With most companies distributing dividends quarterly, investors needing predictable monthly cash flow could desire more frequent payouts.
The good news is that there are a number of securities that pay dividends on a monthly basis, helping to deliver a steady stream of income. This article will discuss three of the best monthly dividend stocks right now.
STAG Industrial (STAG)
STAG Industrial (NYSE:STAG) is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has about 563 buildings across 41 states. The focus of this real estate investment trust (REIT) on single-tenant properties might create higher risk compared to multi-tenant properties, as the former are either fully occupied or completely vacant. However, STAG Industrial executes a deep quantitative and qualitative analysis on its tenants.
As a result, it has incurred credit losses that have been less than 0.1% of its revenues since its initial public offering (IPO). As per the latest data, 53% of the tenants are publicly rated and 31% of the tenants are rated “investment grade.” The company typically does business with established tenants to reduce risk.
In late October, STAG Industrial reported financial results for the third quarter of fiscal 2023. Core funds from operations (FFO) per share grew 3.5% over the prior year’s quarter, from 57 cents to 59 cents, exceeding the analysts’ consensus by 2 cents, thanks to the sustained strength of the REIT’s tenants and material hikes in rent rates. Net operating income grew 7% over the prior year’s quarter while the occupancy rate edged down sequentially from 97.7% to 97.6% and interest expense increased 12% year-on-year due to high interest rates. STAG Industrial has proved fairly resilient to the surge of interest rates to 16-year highs thanks to its decent balance sheet.
STAG Industrial has a well-laddered lease maturity schedule, with a weighted average lease term of 4.9 years and about half of the leases maturing after the end of 2025. Thus, the cash flows of the REIT can be considered fairly reliable under normal business conditions.
STAG has increased its dividend for 12 consecutive years. STAG Industrial currently offers a 4.2% yield and has never cut its dividend throughout its short history.
Agree Realty (ADC)
Agree Realty (NYSE:ADC) is an integrated REIT focused on ownership, acquisition, development and retail property management. Richard Agree founded Agree Development Company, which is the predecessor to Agree Realty Corporation, in 1971. Agree has developed over 40 community shopping centers throughout the Midwest and Southeast.
The company’s business objective is to invest in and actively manage a diversified portfolio of retail properties net leased to industry tenants. Agree Realty has paid a growing dividend for 11 consecutive years.
On Oct. 24, 2023, Agree Realty reported third-quarter results for fiscal year 2023. The company revealed significant investment activity and positive performance metrics. The company invested $411 million in 98 retail net lease properties and completed eight development projects totaling over $41 million in committed capital. Despite a 12.4% decrease in net income per share attributable to common stockholders, Core FFO per share increased by 2.1% to 99 cents, and adjusted funds from operations (AFFO) per share rose by 4.2% to $1.
The quarter also saw strategic financial moves, including a $350 million 5.5-year term loan at a 4.52% fixed rate, share sales generating $87 million in net proceeds, and a balanced balance sheet with a 4.5 times net debt to recurring EBITDA ratio. In terms of net income, the three-month period ending Sept. 30, 2023, showed a 5.6% increase to $39.7 million, compared to the same period in 2022.
The company maintained a shareholder-friendly dividend policy, declaring an October monthly dividend of 24.7 cents per common share. That’s a 2.9% year-over-year increase. ADC stock yields 5.1%.
EPR Properties (EPR)
EPR Properties (NYSE:EPR) is a specialty REIT that invests in properties in specific market segments that require industry knowledge to operate effectively. It selects properties it believes have strong return potential in Entertainment, Recreation and Education. The REIT structures its investments as triple net, a structure that places the operating costs of the property on the tenants, not the REIT. The portfolio includes about $7 billion in investments across 300+ locations in 44 states, including over 250 tenants.
EPR reported third-quarter earnings on Oct. 25, 2023, and results were better than expected on both the top and bottom lines. FFO came to $1.47 per share, which was 8 cents better than expected. Revenue was $189 million, 17% higher year-over-year. That is also better than estimates by almost $26 million. The company said it continues to see ongoing stabilization in its portfolio, as well as stronger box office sales, and a master lease agreement with Regal, a large movie theater tenant.
For many years, EPR enjoyed exceedingly high occupancy rates, which afforded it pricing power and higher margins over time. The coronavirus pandemic upended many of EPR’s tenants. But with the pandemic in the past, EPR’s exposure to experiential parts of the economy is a growth driver. Recent results seem to indicate that the worst is behind EPR, and the Regal restructuring is a big step forward.
We are forecasting the payout ratio to decline to 71% of AFFO by 2028, which is in line with most years in the past decade. EPR’s competitive advantage is its portfolio of specialized properties. EPR has methodically identified the most profitable properties through years of experience and focuses its investments in these areas.
EPR stock currently yields 7.6%.
On the date of publication, Bob Ciura did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
