Monthly Payout Marvels: 7 DRIP-Ready Stocks For Steady Cash Flow

Investors using the DRIP method should buy these dividend stocks with monthly payouts

• Realty Income (O): Realty Income is arguably the best monthly dividend stock.
• Agree Realty (ADC): Agree Realty offers a lot of what Realty Income does.
• Gladstone Land (LAND): This farmland REIT is a reasonable choice.
• Keep reading to discover more dividend stocks with monthly payouts!

Investors who apply the DRIP method to monthly dividend stocks create a win-win situation that can rapidly grow one’s capital. DRIP is simply an acronym standing for dividend reinvestment plan.

Those using the plan reinvest the dividends received to purchase additional shares of the stock. The result is a sort of virtuous cycle in which more and more shares can be accumulated. The plan works for dividends paid on any schedule but is particularly efficacious for monthly stocks given the additional reinvestment periods.

Continual reinvestment on an accelerated monthly schedule creates a snowball effect over time that most investors can appreciate. That simple truth has made and will continue to make the DRIP method an attractive investment strategy.

Realty Income (O)

Realty Income (NYSE:O) deserves consideration in any dividend portfolio and is particularly strong as a monthly dividend stock. The company is structured as a real estate investment trust (REIT) and has a long record of increasing its monthly payout.

In fact, Realty Income has not reduced its dividend payment dating back to 1999. The company just instated its 106th consecutive quarterly dividend increase. Investors receive a monthly dividend almost guaranteed to increase every fourth month.

One thing investors should note when assessing realty income is the necessity of understanding funds from operations (FFO) and earnings as it relates to REIT dividends. FFO is a far more accurate metric by which to gauge the health of a REIT and its dividend. That’s important for our discussion here because while Realty Income’s earnings declined in the most recent period, its FFO continues to grow. Furthermore, Realty Income is a stable commercial real estate firm overall. The company signs triple net leases that are safe for the firm and tend to have very long lease periods.

Agree Realty (ADC)

Agree Realty (NYSE:ADC) is another monthly dividend REIT stock worth exploring. Like Realty Income, Agree Realty operates in the retail space. Its portfolio includes more than 2,100 properties across 49 states totaling in excess of 44 million square feet of leasable area.

Investors should pay particular attention to the aforementioned FFO metric, discussed above. Both core and adjusted FFO continue to rise at the firm. That suggests Agree Realty is a healthy firm in relation to its dividend. Evidence of that notion is provided in the fact that its dividend was last reduced in 2011.

Agree Realty reported a particularly strong core FFO, rising by 15%. That allowed the firm to confidently increase its dividend by 2.9%. The company has no debt maturities until 2028 and anticipates $600 million in acquisitions during the year. The company’s most recent earnings report should give investors reason to believe those acquisitions will prove productive.

Gladstone Land (LAND)

Gladstone Land (NASDAQ:LAND) is a company that buys, leases and sells farmland properties. The company pays a monthly stock to investors, which is why it finds itself on this list. Investors who buy the stock receive an additional 4.2% in current yields, increasing the value of their investment.

Those dividends, reinvested on a monthly basis, have the potential to produce much larger returns over time.

Anyway, let’s look at Gladstone Land taking its fundamentals into account. Firstly, I’ll know it is riskier than either of the two firms discussed above. Adjusted funds from operations fell to 14 cents per share from 17 cents a year earlier. While that isn’t particularly bad, the downward trend is not preferable.

The REIT currently owns 168 farms spanning 112,000 acres across 15 states. The company also owns substantial water assets in California. The firm’s debt is non-variable. While that is positive the company continues to face issues in the high-rate environment.

STAG Industrial (STAG)

STAG Industrial (NYSE:STAG) currently provides investors with 4.2% as dividends paid on a monthly basis. Again, investors who apply the DRIP method to those dividends should be able to build a portfolio with more and more shares.

As you may have guessed from the name of the company it is an industrial REIT. Its portfolio encompasses 570 buildings across 41 states, 493 of which are in the warehouse/distribution space.

The company is doing well from a fundamental perspective, making it an attractive investment. While net income fell slightly the firm’s funds from operations grew. Core FFO increased by 7.3% during the first quarter.

REIT investors need to understand dividend payout ratios. Although dividend payout ratios are important when analyzing other dividend stocks, they don’t apply to REITs. Instead, REIT investors must rely on FFO when judging the health of a REIT dividend. STAG Industrial continues to thrive in that regard as its FFO is growing. However, if an investor were to look at its payout ratio of 1.73 they would assume the firm cannot continue to pay dividends as the rate is 73% above earnings. Instead, STAG Industrial’s dividend is strong and was last reduced in 2011.

Main Street Capital (MAIN)

Main Street Capital (NYSE:MAIN) is the first company on this list to deviate from the REIT model. The firm is a business development company and provides capital to lower-middle market firms.

It specializes in recapitalization, meaning it invests in the private debt of those firms. The company also provides debt to such firms for buyouts and acquisitions.

Main Street Capital is not a REIT, meaning that payout ratios are particularly applicable when analyzing its dividend. Fortunately, its current payout ratio sits at 0.61, well within the healthy range.

The company just increased its dividend by 6.5%, leading to an annualized yield of 8.1% overall. The company will also pay a supplemental dividend of 30 cents in June. Investors have a lot of opportunities to apply the DRIP method to Main Street Capital and its stock, should they invest. The company last reduced its dividend a decade ago and appears very strong presently.

Global Water Resources (GWRS)

Global Water Resources (NASDAQ:GWRS) is a regulated water utility stock representing a company serving the Phoenix metropolitan area. The company provides water to 82,000 people across 32,000 homes in the area.

Global Water Resources is an interesting investment, of course from the perspective of its application to the drip method. It’s also interesting because water is a worthwhile resource to investigate at the moment. That’s especially true in the western United States, where it is becoming increasingly valuable. However, I’d also like to note that Global Water Resources is somewhat risky based on traditional metrics. In particular, its payout ratio is nearly 100% at the moment.

Yet, revenues increased by 11.6% during the most recent quarter. The demand remains strong despite other fundamental concerns surrounding the stock.

GWRS is a good investment for those seeking monthly dividends from utilities firms. However, I’d consider any of the firms listed above before it for the purposes of monthly DRIP dividend investing.

Permian Basin Royalty Trust (PBT)

Permian Basin Royalty Trust (NYSE:PBT) is one of the most interesting monthly dividend stocks given the assets it controls. The company holds rights over the royalty interests to some of the most productive oil fields on Earth.

The Permian Basin sits above some of the largest proven oil reserves on Earth, where the company holds its interests. That’s particularly important at the moment, as geopolitical tensions increase their potential value. That notion is evidenced by a press release from the company dated April 19 showing increased distributions.

The company’s claims span 51,000 acres throughout Texas representing 125 separate claims. It’ll be very interesting to see the fate of the Permian Basin Royalty Trust throughout 2024. Many pundits expect share prices could rise, given geopolitical turmoil. Regardless, it remains a good choice for oil investors seeking a monthly dividend payout rather than a quarterly distribution. Again, that distribution, reinvested on a monthly basis will lead to a compounding effect over the long term. That’s the beauty of the DRIP method, particularly when applied to monthly stocks.

This post originally appeared at InvestorPlace.

On the date of publication, Alex Sirois did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Category: Lists of Dividend Stocks