3 REITs That Pay Monthly Income
If you are looking to build up your portfolio with investments that pay monthly income, you’ll probably want to add in some real estate investment trusts (REITs).
In the current economic climate, investors are looking for safe investments that will continue to generate income throughout the ongoing Coronavirus crisis. There are some REITs out there that fit the bill. Specifically, those that invest in niche segments of the real estate market, often seen as ‘recession-proof’.
Here’s my list of 3 solid REITs that pay dividends monthly, that you can add to your portfolio right now.
- Market value: $18.8 billion
- Dividend yield: 5.1%
A large REIT that invests in economically resilient ‘non-mall’ retail assets, Realty Income is listed on the New York Stock Exchange (NYSE: 0). Often nicknamed ‘The monthly Dividend Stock’, we recently featured Realty Income in our monthly dividend stock analysis series.
The trust has a long, proven history of paying out monthly dividends, and of consistently raising its dividend. Investor who got in early back in 1994 when the trust had its initial public offering have seen their investments compound at a rate of about 15 per cent (15%) per annum.
A Resilient Stock
Realty Income has become even more popular in recent months. As other large retail landlords are suffering the impact of reduced rents sue to the Coronavirus shutdown, the management here are doing a fantastic job of collecting rents.
It looks like things are likely to continue along the same track, According to the trust’s CEO, Sumit Roy “dividend is sacrosanct to who we are.”
Despite looking fairly resilient, there are some potential problem tenants in the Realty Income’s rent roll. These include gym chains LA Fitness and Lifetime Fitness, as well as movie theater chains AMC entertainment and Regal Cinemas. Collectively, these four make up around 12 per cent (12%) of the trust’s revenue.
Making up the difference and providing much-needed income security for Realty Income, are it’s stable of super-solid ‘essential’ retailer tenants including Walgreens and 7-Eleven. These tenants are operating pretty much business as usual throughout the current economic issues.
This REIT also has significant cash reserves on-hand that help to shore up its finances and see it through any difficult times ahead.
Overall, Realty Income continues to offer investors a safe-haven that will continue to pay out dividends on a monthly basis for the foreseeable future.
- Market value: $3.8 billion
- Dividend yield: 5.6%
Another stock we have featured in our monthly dividend stock analysis series, STAG (NYSE: STAG) offers investors the chance to hold part of the lucrative industrial real estate sector in their portfolio. After all, we live in an “Amazon economy’. With large swathes of retail business moving online, demand for large scale warehousing and logistics properties is on the up.
STAG invests in real estate that is essential to the supply chain – regardless of whether the point of sale is traditional shop-based retail or online. Management at the trust say that over 40 per cent (43%) of their portfolio is part of the e-commerce supply chain.
A Niche REIT With Low Tenant Concentration Risk
STAG have a well-diversified tenant base. Amazon are the biggest tenant, but still only account for about 2 per cent (2%) of total revenue. Other tenants on the rent roll at STAG include Ford Motor Company, the U.S. government and DHL Supply Chain.
This REIT is a well-rounded offering for anyone looking to add the power of monthly dividends to their portfolio. The trust has little debt compared to the wider sector, and the ‘essential’ nature of the underlying real estate portfolio make it relatively immune to the current Coronavirus crisis.
- Market value: $1.4 billion
- Dividend yield: 6.5%
The final REIT on our list today is LTC Properties, (NYSE: LTC).
This is another trust that invests in a niche segment of the real estate market that has proven resilient in times of crisis. The clue is in the name; LTC stands for Long Term Care.
LTC invests in skilled nursing facilities and in senior housing properties, with about 50 per cent (50%) of their current 180-property portfolio in each. LTC does not run care home businesses. Instead, its properties are operated by a network of 30 operating partners.
While the current Coronavirus crisis poses a threat to the elderly, and in turn poses risks to care homeowners and operators, the issue is short term in nature. The underlying market for providing good quality living accommodation for later-in-life residents is growing. Furthermore, LTC is well-positioned with strong cash reserves to rise out the current crisis.
As the US (and global) population ages (we are living longer and birth rates are falling), demand for quality accommodation and associated care will only continue to grow in the long-term.
So, there you have it. 3 solid REITs that are riding out the current crisis, and continuing to pay solid monthly dividends to shareholders.
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