3 Monthly Dividend Stocks to Buy Now

While most dividend-paying equities distribute their payouts in quarterly increments, investors seeking more frequent income disbursements should consider taking advantage of monthly dividend stocks.

In addition to more frequent payments and a more consistent cash inflow, monthly dividends have a few additional advantages over their quarterly counterparts. The most significant advantage of monthly dividend distributions is that that the assets grow faster because of the compounding effect.

Instead of waiting a full three months to receive the dividend distribution, monthly dividends allow investors to receive a portion of that income every month and reinvest the money right away. Many investors who reinvest their dividend distributions might be content with receiving their funds quarterly but people who rely on dividend income for living expenses, such as retirees, prefer monthly distributions, since those align with their monthly bills and expenses.

Investors could try to generate monthly dividend income by selecting three different equities that pay staggered quarterly dividends. However, that approach would limit the number of equities that meet the requirements, would lead to a less than optimal portfolio strategy and, most likely, would reduce total returns. Even with this approach, the monthly income payments still would vary.

Additionally, many of the equities that pay monthly dividends are Real Estate Investment Trusts (REITs) and Master Limited Partnerships (MLPs), which take advantage of their favorable tax status and tend to pay higher-than-average dividend yields.

Securities that pay monthly dividends are easy to find. Most investment advisory sites and brokerages have a section that separates equities paying monthly dividends from the other equities.

While some monthly-dividend equities have higher dividend yields or longer records of dividend payouts than the equities mentioned in this article, here are three equities that pay monthly dividends and offer their investors the triple benefit of high yields, multiple years of dividend hikes and asset appreciation.

3 Monthly Dividend Stocks to Buy Now: #3

Realty Income Corporation (NYSE:O)

Dividend Yield: 4.6%

Headquartered in San Diego, California, and founded in 1969, the Realty Income Corporation is a Real Estate Investment Trust (REIT) that focuses primarily on acquiring, developing and leasing retail and commercial real estate facilities. As of September 2019, the company had more than 5,964 properties under long-term net lease agreements in 49 U.S. states, Puerto Rico and the United Kingdom with more than 100 million square feet of total leasable space.

The company has paid 320 consecutive monthly dividends since Realty Income’s public listing in 1994. While Realty Income Corporation pays its dividend distributions monthly, the company generally hikes it dividend payouts quarterly. The Realty Income Corporation has boosted its dividend payout every year for the last 20 years. Over the past two decades the company enhanced its total annual dividend payout more than 150%. This advancement pace corresponds to an average growth rate of 4.7% per year for two decades.

The REIT’s current $0.228 monthly dividend payout corresponds to a $2.81 annualized distribution. This annualized payout is equivalent to a 4.6% forward dividend yield.

While experiencing some volatility that included a decline of more than 30% in late 2016 and 2017, the share price has maintained a general uptrend since February 2018. Riding that uptrend, the share price passed its 52-week low of $62.28 at the onset of the trailing 12-month period and continued to gain another 31.6% before reaching its $81.94 all-time high at the end of October 2019. Since peaking in late-October 2019, the share price pulled back to close on January 7, 2020, at $74.18, While nearly 10% below its October-2019 peak, the Jan. 7 closing price was still more than 19% above its 52-week low from the beginning of the trailing 12-month period, as well as 41% higher than it was five years ago.

The share price is currently suffering another pullback, having lost 18% in share value in the trailing 12-month period. Its long-term returns were more promising, returning investors 26.7% and 39.1% in the last three and five years, respectively. With a target price of $68.00, the REIT is likely trading at a 12% discount, making it an excellent time to add this dividend payer to any income investor’s portfolio.

3 Monthly Dividend Stocks to Buy Now: #2

STAG Industrial, Inc. (NYSE:STAG)

Dividend Yield: 4.7%

Founded in 2010 and based in Boston, STAG Industrial, Inc. is a real estate investment trust (REIT) that acquires, owns and operates single-tenant, industrial properties throughout the United States. The vast majority of its profit is derived from rental income on warehouse and distribution buildings in the Midwestern and Eastern United States. The company’s largest customers are involved in logistics, air freight, automotive, and industrial equipment, bringing STAG Industrial its largest chunk of wealth.

The current $0.12 monthly dividend converts to a 4.7% yield and a The current 4.7% dividend yield is nearly 11% above the financial sector’s 4.11% average yield and also 8.6% higher than the average yield of all the companies in the Industrial REITs segment.

Since its initial dividend distribution in 2011, the REIT has boosted or maintained its annual dividend amount every year. Over the past eight years, the company enhanced its total annual dividend payout amount 53%. That advancement pace corresponds to an average dividend growth rate of 7.2% per year.

After losing more than 40% of its value in 2015, the REIT’s share price more than doubled over the past five years, gaining 139.3%. It started the 12-month period just before the financial crisis of March 2020, having dropped 12.88% in February and 19.09% in March and made an impressive recovery in the six months following. Currently, its share price is down 0.9% in the trailing 12 months, meaning its total returns brought investors 3.6%.

3 Monthly Dividend Stocks to Buy Now: #1

EPR Properties (NYSE:EPR)

Dividend Yield: –

Headquartered in Kansas City, Missouri, and founded in 1997, EPR Properties is a specialty REIT that invests in commercial properties primarily in the entertainment, recreation and education segments. The company’s current portfolio of nearly $7 billion in assets comprises properties in Entertainment, Recreation and Education, and it is the largest movie theater landlord in the United States.

EPR was forced to temporarily cut its dividend after the financial crisis in March 2020, eliminating its $0.38 monthly distribution. There is good reason to believe, however, that its dividend will be reinstated soon. EPR Properties is unable to pay a dividend due to the financial struggles of its primary tenants: movie theaters. Once the COVID-19 vaccine is fully rolled out, people are likely to start returning to mass entertainment mediums and restore the profitability of the cinema industry. This ought to stabilize EPR’s cashflow and allow it to restore its dividend, although likely not as high as it was pre-cut — at least, not yet.

Restoring the monthly dividend will cause yield-hungry investors to flock back to the stock, creating a resurgence likely to push the share price to its pre-COVID levels and fully recover on its losses for the year. In March 2020, when the WHO declared COVID-19 a worldwide pandemic, EPR Properties plummeted 58.46%. It largely traded sideways for the several months afterward, until November 2020, when the stock regained 51.09% of its value. Although it is still down 43.9% for the trailing 12-month period, EPR, being such a dominant force in the movie theater industry, will likely skyrocket as mass-entertainment becomes safe and acceptable again.

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