Real estate investment trusts (REITs) were created to provide income to investors without requiring them to directly buy or manage any of it themselves.
Because they're required to pay at least 90% of their taxable income to those investors in exchange for pass-through tax benefits, they've also become very popular with income investors.
Most of the approximately 225 publicly traded REITs pay dividends quarterly, but there are about a dozen that pay monthly dividends. Here are three of those to consider buying in August.
Broadmark Realty Capital
Broadmark Realty Capital (NYSE: BRMK) makes construction, heavy rehab, and bridge loans to residential and commercial real estate developers and builders and has been paying monthly dividends since January 2020 at yields ranging from 7% to 15.1%.
Seattle-based Broadmark says it has made more than 1,200 such loans for a total of $2.8 billion since its founding in 2010, and it belongs to the family of mortgage REITs, which make their money on the interest spread between what they borrow and what they lend. There can be some particular challenges here. For instance, an inflationary period that sees rates rise can make things interesting, but as our Reuben Gregg Brewer says here, Brookmark isn't like other REITs and may be a particularly good option for conservative investors.
Broadmark stock closed at $10.37 on Friday, July 30, down 6.58% from its 52-week high of $11.10 reached on June 17, 2021, and well off its 52-week low of $8.91 hit on July 31, 2020. That was good for a yield of 8.10% based on an annual dividend of $0.84.
LTC Properties (NYSE: LTC) invests in senior housing and healthcare through a variety of sale-leasebacks, mortgage and construction financing, joint ventures, and other lending vehicles.
Currently, the Westlake Village, California-based REIT is invested in about 175 properties operated by 31 partners in 27 states, a portfolio evenly split between senior housing and skilled nursing facilities.
After missing second-quarter estimates for funds from operations (FFO) and revenue, LTC Properties stock closed at $37.85 on Friday, July 30, down from a 52-week high of $44.73 on March 15 but well off its 52-week low of $32.01 from Oct. 29.
That was still good for a yield of 6.02% based on an annual dividend of $2.28, and despite it all, this healthcare REIT hasn't cut its dividend, paying the same $0.19 per share per month since October 2016 and at least $0.17 per month since October 2013.
This pick is even a bit more adventurous. EPR Properties (NYSE: EPR) is a Kansas City-based owner and operator of what it calls experiential properties that EPR says "offer a variety of enduring, congregant entertainment, recreation, and leisure activities."
In other words, stuff you can't do in a pandemic. Indeed, after paying regular, and growing, dividends since 1997 -- including monthly since 2013 -- EPR suspended payouts in May 2020 as tenants shut down and rent flow dried to a trickle.
Now they're back. EPR announced on July 13 that it would resume paying a monthly dividend of $0.25 per share after the early termination of a covenant relief period put in place with some of its creditors to help the firm make it through the suddenly tough times. Two weeks later, EPR reported Q2 2021 net income of $12.5 million, compared with the $69 million loss suffered in Q2 2020.
EPR says it now has a portfolio of 357 locations with more than 200 tenants in 44 states and Canada, including 177 movie theaters, along with family entertainment districts and centers like Topgolf, theme parks, ski resorts, experiential lodging, fitness and wellness providers, and even a casino.
EPR stock closed at $50.30 on Friday, July 30, 10.29% below its 52-week high of 56.07% on June 2 but about 250% above the 52-week low of $20.62 a share it dipped to on Oct. 14. It's now yielding 5.96% based on an annual dividend of $3.
The Millionacres bottom line
Paying a monthly dividend doesn't, of course, mean that a REIT is automatically a good real estate investment in either the short term or long run. Also, the resurgence of COVID-19 because of the delta variant certainly poses a threat, especially to a hospitality REIT like EPR Properties that's so dependent on visitors. LTC Properties is in the nursing home business, which also could be hurt again by a resurgent pandemic, but Broadmark might be more resilient since, after all, after a brief halt, construction has done well during the pandemic.