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[Editor's note: This article was previously published in November 2018. It has been updated to reflect changes in the market.]
Most dividend stocks pay their shareholders quarterly, but a few dividend-yielding stocks offer monthly distributions. The group is small: less than 100, with many of the offerings being exchange-traded funds ( ETFs ) or closed-end actively managed funds. And so investors looking for monthly dividend stocks to buy are limiting their universe quite a bit.
And there are quite a few attractive dividend-yielding stocks that pay out monthly. Several offer compelling cases for both their upside and safe dividends, with attributes that go beyond simply the timing of their distributions.
These six stocks all fit that bill, offering not only monthly dividends but potential share price appreciation and reasonable payout ratios.
Realty Income (O)
Realty Income (NYSE: O ) is the best-known of the monthly dividend payers, to the point that it has trademarked the slogan "The Monthly Dividend Company."
In terms of past performance, the monthly payouts have been just the cherry on top of a delicious sundae. O stock has returned - including dividends - an average of 15.8% annually since 1994, according to a recent investor presentation. It has been one of the best-performing real estate investment trusts in the market over that stretch.
O stock has become much more expensive over the past few months, bouncing more than 20% from February lows. But there's still a nice bull case at the moment. O yields a bit over 4.1%, and trades at about 18x the midpoint of 2018 FFO (funds from operations) guidance.
The portfolio looks both safe and nicely diversified, with Walgreens Boots Alliance (NASDAQ: WBA ) and FedEx (NYSE: FDX ) being its two largest tenants. Considering Realty Income's track record, it's worth staying long.
LTC Properties (LTC)
Like Realty Income, senior housing and healthcare property REIT LTC Properties (NYSE: LTC ) has bounced nicely off recent lows. And like with O stock, there's still a solid bull case for LTC even after recent gains.
With the "baby boom" generation aging, demand should stay strong. Meanwhile, LTC still yields 5%, though growth has been below that of most dividend-yielding stocks (it has been held flat for about two years now).
There are some risks here: investors are concerned that changing healthcare insurance reimbursement policies will impact LTC's tenants. The stock actually hit a five-year low earlier this year as a result. But sentiment has improved - and should continue to do so. With LTC still trading at a reasonable 14x FFO, the bounce could continue. Add to that a 5% yield, paid monthly, and it's definitely worth a look.
Shaw Communications (SJR)
Canadian telecommunications company Shaw Communications (NYSE: SJR ) hasn't posted particularly strong performance over the past few years. SJR actually has declined nearly 10% over the past five years - and has lost about 10% of its value over the past year alone.
There are some concerns about the wireless industry in Canada, much as there are in the U.S. But Shaw is growing nicely, with revenue up so far this year. Margin expansion hasn't followed yet, but as Shaw continues to take market share, profit growth may follow.
But with a 4.6% dividend yield and an 19x forward price-to-earnings multiple, SJR isn't pricing in much improvement. With 5G a potential catalyst in the mid-term, there's a nice case for SJR stock at current levels.
Dividends are announced in Canadian dollars, which can affect the payouts received by American investors. Still, a monthly dividend, a 4%-plus yield and a potential upside provide a nice combination here.
Source: Marriott Select Service Hotels via Flickr (Modified)
Apple Hospitality REIT (APLE)
Apple HospitalityREIT (NYSE: APLE ) owns 241 hotels in the U.S. - 115 of the hotels operate under the Marriott (NASDAQ: MAR ) banner, with the remaining 126 flying under the Hilton (NYSE: HLT ) flag.
Those two strong brands underpin a strong portfolio. Geographic diversification limits downside risk as well. With an impressive 7.7% yield paid monthly, that makes APLE one of the best dividend-yielding stocks in terms of monthly income.
The story admittedly isn't perfect. Growth has been relatively meager, and APLE's dividend has stayed at 10 cents per share per month since a 2015 IPO. Investors would have been much better off buying either MAR or HLT, both of which have better than doubled from early 2016 lows.
But for income-focused investors, APLE looks like a strong pick.
Pembina Pipeline (PBA)
Pembina Pipeline (NYSE: PBA ) is the biggest company on this list and the riskiest. Pipeline companies generally are lower-risk plays in the oil and gas space, but Pembina does have some concerns. Canadian oil stocks have struggled of late, and Pembina levered up to acquire Veresen last year.
That said, there's still a lot to like here. Earnings increased in the double-digits last year, largely due to the acquisition. PBA pays a solid 5.1% dividend. Valuation is relatively reasonable against U.S. rivals like Kinder Morgan (NYSE: KMI ) and Plains All American Pipeline (NYSE: PAA ).
If Pembina can continue to grow once the Veresen acquisition is fully integrated, there should be nice upside on top of the 5%-plus yield.
STAG Industrial (STAG)
STAG Industrial (NYSE: STAG ) isn't necessarily a spectacular stock, but it's one that can drive steady long-term returns along with monthly payouts. The company leases industrial buildings to single tenants and has a nicely diversified portfolio from both a customer and geographic standpoint. The average lease length currently is nearly five years, which should keep recent dividend growth intact.
Longer-term, there are minor concerns. Valuation isn't necessarily cheap, at over 16x FFO. An economic downturn could lead to lease cancellations or even customer bankruptcies. Investors focused on value might want to wait for a cheaper price than the current stock price of $27.07.
But investors looking for growing monthly dividend payouts don't have a ton of options, and STAG very well might be the best one.
As of this writing, Vince Martin did not hold a position in any of the aforementioned securities.
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