Investing in dividends stocks can be a great way to earn passive income. If there's one drawback, most companies pay quarterly dividends, which can lead to a lumpier income stream.
However, a few companies pay monthly dividends, making them ideal for those seeking a steady passive income stream. Realty Income(NYSE: O), EPR Properties(NYSE: EPR), and Gladstone Land(NASDAQ: LAND) are three options to consider for recurring passive income.
The name says it all
Realty Income lives up to its name. The real estate investment trust (REIT) is known as The Monthly Dividend Company. It has delivered 651 consecutive monthly dividend payments throughout its history. The company has increased its dividend for 30 straight years, including for the last 108 quarters in a row and 127 times overall since it came public in 1994.
The REIT currently offers a dividend yield of around 5%, several times higher than the S&P 500's sub-1.5% yield. It should have no trouble increasing its payment in the future. Realty Income expects to grow its adjusted funds from operations (FFO) per share by 4% to 5% annually, driven by rent growth and accretive acquisitions. The diversified REIT, covering retail, industrial, gaming, and other properties, has a massive growth runway, with a $5.4 trillion total addressable market opportunity in the U.S. and another $8.5 trillion opportunity set in Europe. With an elite balance sheet -- one of only eight REITs with two A3-A- credit ratings or better -- Realty Income has ample financial flexibility to continue growing its portfolio and payout.
Providing a great experience for income-seeking investors
EPR Properties is a REIT focused on experiential real estate, like movie theaters, eat & play venues, and other attractions. The REIT leases those properties to operators under long-term net leases. Those agreements provide it with steady income to pay its monthly dividend, which currently yields over 7%.
The landlord expects to spend $200 million to $300 million this year expanding its experiential real estate portfolio. It spent $132.7 million through the first half of the year to acquire properties and invest in experiential development and redevelopment projects. It had committed to investing another $180 million in future projects it expects to fund over the next two years. These investments will help grow the REIT's rental income, which should enable it to continue increasing its dividend. It gave investors a 3.6% raise earlier this year and has raised its dividend a few times since reinstituting a payout following the pandemic.
A steadily growing income stream
Gladstone Land is a farmland REIT. It currently offers a dividend yield above 4%. The farm landlord has increased its dividend in 35 of the last 38 quarters, growing its payout by 55.7% during that period.
The REIT is ensuring it can continue paying a sustainable monthly dividend. One action it's currently taking is undergoing a strategic review and assessment of its permanent crop portfolio -- for example, almonds, pistachios, and grapes. Prices for these crops have experienced a downturn in recent months while costs are rising. That volatility is making it more difficult to plan for monthly dividends, and the REIT could seek to sell off some of these farms and reinvest the proceeds into those that generate steadier income. The steps it takes to preserve and grow the value of its farm portfolio and rental income should enable the REIT to continue to pay a rising monthly dividend.
Ideal options for those seeking monthly dividend income
Realty Income, EPR Properties, and Gladstone Land offer investors very recurring passive income through their monthly dividends. The REITs should be able to continue increasing their monthly payments in the future, which enhances their appeal. Those features make them ideal options for those seeking to collect a very steady income stream that rises over time.
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Matt DiLallo has positions in EPR Properties, Gladstone Land, and Realty Income. The Motley Fool has positions in and recommends Gladstone Land and Realty Income. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.
