6 Great Monthly Dividend REITS [for Great Compound Income]

Looking for REITs that pay monthly dividends? Our unbiased detailed report covers 6 REITS that pay over 4.7% Yield + 3 high yield monthly REITS

Our in-depth analysis covers 6 REITS worth over $1 billion USD each that pay up to a 10% Yield.

Note: We Hold No Positions in any of these stock, nor do we have any business or personal relationship with any of the companies mentioned – this is a completely unbiased report for educational purposes and is not a recommendation to buy or sell any stock referenced.

Usually, investors searching for dividend stocks follow an “income strategy” which means they seek to generate a steady income from their investments rather than a big capital gain through appreciation of the stock price “growth strategy”.

In an income investment strategy, WHEN you get paid is almost as important as how much you get paid.  With Monthly Income from Real Estate Investment Trusts you get paid monthly and that allows your payments to compound faster, over the long-term this is extremely beneficial for your bottom line.

Does this mean dividends paid more frequently are better than those paid less frequently?

The Advantages & Disadvantages of Monthly Dividend REITS

The increased frequency of monthly dividends is very attractive for several reasons:

  • Easier to manage

Like previously mentioned, income strategies can require some management in order to make dividend payments meet specific expenses. It can be difficult to meet recurring expenses with a quarterly or biannual dividend since a lot of those amounts are due on a shorter period basis.

Of course, income investors can build a portfolio that pays dividends every month by choosing stocks that reward shareholders in alternate months. Nevertheless, that is more difficult and can be more expensive (transaction costs) than choosing monthly dividend-paying investments.

  • Faster compounding

Whether to meet specific financial needs or to take advantage of the compounding, monthly payments can still have the upper hand against less frequent payments. The more frequent the dividend the faster it is reinvested. Obviously, the difference is small because each reinvestment amounts to 1/12 of the yearly dividend but over a long period (decades) it turns into a sizeable amount.

  • Less volatility around ex-dividend date

There is a date after which investors that buy the stock aren’t entitled to receive the next dividend; instead, they have to wait for the following payment.  That date is called “ex-dividend date”.

Imagine a company that pays an annual dividend of 5%. It’s easy to understand there will be a lot of people trying to get the stock right before ex-dividend date in hopes of getting 5% out of their investment without having to wait the whole year and being exposed to share price volatility. In the same way, there will be a lot of people closing their position after they get their payment.

The larger the dividend yield the larger the price swings around the ex-dividend date.  When the dividend is spread throughout the year, each payment is smaller which translates into less volatility around these dates.

  • Fairness

An income investment strategy isn’t intended to be a short-term strategy but every once in a while it’s healthy to reevaluate the portfolio, close some positions and open new ones.

When the time comes it can be frustrating having to wait for a dividend that’s distributed once or twice a year. Picture the situation where an investor sells the stock one or two months before the ex-dividend date and the dividend is distributed once a year. This investor might have held the stock for ten or eleven months and he still doesn’t get a cent in dividends. This will happen to a lesser degree to more frequent dividend payments.

However attractive, monthly dividends also imply some inconveniences:

  • Incremented expenses

Some companies mention that there are increased costs for processing dividend payments which makes it more attractive for companies to pay dividends less often. If that’s the case monthly payments can cost roughly 12 times as much as processing a single annual dividend. Could stocks have a higher dividend yield if they paid annual dividends?

  • Financial constraints

To pay monthly dividends, a company needs to have very disciplined financial execution. If its cash flow is exposed to some seasonality the company may require external funds to pay dividends which could otherwise fund itself, provided it had some more time.

  • Diversification

The business that makes monthly dividend-payments on stocks needs to be very stable – and even then most companies are paying quarterly dividends – it can be a challenge to find the right investments especially if you want to diversify.

6 REITS That PAY Monthly Dividends

Ticker Company Name Dividend Yield Payout Ratio Share Price ($) Annual Dividend ($) Industry Market Cap (B USD)
O Realty Income Corp 4.72% 83.30% 55.98 2.64 REIT – Retail 14.69
EPR EPR Properties 6.49% 71.50% 66.59 4.32 Real Estate Development 4.35
APLE Apple Hospitality REIT, Inc. 6.63% 68.60% 18.09 1.20 Real Estate Development 4.24
STAG STAG Industrial, Inc. 5.12% 79.80% 27.74 1.42 REIT – Industrial 2.47
LTC LTC Properties 5.40% 75.70% 42.24 2.28 REIT – Healthcare Facilities 1.55
GNL Global Net Lease, Inc. 10.14% 103.90% 21 2.13 REIT – Diversified 1.25

 

Monthly REIT Dividend Stocks Detailed Analysis

Realty Income Corp (NYSE: O)

Chart: Realty Income Corp NYSE:O Monthy Dividend Yield Chart - 24 Years
Chart: Realty Income Corp NYSE:O Monthy Dividend Yield Chart – 24 Years

* chart adjusted for the stock split in 2004

Realty Income Corporation has been paying monthly dividends since 1994 and it has increased its dividend almost 100 times in that period. In the last 3 years, its monthly dividend increased by almost 16% which translates to an average annual growth of 5.4%. This is a real estate investment trust (REIT) with over 5,000 rental properties, mostly in the retail space.

It is also the largest US company paying monthly dividends. Its financials are very solid with revenue and funds from operations (FFO), which is a big metric of REITs performance, increasing at a steady pace.

EPR Properties (NYSE: EPR)

Chart: EPR Properties NYSE:EPR Monthy Dividend Yield Chart. 21 Years
Chart: EPR Properties NYSE:EPR Monthy Dividend Yield Chart. 21 Years

EPR Properties is also a REIT with over 20 years of track record. It owns an investment portfolio that includes primarily entertainment, recreation and education properties valued at around $6.2 billion.

In 2017 it recorded its fourth consecutive year of income growth and revenue jumped 17% from the previous year to $575 million. FFO was also higher recording a 4% increase.

EPR did cut its dividend once back in 2008, but it has been increasing the distributions ever since. The dividends have an average annual growth of over 5% and they’ve been paying monthly since 2013.

Apple Hospitality REIT (NYSE: APLE)

Chart: Apple Hospitality REIT-NYSE:APLE Monthly Dividend Yield Chart. 3 Years
Chart: Apple Hospitality REIT-NYSE:APLE Monthly Dividend Yield Chart. 3 Years

Apple Hospitality’s is one of the largest hospitality REITs in the United States. Its portfolio of assets consists of 239 hotels across 34 states and is valued at $4.9 billion. All of the company’s hotels operate under Marriott or Hilton brands.

You can see the dividends haven’t changed since 2015, but that’s when the stock was subject to a reverse stock split which actually triggered a dividend cut. Still, this REIT entered my top 8 for good reasons.

At the current price it presents a great yield, revenue is up 19% in 2017, net income rose 26% and FFO 15%.

 

Stag Industrials (NYSE: STAG)

Chart: Stag Industrials NYSE:STAG Monthly-Dividend Yield Chart - 7 Years
Chart: Stag Industrials NYSE:STAG Monthly-Dividend Yield Chart – 7 Years

Stag is a REIT that operates industrial properties, most of them distribution/warehouse buildings. Its portfolio comprises 370 properties valued at $2.7 billion. Revenue performance has been flawless over the last few years and FFO just jumped 38% in 2017 compared to 2016 and over 30% in the first half of 2018 compared to the same period last year.

Its dividend has been rising every year since 2011 and is distributed monthly since 2013.

LTC Properties (NYSE: LTC)

Chart LTC Properties NYSE:LTC Monthly Dividend Yield Chart - 25 Years
Chart LTC Properties NYSE:LTC Monthly Dividend Yield Chart – 25 Years

LTC was formed in 1992 and it operates mainly long-term healthcare properties like skilled nursing and assisted living facilities. At the end of last year, its portfolio was valued at around $1.6 billion.

Since LTC started paying monthly dividends in 2005 distributions were raised 10 times at an average annual rate of 4.8%.

Regarding LTC’s financial performance, there aren’t any flashy numbers as FFO is growing at a high single-digit rate and earnings per share were flat last year. The thing is this is a very unique business which brings any portfolio some diversification on top of a very strong dividend track record.

Global Net Lease (NYSE: GNL)

Chart: Global Net Lease NYSE:GNL Monthly Dividend Yield Chart. 3 Years
Chart: Global Net Lease NYSE:GNL Monthly Dividend Yield Chart. 3 Years

* adjusted for the reverse stock split in 2017

Global Net Lease invests in commercial properties and even though it originated in 2011, it only started paying dividends in 2015. Its dividend track record is pretty solid but not that long so you can see the appeal is coming from the dividend yield. At 10% this dividend is pretty tempting, even though the total stock return is flat at the moment. Share price took a nosedive earlier this year but it also made a spectacular recovery.

Their top line is growing as well as their portfolio, but interest is still taking a toll on profitability. It also brings some diversification because half of its assets are in Europe.

3 High Yield Monthly Dividend REITS

Ticker Company Name Dividend Yield Payout Ratio Share Price ($) Annual Dividend ($) Industry Market Cap (B USD)
GNL Global Net Lease, Inc. 10.14% 103.90% 21 2.13 REIT – Diversified 1.25
APLE Apple Hospitality REIT, Inc. 6.63% 68.60% 18.09 1.20 Real Estate Development 4.24
EPR EPR Properties 6.49% 71.50% 66.59 4.32 Real Estate Development 4.35

Table 2: High Yield Monthly Dividend REITS

Out of our list of REIT Stocks, there are clearly 3 that are paying higher dividend yields based on the current stock price.

Global Net Lease Inc. (Ticker: GNL) is paying a mighty 10.14% dividend yield.  The stock price is roughly the same in August 2018 as is was in August 2017 but it did have a 27% price drop in between.  Suffice to say the stock price has recovered fully.

Apple Hospitality REIT, Inc. (Ticker: APLE) is currently showing a dividend yield of 6.62%.  It has a solid market capitalization of $4.24 billion. The stock price has fluctuated between $16 and $21 over the last 3 years since inception, so it is probably a good income purchase at around the $16 to $17 mark, this will maximize your yield.

EPR Properties Inc. (Ticker: EPR) is currently returning a Dividend Yield of 6.49% and along with the entire REIT market stock prices dropped 26% for EPR from November 2017 through May 2018.  EPR has recovered this loss from May 2018 to date.

Monthly REIT Dividend Stocks Summary

All of the REITS mentioned have a market capitalization of over $1 billion and a dividend yield above 4%. Even though operating in different areas they are all REITs with a solid dividend track record. With that being said it might be smart to add other monthly dividend-paying assets like bonds or funds for diversification purposes.

Learn More About REITs – Listen to our Podcast.

Podcast 007 – Hedge Funds and REITS – Are they as good as they seem?

A close look at Hedge Funds and Real Estate Investment Trusts

  • Published: Sun, 04 Mar 2018 23:00:00 GMT
  • Duration 00:10:09

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.