Monthly dividend stocks are highly appealing for income investors. That is because these particular dividend stocks pay their dividends every month, instead of once per quarter like most dividend-paying stocks.
However, investors must also evaluate stocks to make sure they have sustainable dividends. The following 3 stocks have safe monthly dividends.
Realty Income (O)
Realty Income is a retail real estate focused REIT that has become famous for its successful dividend growth history and monthly dividend payments.
Today, the trust owns thousands of properties. Realty Income owns retail properties that are not part of a wider retail development (such as a mall), but instead are standalone properties. This means that the properties are viable for many different tenants, including government services, healthcare services, and entertainment.
On August 5, 2024, Realty Income Corporation (O), known as The Monthly Dividend Company®, announced its operating results for the three and six months ended June 30, 2024. For the second quarter, Realty Income reported adjusted Funds from Operations (AFFO) per share increased by 6.0% to $1.06 compared to the same quarter in 2023. The company invested $805.8 million during the quarter at an initial weighted average cash yield of 7.9% and achieved a rent recapture rate of 105.7% on properties re-leased.
AFFO for the second quarter was $921.1 million, or $1.06 per share, up from $671.7 million, or $1.00 per share, in 2023.
Realty Income does not generate overly high funds-from-operations growth rates on a per-share basis, but the growth that the REIT is experiencing has been very steady, coming almost every year at a mid-single digits CAGR.
As a result, the REIT has been able to grow its AFFO per share and its dividend per share for 27 consecutive years and is today a Dividend Aristocrat.
Whitestone REIT (WSR)
Whitestone is a retail REIT that owns about 55 properties with about 5.0 million square feet of gross leasable area primarily in top U.S. markets such as Texas and Arizona. Its tenant base is very diversified consisting of 1,453 tenants with no single tenant exceeding 2.1% of annualized base rental revenue. Its strategy is to prioritize renting to strong tenants and service-oriented businesses, including grocery, restaurant, health and fitness, financial services, logistics services, education, and entertainment, etc. in neighborhoods with high disposable income.
Whitestone reported its first quarter 2024 results on May 1st, 2024, during which it witnessed an occupancy rate of 93.6% versus 92.7% in Q1 2023. For the quarter, revenue growth was 3.7% to $37.2 million versus Q1 2023. Funds from operations per share (“FFOPS”) dropped 4.2% to $0.23. Same-store net operating income (“SSNOI”) rose 3.1% to $23.9 million. Also, rental rate growth was 17.0%, down from 20.8% a year ago, supported by a jump in rental rate growth in new leases of 25.9% vs. 9.5% a year ago.
Renewal leases growth was 15.0% versus 23.0% a year ago. There were 24 new leases and 46 renewal leases in the quarter. Whitestone maintained the following forecast for its 2024 guidance: SSNOI growth of 2.5%-4.0% and core FFOPS of $0.98-$1.04. It forecasts an ending occupancy of about 94.3%.
WSR should have the capacity to improve its dividend in the long run. For now, we use an estimated dividend growth rate of 6% through 2029, which would lead to a sustainable payout ratio of ~51% for a REIT. Whitestone’s exposure to the high growth Sun Belt market, as well as its investments in acquisitions, re-development, and development projects will drive future growth.
The continuation of SSNOI growth since Q1 2021 is a good sign. We would like to see it stay that way. For now, we estimate a FFOPS growth rate of 5% through 2029 on a long-term recovery path.
WSR yields 3.7%.
Phillips Edison & Company (PECO)
Phillips Edison & Company, Inc. is a real estate investment trust that is one of the nation’s largest owners and operators of omni-channel grocery-anchored shopping centers. Further, the company runs a third-party investment management business providing property management and advisory services to unconsolidated joint ventures and one private fund.
As of its latest filings, Phillips Edison & Company’s wholly-owned portfolio consisted of 286 properties, and 20 shopping centers owned through one unconsolidated joint venture, which comprised about 34.8 million square feet in 31 states. Phillips Edison & Company generates just over $575 million in annual revenues, pays dividends on a monthly basis, and is based in Cincinnati, Ohio.
On July 25th, 2024, Phillips Edison & Company released its Q2 results for the period ending June 30th, 2024. For the quarter, total revenues came in at $161.5 million, 6.2% higher year-over-year. Same-store NOI rose by 1.9% to $105.6 million, new and renewal leasing spreads landed at 34.4% and 20.5%, respectively, while occupancy was strong at 97.5% - all of which were encouraging.
Along with only marginally higher interest and operating expenses, Nareit FFO for the quarter grew by 4.1% to $78.4 million. Nareit FFO per share was $0.57. However, this was down from $0.58 last year due to a higher share count.
Future growth for the REIT will be driven in large part by acquisitions. During the last quarter, the company acquired two shopping centers and one land parcel for a total of $59.5 million. For fiscal 2024, management still expects Nareit FFO per share to land between $2.34 and $2.41. This implies a year over-year growth of 5.8% at the midpoint.
PECO stock currently yields 3.4%.
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Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.