Do you pay your bills every month or every quarter? For most people, budgets are on a monthly timeline. Unfortunately for people who rely on dividend income, corporate results are calculated and reported on a quarterly basis. That means you have to wait three months in between dividends from most dividend-paying stocks. If it would be helpful to see that cash hit your account more frequently, then you might want to consider the handful of companies that distribute checks to shareholders every month.
SL Green (NYSE: SLG) is a real estate investment trust (REIT) that owns commercial space in 88 buildings in Manhattan. It claims to be the largest office landlord in New York. The REIT is paying a $0.30 dividend per share each month, resulting in a 5.04% forward yield. SL Green switched from quarterly to monthly dividends after March 2020.
The REIT has done an excellent job collecting a high proportion of rents due from tenants throughout the pandemic crisis, and its funds from operations (FFO) are sufficiently high to cover the current dividend. It was even confident enough in late 2020 to announce a $1.6967 per share special stock dividend that was paid in January. However, investors should take care to assess the risks associated with commercial property in major markets that could be experiencing disruptions caused by remote work and the so-called urban exodus.
Realty Income (NYSE: O) is another REIT that owns over 6,500 properties, most of which are under long-term triple-net-lease agreements. The trust targets recession-resistant clients such as drug stores, dollar stores, convenience stores, and grocers. Realty Income also has exposure to gyms and theaters, which have struggled mightily over the past year. The theater portion is especially troublesome — many media executives speculate that theater traffic is permanently lower due to changing consumer tastes and streaming. Still, AMC Entertainment Holdings (NYSE: AMC) only contributes 2.7% of the REIT's contractual lease revenue.
Realty Income is a Dividend Aristocrat with a long history of increasing dividends. It is paying a 4.4% yield, and the dividend was approximately 84% of adjusted FFO in the most recent quarter. Even with the current economic crisis, Realty Income is producing more than enough cash to cover its distributions. As the economy recovers, it's reasonable to expect the REIT to continue increasing the dividend.
Agree Realty (NYSE: ADC) is a REIT that owns over 1,100 retail properties in 46 states. Most tenants are national chains with large-format locations, such as grocery, home improvement, and general merchandise. This ties Agree's long-term success to brick-and-mortar retail sales, but many of its tenants have proven resistant to recessions and e-commerce disruption.
Agree switched from quarterly to monthly dividends in February 2021. Prior to that, the REIT had steadily increased its quarterly distributions from $0.40 per share in 2011 to $0.62 in January of this year. The stock now pays out $0.207 per share each month, producing a 3.7% yield. Adjusted FFO per share was 134% of the cash distributed to shareholders in the quarter, so the trust is generating enough profit to support its current payout, even with the economic crisis.
Horizon Technology Finance
Horizon Technology Finance (NASDAQ: HRZN) provides loans to venture capital (VC)-backed start-ups. There aren't many publicly traded companies with that sort of strategy, and most competitors are larger with more diversified operations. It's a fairly risky strategy, but shrewd underwriting can deliver tremendous results.
Horizon's lending activities create monthly income streams from interest, which are reliable, assuming that loanees avoid default. There's a heightened default risk when lending to early stage growth companies, but Horizon seeks to offset that risk by taking warrants included in the loan contracts with those start-ups. Warrants provide upside appreciation with these high-risk, high-reward companies.
Horizon is paying $0.10 per share each month right now, an 8.36% forward yield. The monthly distribution hasn't changed in years. Unlike other stocks on this list, Horizon's goal isn't to slowly and steadily increase income for shareholders. Instead, Horizon aims to provide some cash flow returns to investors to bide time until the company's equity holdings create an even more valuable entity.
LTC Properties (NYSE: LTC) is a specialized REIT that owns 184 healthcare properties, most of which are either skilled nursing or acute care facilities. Demand for the services provided by LTC's tenants is mostly recession-proof, and demographics are favorable. Life expectancy is rising for people who achieve older age, and elder care solutions are expanding too. As the number of people over age 80 rises in the US, so too will demand for long-term care facilities. That's good news for LTC Properties shareholders.
Shareholders are receiving $0.19 per share each month from LTC, an attractive 5.38% yield. With adjusted FFO at 137% of the dividend last quarter, this REIT might be a more stable play than the commercial and residential property owners that are dealing with disruptions related to the pandemic. Investors should note that LTC hasn't increased its monthly distribution since 2016, and even then, it only rose by a penny each month.
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