The market seems more volatile than ever. The recent spate of banking industry problems has created a new wave of tensions for investors.
While stock prices will often fluctuate, sometimes violently, many investors turn to dividends to make things easier. A steady stream of income does a lot to offset the market’s ups and downs.
And, what’s the only thing better than a quarterly dividend? A monthly one. A company providing a paycheck to investors every month can be just the ticket for dealing with an enduring bear market.
In recent years, we’ve seen a few more companies adopt a monthly dividend payment schedule. Still, it’s not all that common among publicly traded U.S. companies.
Regardless, these three monthly dividend stocks should be on the top of your watchlist for reliable income.
Realty Income (O)
Realty Income (NYSE:O), perhaps more than any other company, has popularized the idea of monthly dividend stocks. In fact, the company made a point of calling itself the Monthly Dividend Company many years ago, and the nickname caught on a big way.
Realty Income is a triple-net lease real estate invest trust (REIT). Triple-net leases are attractive since the tenants (rather than the landlord) pay for major expenses such as utilities and taxes.
Triple-net leases tend to create more predictable cash flow streams with fewer unexpected disruptions. They have become even more compelling given the current inflationary environment where many costs have suddenly spiraled out of control.
In any case, Realty Income is managing through the current economic landscape. Higher interest rates are a potential negative, as Realty Income will likely have to pay more to service its debt in future years. On the other hand, inflation helps raise underlying asset valuations along with giving more room for rent increases.
Speaking of increases, Realty Income is known for increasing its dividend frequently; often, many times per year. These are small increases on their own, but over the years, it’s added up to a tremendous amount. For investors purchasing today, O stock starts off with a 5% dividend yield.
LTC Properties (LTC)
LTC Properties (NYSE:LTC) is a REIT focused on skilled nursing facilities and senior housing. The REIT owns about 200 different properties and benefits from a wide geographic range of operations.
Skilled nursing and senior housing were admittedly under significant pressure prior to the onset of the Covid-19 pandemic. However, government aid to the sector during that emergency provided a great deal of additional stability to many of LTC’s tenants.
Industry conditions appear to be improving. The company has reported that more than 97% of rent is being collected on time now. That’s an enviable figure compared to other sectors of real estate such as offices, at the moment. Additionally, LTC’s recent quarterly results showed solid year-over-year growth.
In the longer term, skilled nursing and senior housing should be growth industries. America is in the middle of a great period of aging from a demographic perspective. And with people living longer than before due to improvements in medicine and enhanced treatment options, that should mean that there will be people making more use of senior housing and skilled nursing in their retirement years.
Shares currently trade for less than 13 times forward funds from operations (FFO) and offer a 6.8% dividend yield.
Stag Industrial (STAG)
Founded in 2003, Stag Industrial (NYSE:STAG) is a REIT focused on the industrial sector. It owns more than 500 buildings such as warehouses and distribution and manufacturing centers.
Stag focuses on properties in small markets, owning a wide footprint of warehouses and logistics buildings across the country. This has been a tremendous strategy in the age of e-commerce as vendors need warehouses and distribution facilities as close as possible to consumers to ensure on-time deliveries.
Stag should be fairly immune to the sorts of issues we’ve seen in other sectors of real estate. Malls and shopping centers, for example, are under fire from e-commerce. And the fate of offices remains uncertain in a world where people increasingly work from home. Stag, however, should enjoy a long-term tailwind as more and more of commerce continues to happen online which requires more supporting logistics-related buildings to manage the flow of goods.
Stag Industrial shares have fallen more than 20% over the past year. This makes the stock, which was often pricey, available at a more reasonable valuation today. STAG stock now offers a 4.5% dividend yield, paid monthly, while selling at less than 15 times forward FFO.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.