Most dividend stocks pay out quarterly. This can create cash flow issues for investors who rely on dividends for income.
After all, most bills come in monthly, not quarterly. The spacing of dividends can be problematic.
It makes sense why there are so many investors that want to generate a recurring income stream by investing into monthly dividend stocks. These are stocks that pay their shareholders every month instead of quarterly.
Unfortunately, many monthly dividend stocks have elevated risk. Some management teams see monthly dividends as little more than a gimmick to attract shareholders.
There are a few high quality monthly dividend payers, however. Among the best is Realty Income (O).
Company Overview
Realty Income is a real estate investment trust that was founded in 1969 and that is currently valued at $16 billion. The company invests in commercial real estate properties, 81% of total rents are generated from retail properties.
Realty Income’s tenants consist of 254 different companies across 47 industries over almost all of the United States. Its properties are used as pharmacies, dollar stores, cinemas, convenience stores, fitness centers, etc.
This wide array of industries that Realty Income rents its properties to makes it resilient versus downturns in single industries. Realty Income does not own mall properties, but rather invests into standalone real estate properties that can be rented out much more flexibly. Mall REITs have gotten under pressure in recent years, as traffic in lower-grade US malls is declining. This trend is partially due to Amazon and other e-commerce companies gaining market share versus traditional brick-and-mortar retailers.
Realty Income’s standalone properties, on the other hand, are not pressured by online retailers, as its tenants’ services are less easily replicated online. Fitness centers, post offices, etc. will always be needed, which is why occupancy rates across Realty Income’s portfolio remain quite high (98.6% during Q1).
