5 Monthly Dividend REITs to Buy Now
By: Olivia Faucher,
While most real estate investment trusts (REITs) generally offer higher than average dividend yields, monthly dividend REITs also offer investors a steady source of income due to their frequent distributions.
REITs generally offer high dividend payouts because of their tax status. To maintain the favorable tax status which allows monthly dividend REITs to have no corporate tax liability, these legal entities must distribute almost all of their earnings as dividends. To qualify for taxation as a REIT, these equities must distribute at least 90% of their earnings as dividends to their stakeholders. These incentives push dividend payouts amounts and yields to levels that are generally higher than the yields of many other equity types.
The monthly dividend payouts are frequent enough to align well with investors’ monthly expenses. This fact is also important for many investors who are on a fixed income, such as retirees. While seeking high dividend yields with a reliable income flow, investors also look for equities that offer at least minimal capital gains to accompany the high dividend yields in order to ensure overall gains.
Since a dividend yield could rise because of a falling stock price, asset appreciation in excess of the dividend yield indicates that the share price contributed to the equity’s total returns and did not offset any dividend gains over the trailing one-year period. Despite the importance of total returns, the five monthly dividend REITs below are sorted by their current dividend yields in ascending order.
Additionally, the following 5 monthly dividend REITs have demonstrated their ability to withstand the implications of the current financial crisis. Investors can safely rely on these REITs to continue to payout a monthly dividend.
5 Monthly Dividend REITs to Buy Now: #5
Gladstone Land Corporation (NASDAQ:LAND)
Dividend Yield: 3.32%
The Gladstone Land Corporation is a publicly traded REIT that invests in farmland and farm-related properties that are located in major agricultural markets in the United States. The REIT then leases this land to unrelated third-party farmer-tenants.
Gladstone Land’s stock price has been on a five year upward trend. In 2015, the stock price sat in the $10 range, and it has trended upward towards the current stock price of $16.15. The price per share took a substantial hit in March 2020, falling all the way down to $9.66, as a result of the financial crisis. Since then, the stock has demonstrated its resilience, as it has made an impressive recovery given that the current stock price is not far off from the 52-week high of $16.37.
The company has paid 86 consecutive monthly dividends since 2013, and has increased its dividend 18 times over the prior 21 quarters. Gladstone Land has attained consistent growth in its dividend over time, boasting a five-year dividend growth rate of 8.22%.
Gladstone Land has a history of delivering returns to its investors. The company has provided its investors with total returns of 44.35% over the last 12 months, 47.20% over the last three years, and 91.56% over the last five years. These consistent returns make LAND an attractive stock for investors.
Gladstone Land has achieved consistent revenue growth over the past 5 years, which can be attributed to the company’s regular increases in acquisitions. For example, LAND reported that Q1 2020 net income was $3.1 million, much higher than the Q1 net income of $958,000 the previous year in 2019. Gladstone Land acquired 12 new properties in 2019, and the company is now reaping the benefits of those new properties as the properties begin to bring in revenue. The company is achieving sustainable growth, which is largely valuable to investors.
5 Monthly Dividend REITs to Buy Now: #4
STAG Industrial, Inc. (NYSE:STAG)
Dividend Yield: 4.36%
Headquartered in Boston and incorporated in 2011, STAG Industrial, Inc. is an industrial real estate operating company that focuses on the acquisition, ownership and operation of single-tenant industrial properties throughout the United States.
Stag’s stock price has been on a solid upward trend over the last five years, making strides from the $19 range all the way up to the $30+ range that the price per share currently sits at. The stock price took a considerable hit at the height of the financial crisis, falling 45.3% from $33.47 in February 2020 to $18.31 in March 2020. Since this large decrease, the stock has been on a consistent upward trend to reach where it sits now at $31.01. The stock has made a significant recovery, as the current price is close to the 52-week high of $33.48.
STAG is currently paying out a monthly dividend of $0.12, making their annualized payout $1.44. The company’s current dividend yield is 4.36% , and average dividend yield over the last 5 years is 5.12%
STAG has achieved income and revenue growth despite the economic crisis, which is a testament to the company’s reliability. For the first quarter of 2020, STAG Produced Cash Net operating income of $93.7 million, an increase of 25.1% compared to the first quarter of 2019 of $74.9 million. The large first quarter increase can be largely attributed to the fact that Stag sold three buildings during this quarter, resulting in a gain of $46.98 million. This level of revenue growth is likely not sustainable, however the company will likely continue to attain some level of revenue growth because Stag acquired nine new buildings in the first quarter of 2020, in addition to selling three buildings. The nine new properties will provide an increased stream of revenue. The company has a year over year revenue growth of 12%, far surpassing the sector median of 2.73%.
5 Monthly Dividend REITs to Buy Now: #3
Realty Income Corporation (NYSE: O)
Dividend Yield: 4.65%
Realty Income Corporation, also known as The Monthly Dividend Company, is a company dedicated to providing stockholders with dependable monthly income. Realty Income owns more than 6,500 real estate properties that are under long-term lease agreements with commercial tenants.
Realty Income Corporation has delivered nearly 601 consecutive monthly dividend payouts in its 50-year history. Realty Income Corp. is also classified as a Dividend Aristocrat, meaning the company has a record of boosting their annual dividend distribution amount for at least the last 25 consecutive years. Realty Income Corporation has established a reputation of paying reliable dividends to its investors.
The current $0.234 monthly payout results in an annualized payout of $2.80 and a dividend yield of 4.65%. Over the last two decades the company managed to maintain an average dividend growth rate of nearly 5% per year.
The current price per share of Realty Income stock is $60.61, which is well below the 52-week high of $84.92. The stock price has been moving on a steady upward trend over the last 5 years, but has certainly suffered as a result of the widespread financial implications of the COVID-19 pandemic. Realty Income Corporation’s stock took a tremendous hit in March 2020, falling from $76.59 ro $42.50. Since then the stock has been slowly recovering and still has room to improve. Investors who make the move to buy Realty Income stock right now, while the share price is depressed, will put themselves in a prime position to attain a strong dividend yield on their investment as well as the potential for capital growth as the stock continues to recover.
The company’s revenue growth year-over-year is reported at 9.25%, which greatly outperformed the sector as a whole, as the sector median stands at 2.73%. Realty Income Corporation is a standout amongst the competition.
5 Monthly Dividend REITs to Buy Now: #2
LTC Properties, Inc. (NYSE:LTC)
Dividend Yield: 5.96%
Headquartered in Westlake Village, California, and founded in 1992, LTC Properties, Inc. operates as a health care REIT. The company invests in senior housing and long-term health care properties, including skilled nursing properties, assisted living properties and independent living properties through mortgage loans, property lease transactions and other investments.
Unlike many other equities that slashed their dividends drastically in the aftermath of the 2008 financial crisis, LTC merely paid a flat annual dividend in 2009 and resumed its annual dividend hikes the following year. Since suspending dividend payouts in 2001, LTC has advanced its annual payout by 440%. This corresponds to an average annual growth rate of 10.4%.
The current monthly distribution from LTC is $0.19. This monthly payout converts to a $2.28 annual payout and a 5.96% dividend yield. LTC has sustained their dividend payout throughout the financial crisis without having to cut the payout amount, demonstrating that the company is equipped to withstand the impacts of the economic downturn.
LTC stock was trading at a price near $50 before taking a significant hit due to the financial crisis. The stock price fell down to $25.30 in March 2020, and has since made a recovery to reach the current price of $38.62. Despite this recovery, the price is still somewhat depressed relative to its normal share price before the financial crisis. Now is a favorable time to buy LTC stock, while the price is lower than usually, as it has the potential to provide increased returns as it continues to recover.
5 Monthly Dividend REITs to Buy Now: #1
Gladstone Commercial Corporation (NASDAQ:GOOD)
Dividend Yield: 8.2%
The Gladstone Commercial Corporation is a publicly traded REIT that pays monthly cash distributions to its stockholders and invests in net leased industrial, commercial and retail real property. It also selectively makes long-term industrial and commercial mortgage loans.
Gladstone Commerical’s stock price has been on a five year upward trend. The price per share took a considerable hit when it fell from $21.53 to $9.54 in a matter of weeks during March 2020 at the peak of the financial crisis. However, since that hit the stock has made a recovery, and the stock price currently sits at $18.25. The company’s resiliency during the financial crisis and ability to sustain its dividend throughout the crisis speaks volumes about the confidence that investors can have in Gladstone Commercial.
The company’s current $0.125 monthly dividend amount corresponds to a $1.50 annualized payout and currently yields 8.2%. GOOD has been paying a monthly dividend since 2003, demonstrating that the company pays a dependable dividend. Furthermore, GOOD’s average 4 year dividend yield of 7.97% outperforms the sector median of 5.16%.
The company recently reported their q2 2020 earnings, and they beat expectations in terms of profitability. Good also beat analyst expectations of revenue, reporting revenue of $33.5 million in the second quarter, while analysts predicted $31.6 million. Additionally, this REIT has also delivered to its shareholders a 8.22% total return over the past three years and a 64.25% return over the last five years.
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Olivia Faucher is an investment writer intern at Eagle Financial Publications who writes for www.dividendinvestor.com.