*This article was written by Bob Ciura for Sure Dividend
With most stocks distributing dividends quarterly, investors needing predictable monthly cash flow could desire more frequent payouts.
This is where monthly dividend stocks come in. Monthly dividend stocks pay shareholders a dividend each month, for 12 total payments per year.
Investors can even find high yields above 5% from monthly dividend stocks. This article will discuss 3 of the high yielding monthly dividend stocks that are flying under the radar of most income investors.
STAG Industrial (STAG)
STAG Industrial is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has 563 buildings across 41 states in the United States. STAG Industrial went public in 2011 and has a market capitalization of $6.8 billion.
The focus of this 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 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.
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In late October, STAG Industrial reported (10/29/24) financial results for the third quarter of fiscal 2024. Core FFO per share grew 2% over the prior year’s quarter, from $0.59 to $0.60, in line with the analysts’ consensus, thanks to the sustained strength of the REIT’s tenants and hikes in rent rates.
Net operating income grew 5% over the prior year’s quarter even though the occupancy rate remained flat at 97.1%. On the other hand, interest expense increased 21% year-on-year due to high interest rates.
On the bright side, STAG Industrial has proved fairly resilient to the surge of interest rates to nearly 23-year highs thanks to its decent balance sheet. Moreover, the REIT marginally raised its already positive guidance for core FFO per share in 2024, from $2.36-$2.40 to $2.38-$2.40.
STAG Industrial has grown its FFO per share at a 6.2% average annual rate over the last decade and at a 4.9% average annual rate over the last five years. The U.S. industrial market is more than $1 trillion in size and STAG Industrial still has a market share that is less than 1% of its target market, which includes the top 60 markets of the country. Therefore, the REIT has ample room to continue to grow for years.
STAG has increased its dividend for 13 consecutive years and currently yields 4.0%.
Realty Income (O)
Realty Income is a retail real estate focused REIT that has become famous for its successful dividend growth history and monthly dividend payments. Today, the trust owns thousands of properties. Realty Income owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties. This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment.
Realty Income Corporation (O) reported third-quarter 2024 earnings, with EPS at $0.30, missing estimates by $0.06, but revenue of $1.27 billion, a 26% year-over-year increase, beat expectations by $10.01 million. Net income for common shareholders was $261.8 million. The company generated $915.6 million in Adjusted Funds from Operations (AFFO), or $1.05 per share.
Realty Income invested $740.1 million in new properties, achieving an initial average cash yield of 7.4%, while maintaining a portfolio occupancy of 98.7%. Additionally, Realty Income raised $271 million through its At-The Market program and issued $500 million in 5.375% senior unsecured notes due 2054, alongside £700 million in senior notes.
Realty Income generates its growth through growing rents at existing locations, via contracted rent increases or by leasing properties to new tenants at higher rates, but also by acquiring new properties. Realty Income expects to increase its investments in international markets moving forward.
It made a first deal in the UK in 2019 and plans to do more such deals in the future when it finds attractive targets. These acquisitions will help drive profits in the long run.
Realty Income has increased its dividend for 27 consecutive years and the stock currently yields 5.4%.
Main Street Capital (MAIN)
Main Street Capital Corporation is a Business Development Company (BDC) that provides long-term debt and equity capital to lower middle market companies and debt capital to middle market companies.
Main Street defines lower middle market companies as generally having annual revenues between $10 million and $150 million. The company’s investments typically support management buyouts, recapitalizations, growth financings, refinancing, and acquisitions.
At the end of Q3 2024, Main Street had an interest in 84 lower middle market companies (valued at $2.5 billion), 17 middle market companies ($178 million) and 92 private loan investments ($1.9 billion). On November 5th, 2024, Main Street Capital announced a 2.0% dividend increase to $0.25 per share paid monthly.
On November 7th, 2024, Main Street Capital reported third quarter 2024 results. Net investment income of $87.6 million for the quarter was a 7% increase compared to $82.2 million in Q3 2023. The corporation generated net investment income per share of $1.00, up 1% year-over-year from $0.99 per share. Distributable net investment income per share totaled $1.06, up 2% from $1.04 in Q3 2023.
Main Street’s net asset value per share increased 4.7% since December 31st, 2023, from $29.20 to $30.57. The corporation declared monthly dividends of $0.25 to be paid in the first quarter of 2024, which are 4.2% higher than those declared a year ago, as well as a supplemental $0.30 dividend to be paid in December.
The company pays a monthly dividend, currently sitting at $0.25 or $3.00 on an annual basis, along with supplemental dividends. The upcoming supplemental dividend amounts to $0.30 per share to be paid in December, while the company keeps its trend of increasing the regular monthly dividend slightly every year. The supplemental dividends have been a result of generating realized gains from Main Street’s equity investments.
MAIN stock currently yields 7.5%.
Disclosure: No positions in any stocks mentioned
