For many investors, dividend-paying stocks represent the best of both worlds. A high-performing company can generate stock price appreciation and, in addition, shareholders receive regular distributions. While most companies that pay dividends make these payments quarterly, some distribute money to shareholders monthly.
When deciding which dividend-paying stocks to buy, investors should look for companies whose financial positions are healthy enough that their dividends appear sustainable and which appear well-positioned to increase those payouts over time. Here are two great companies with reliable, growing dividends that investors should consider for their portfolios.
Real estate income
Real estate income (NYSE:O) takes his monthly dividend so seriously that it is called “The Monthly Dividend Company”. THE real estate investment trust (REIT) has a diverse portfolio of properties throughout the United States and abroad that it leases to tenants in various industries. As a REIT, it is required to distribute at least 90% of its taxable income to its shareholders annually in the form of dividends. And Realty Income has also increased its payouts for 27 consecutive years.
Realty Income’s stock is down 12% over the past year, but that has helped push the dividend yield to 5.8%. This dividend yield is significantly higher than the broader market’s average yield of 1.35%, and is even higher than that of most high-yield savings accounts, making it an attractive choice for investors looking for regular income.
The stock could also be a good choice for investors who want to have some ballast in their portfolio during difficult economic times. Realty Income estimates that approximately 90% of its rents come from tenants whose businesses are resilient to economic downturns, and 73% of its portfolio is leased to non-discretionary, low-cost and/or consumer-focused retail businesses. services.
REP Properties
Another monthly dividend paying REIT to consider is REP Properties (NYSE:EPR), which owns real estate in the experiential and educational space. It uses long-term triple-net leases that make its tenants responsible for all operating expenses of the properties they occupy. About 93% of EPR’s properties are leased to tenants in the experiential category, which includes movie theaters, amusement parks and food and beverage companies like Top Golf.
EPR Properties has had some tough years, but it appears to have turned a corner recently. The pandemic had a clear negative impact on the company, as many of its tenants had to temporarily close and one of its largest theater tenants had to file for bankruptcy. EPR suspended its dividend in spring 2020, but reinstated it at a lower level in December 2021. At the current stock price, it yields 8.1%.
Management has expressed its desire to further diversify its portfolio to reduce the company’s exposure to the movie theater segment. In the first quarter of 2024, movie theaters accounted for 37% of EPR’s annualized adjusted profit, compared to 41% in the first quarter of 2023. During the first quarter, EPR purchased attraction property and land for two restaurant developments and games. The company plans to spend an additional $220 million over the next two years to further diversify its portfolio.
The essentials for investors
Realty and EPR Properties pay reliable monthly dividends to shareholders while also providing exposure to real estate. Neither will provide the rapid share price growth found in other sectors of the stock market, but their dividend yields will make them an attractive option for many investors.
Should you invest $1,000 in real estate income right now?
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Jeff Santoro holds positions in EPR Properties. The Motley Fool posts and recommends Realty Income. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.
2 Stocks That Cut You a Check Every Month was originally published by The Motley Fool
