd consecutive quarterly dividend increase. The dividend is paid monthly and comes out to $2.63 per year.
Realty Income continues to flourish.
Monthly Dividend Stock #2: EPR Properties
EPR Properties (NYSE:EPR) is of interest to me because it operates outside of the box. This REIT invests in educational and entertainment properties. EPR also just reported earnings, which came in very strong. It is paying a very generous yield of 8%, which represents 86% of funds from operations. If you were ever wondering who owns all that land that movie theaters are built on, EPR owns 149 of them. It also owns 11 family entertainment centers, seven entertainment retail centers, 25 ski areas, 31 golf complexes, and almost 150 different types of schools.
Monthly Dividend Stock #3: LTC Properties
LTC Properties (NYSE:LTC) will likely have reported earnings by the time this article publishes. Senior housing in assisted living, which is the space that LTC operates in, is going through a boom phase as America’s population ages. Within the next 15 years, it’s estimated that there will be more senior citizens than children in the country. While LTC does pay a monthly dividend which amounts to a 4.55% annual yield, I have a few concerns, because it mostly deals with assisted- and skilled-living facilities. Medicaid has been reducing payments to skilled facilities, so I have a few worries about LTC going forward.
Monthly Dividend Stock #4: Whitestone REIT
Whitestone REIT (NYSE:WSR) is another monthly dividend stocks, although it is one that I would stay away from. It seems like it should be doing better than it is, but with a focus on neighborhood shopping centers, Whitestone is facing headwinds from a difficult retail environment that I do not foresee much improvement in. WSR has never increased its dividend, even though virtually all strong real estate investment trusts increase dividends over time, at least annually. Its dividend is now 10.75%, but that’s because WSR’s price dropped to the point that investors are clearly concerned about the company’s ability to maintain the dividend.
Monthly Dividend Stock #5: STAG Industrial, Inc.
STAG Industrial, Inc. (NYSE:STAG) has some 360 buildings in 37 states, with about 71 million square feet of rentable space. Almost all of the buildings are in the form of warehouses, along with some office buildings and light manufacturing facilities. It is heavily diversified with only a sixth of its asset base devoted to its top ten tenants. STAG stock has doubled over the past seven years alone, thanks to focusing on B-class tenants that are in secondary markets. When tenants move further away from urban centers, overhead and capital expenditures (capex) are less expensive. While I’m not crazy about its 13% exposure to the automotive sector, I do like STAG’s 5.4% yield.
Monthly Dividend Stock #6: Blackrock Multi-Sector Income Trust
Blackrock Multi-Sector Income Trust (NYSE:BIT) is a closed-end fund that distributes income monthly, having a distribution rate of 8.28%. It also trades at a 10% discount to its net asset value. As stated, it derives its income from a wide variety of investments, most of which are some form of debt instrument. About 1/3 of its holdings are securitized products in some form, about 1/4 are from high-yield instruments, about 13% come from investment-grade credit sources and from a smattering of other types of instruments. Nearly 2/3 of the company’s holdings are B-rated or higher.
Monthly Dividend Stock #7: BlackRock Credit Allocation Income Trust
BlackRock Credit Allocation Income Trust (NYSE:BTZ) is a somewhat similar fund, but almost half of its holdings are investment-grade credit of some kind, 25% are high-yield instruments and 14% are non-US developed funds. The other holdings come from various sources and the companies issuing the investment-grade credit are well-known names. The distribution rate for this fund is 6.4% and it trades at an 11.5% discount to net asset value. In this fund, 67% of the holdings are BBB-rated or higher, so the credit quality is substantially improved, thus the lower distribution rate.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.