The real appeal of real estate investment trusts (REITs) for many is the dividend, which for most is paid quarterly. There are some, however, that pay monthly, adding to their appeal as a steady flow of income, especially in today’s super-low rate environment for insured savings accounts and CDs.
But with any investment, choosing carefully is important. So we did that for you here, picking out three that, while each from a different industry, have proven to be steady providers of monthly income.
Not included here is perhaps the best known of monthly dividend payers, but we’re not giving Realty Income (NYSE: O) short shrift. There’s good reason for its popularity and Millionacres covers this retail REIT regularly, including this piece from a few weeks ago.
Instead, let’s have a look at Whitestone REIT (NYSE: WSR), STAG Industrial (NYSE: STAG), and LTC Properties (NYSE: LTC).
Houston-based Whitestone describes itself as “a pure-play, community-centered retail REIT that acquires, owns, manages, develops, and redevelops high quality ‘e-commerce-resistant’ neighborhood, community, and lifestyle retail centers principally located in the largest, fastest-growing, and most affluent markets in the Sunbelt.”
“E-commerce resistant" means a mix of national, regional, and local tenants that provide daily necessities, needed services, and entertainment to communities located primarily in thriving Phoenix, Austin, Dallas-Fort Worth, Houston, and San Antonio.
As of third quarter 2020, those 1,386 tenants were located in 58 "Community Centered Properties" comprising 5 million square feet of leasable area. Unlike retail REITs that focus on big-box clients, this company stresses the multi-cultural and entrepreneurial nature of its tenant base, noting that its diverse base of specialty retail, grocery, restaurants, medical, educational, financial services, and entertainment tenants are typically in spaces of less than 3,000 square feet.
They paid 95% of their rent in the fourth quarter. And on Feb. 10, Whitestone announced it was raising its quarterly payout by 2.4% to $0.1075 per share. That included boosting its monthly payout from $0.035 per share to $0.035833 per share when it distributes in March the 127th consecutive monthly dividend the REIT has distributed since its IPO in August 2010.
Sure, that’s less than three cents a share, but at a Feb. 12 closing price of $8.85, that’s good for a respectable yield of 4.86%. Whitestone stock had fallen to as low as $4.71 a share last spring and is still well off its 52-week high of $13.74.
Founded in 2010, STAG Industrial is a Boston-based REIT that currently owns and operates 492 buildings covering 98.2 million square feet in 39 states. An active buyer, the company picked up 32 properties in the fourth quarter alone, at a price of $579.9 million and with an occupancy rate of 100%.
As Millionacres’ Dan Caplinger observed in a forward-looking analysis of STAG Industrial last summer, "STAG's ideal candidate for its portfolio is an industrial property that it can lease out to a single corporate tenant with a long-term rental agreement with favorable escalation terms. That guarantees rising levels of revenue and avoids the hassles of dealing with multiple tenants within a single location."
That business model has enabled this industrial REIT to boost its monthly common stock dividend to $0.120833 for the first three months of 2021. Based on a Feb. 12 closing price of $32.56, that’s a yield of 4.45%. STAG stock is back close to its 52-week high of $34.50, but after turning in yet another profitable quarter, and its solid position in a high-performing sector, there’s reason to believe there could be share appreciation ahead, too.
LTC Properties invests in seniors housing and health care primarily through sale-leasebacks, mortgage financing, joint ventures, construction financing, and structured finance solutions.
Based in Westlake Village, California, LTC Properties currently has a portfolio of more than 180 properties nearly evenly split between seniors housing and skilled nursing facilities. They’re in 27 states and operated by 29 different partners.
This healthcare REIT has been the model of consistency, paying $0.19 per share per month every month since October 2016 and regularly growing monthly payouts since March 2005. The company paid quarterly dividends before that since 1993.
LTC Properties was yielding 5.4% as of a Feb. 12 closing price of $42.26. That’s still about 16% off its 52-week high of $50.50 after the stock plummeting to as low as $24.49 in April as COVID-19 hammered the nursing home business while brutalizing its occupants.
Millionacres’ Reuben Gregg Brewer included LTC Properties as one of "3 Healthcare REITs to Buy Now" in an article last month, calling it "a turnaround play that's holding up relatively well in one of the hardest-hit niches."
The Millionacres bottom line
Whitestone REIT, STAG Industrial, and LTC Properties are in very different businesses but share this: a record of dividend payouts and operating models that give an investor confidence they can keep it up.
There’ll be ups and downs in their markets and their share prices, of course, but nothing is guaranteed in life anyway, right? At least these stocks look like they’ll keep pushing out dividends, month after month.