For many investors, dividend-paying stocks represent the best of both worlds. A well-performing company can see a rise in its share price, plus shareholders receive regular distributions. While most dividend-paying companies make these payouts quarterly, some companies distribute cash to shareholders every month.
When deciding which dividend-paying stocks to buy, investors should look for companies that are financially sound enough that their dividends appear sustainable, and that appear well-positioned to increase those payments over time. Here are two great companies with reliable and growing dividends that investors should consider for their portfolios.
Real estate income
Real estate income (NYSE:O) takes its monthly dividend so seriously that it calls itself “The Monthly Dividend Company.” The Real Estate Investment Trust (REIT) owns a diversified portfolio of properties in the United States and internationally, which it leases to tenants across a variety of industries. As a REIT, it is required to distribute at least 90% of its taxable income annually in the form of dividends to its shareholders. And Realty Income has also increased its payouts for 27 consecutive years.
Shares of Realty Income are down 12% in the past year, but that has helped boost its dividend yield to 5.8%. That dividend yield is significantly higher than the broad market average yield of 1.35% and 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 some ballast in their portfolio during difficult economic times. Realty Income estimates that approximately 90% of rentals come from tenants with businesses that are resilient to economic downturns, and that 73% of the portfolio is leased to businesses in non-discretionary, low-price and/or service-oriented retail.
EPR properties
Another monthly dividend paying REIT to consider is EPR properties (NYSE: EPR), which owns real estate in the experience and education space. It uses long-term triple-net leases, making tenants responsible for all operating costs of the properties they occupy. Approximately 93% of EPR’s properties are leased to tenants in the experience category, which includes movie theaters, theme parks and food and gaming venues such as Top Golf.
EPR Properties has had a rough few years, but seems to have turned the corner lately. The pandemic had a clear negative impact on the cinema, as many of its tenants had to temporarily close and one of the largest cinema tenants had to file for bankruptcy. EPR suspended its dividend in the spring of 2020, but reinstated it at a lower level in December 2021. At the current share price it yields 8.1%.
Management has expressed its desire to further diversify its portfolio to reduce the company’s exposure to the cinema segment. In the first quarter of 2024, theaters contributed 37% of EPR’s annualized adjusted profit, up from 41% in the first quarter of 2023. During the first quarter, EPR purchased a theme park and land for two food and play projects. The company expects to spend another $220 million over the next two years to further diversify its portfolio.
The low point for investors
Both Realty and EPR Properties deliver reliable, monthly dividends to shareholders while providing real estate exposure. Neither will offer the rapid share price growth found in other sectors of the stock market, but their dividend yield will make them an attractive option for many investors.
Should you invest €1,000 in real estate income now?
Consider the following before purchasing shares in Realty Income:
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Jeff Santoro has positions in EPR Properties. The Motley Fool holds positions in and recommends Realty Income. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.
2 Stocks That Will Give You a Check Every Month was originally published by The Motley Fool
