Dividends are a great way to supplement your retirement income stream. But most companies pay quarterly, which can cause budgeting issues. This trio of real estate investment trusts (REITs), however, pay monthly, making your financial life that much easier. Here's a quick look at Realty Income (NYSE: O), LTC Properties (NYSE: LTC), and Gladstone Land (NASDAQ: LAND) and what each of them can offer investors' dividend portfolios.
1. A bellwether dividend payer
Realty Income has taken the nickname "The Monthly Dividend Company" to very clearly show investors what it's all about. Meanwhile, the REIT is a Dividend Aristocrat, with over 25 years' worth of annual dividend hikes under its belt (including one each quarter during pandemic-hit 2020).
And it's an industry giant, with a portfolio of more than 6,500 single-tenant net lease assets (mostly in the retail space). The lessees of net lease properties are responsible for most of the operating costs of the buildings they occupy, so this is a fairly low-risk niche of the REIT industry. There's a lot to like here.
The one big problem is that investors are well aware of Realty Income's long history of success. The current yield of roughly 4.6% is around the middle of the REIT's yield range over the past decade or so. This suggests it isn't cheap today. In fact, you can find other net lease REITs with great track records and higher yields. But finding one that has a great history and pays monthly dividends is a bit harder to come by.
For investors willing to pay full fare for a REIT with an incredible history of success behind it, it's hard to not suggest a look at Realty Income. While value investors probably won't like this REIT today, most others will likely find it very interesting.
2. Muddling through tough times
LTC Properties also operates in the net lease space, but it focuses exclusively on senior housing assets in the healthcare sector. In 2020, that was not a particularly great place to be, given that the coronavirus pandemic is particularly risky for older people and spreads easily in group settings. LTC has had to work with tenants on rent concessions to help them get through this difficult time. But it has continued to pay its monthly dividend just the same.
Meanwhile, LTC's roughly 5.5% yield is down from its pandemic peak but still toward the high side of its 10-year range. And with vaccines rolling out across the United States, the companies that lease its properties will hopefully be able to get back to a more normal operating environment at some point in the very near future.
All that should set the REIT up for long-term success as more baby boomers crest into their retirement years and start needing help with healthcare. There's no magic cure for the headwinds here, but if you're looking for a monthly pay healthcare REIT, LTC has remained resilient through a very difficult time and is worth further evaluation.
3. They aren't making any more of it
The last name, Gladstone Land, is a harder sell for some investors. For starters, it's externally managed, which can result in conflicts of interest and fears about distracted leadership. These are issues investors need to consider carefully. And while Gladstone Land pays its dividend monthly, the yield is a modest 3%. But don't toss this REIT aside just yet.
Gladstone Land invests in farms, with a focus on produce, fruits, and nuts. These are high-value crops, many of which require quick delivery to local sellers because they simply can't be stored for long. That's different from the highly global, commoditized grain sector, which is much more volatile.
Meanwhile, the amount of land that can be used for farms has declined materially over recent decades despite a steady rise in the world's population. That means the remaining farmland is increasingly valuable. This is a long-term play, for sure, but so far, Gladstone is executing pretty well, growing its portfolio materially since its 2013 IPO and rewarding investors with regular, though recently small, dividend increases (the streak is up to six years).
The real benefit here is that farmland, because of its necessity, tends to be a pretty steady performer regardless of what's happening on Wall Street. This suggests Gladstone Land could be a good diversifying asset in a broader portfolio. Add in that monthly pay dividend, and it might still find a place on your wish list, despite its modest yield.
A unique breed
It would be great if every company got on the monthly pay bandwagon, but that's just not going to happen. So investors looking to replace their paycheck with a monthly dividend check will have to deal with a constrained list of options. But if you're careful, you can still build a diversified portfolio with names like Realty Income, LTC Properties, and Gladstone Land. If you take the time to dig into each of these REITs, it's highly likely one, or more, will get onto your buy list today.