One of the best parts about investing is that your money goes to work for you, potentially providing you rewards for the risks you are taking by investing it. Of those rewards, dividend payments are among the sweetest.
This is because most dividends are tangible, cash payments generated from a company’s operations. Those dividends can be paid out based on the health of the business, not the mood of the market. In addition, that cash hits shareholders’ accounts without those shareholders needing to sell and lower their ownership stakes in the businesses that paid them.
While a dividend is never a guaranteed payment, those previously mentioned factors make dividends very attractive to investors. Quite frequently, companies will pay their dividends quarterly, but there are a small handful that will offer their investors a faster payout cycle. These two stocks, in fact, cut their investors a check every single month.
Image source: Getty Images.
Realty Income (NYSE: O) is so proud of the fact that it pays its dividend monthly that it actually calls itself “The Monthly Dividend Company.” It has paid 640 monthly dividends since its founding in 1969, and since it went public in 1994, it has increased that payment a whopping 122 times.
As impressive as that streak sounds, it’s important to recognize that those increases are usually tiny. The table below shows Realty Income’s dividends for each month in 2023, based on the dividend payment date.
Payment Date
Payment Amount
$ Increase from Previous Month
% increase from Previous Month
1/13/2023
$0.2485
$0.0005
0.2%
2/15/2023
$0.2485
$0.0000
0%
3/15/2023
$0.2545
$0.0060
2.4%
4/14/2023
$0.2550
$0.0005
0.2%
5/15/2023
$0.2550
$0.0000
0%
6/15/2023
$0.2550
$0.0000
0%
7/14/2023
$0.2555
$0.0005
0.2%
8/15/2023
$0.2555
$0.0000
0%
9/15/2023
$0.2555
$0.0000
0%
10/13/2023
$0.2560
$0.0005
0.2%
11/15/2023
$0.2560
$0.0000
0%
12/15/2023
$0.2560
$0.0000
0%
Data source: Realty Income.
Realty Income and its shareholders have every reason to celebrate its consistent dividend streak. Still, its slow rate of increases make it more appropriate for investors looking for current income than those looking for income growth.
As a real estate investment trust (REIT), Realty Income must pay out at least 90% of its earnings as a dividend. That makes it highly likely that as long as its operations remain profitable, its investors should expect at least its dividend payment streak to continue.
Most of Realty Income’s properties are single-unit, free-standing commercial properties. Think of it as the landlord for things like grocery stores, convenience stores, drug stores, and dollar stores. They may not be the fastest growers out there, but they’ve certainly shown their resiliency over time.
LTC Properties (NYSE: LTC) is also a REIT, albeit one focused on senior housing and care, such as long-term care centers. Its focus on senior citizens sets it up to potentially thrive over the coming decades. A combination of an aging population and generally lower birth rates means there will likely be more demand for its services as people will need care and have fewer adult children to take care of them.
LTC Properties has maintained its dividend at $0.19 per share per month since October 2016. That makes it also very much more tuned for investors looking for current income rather than those seeking out income growth over time.
While the longer-term demographics appear to be favorable for LTC Properties’ focus on senior care, the COVID-19 pandemic and its outsize impact on seniors did hurt the company’s occupancy rate. Numbers have been generally stabilizing as the pandemic appears to be under better control, but this summer, the company indicated that it would be a “long, slow grind” before it completely recovers.
Both Realty Income and LTC Properties are in the business of being the landlords for businesses that look to have long-term staying power. That makes them reasonable places for investors to hunt for income from their portfolios. It’s also a key driver behind why they’ve been able to make those dividend payments every month, for years on end.
Of course, the downside to that sort of consistency is that neither company is delivering extremely rapid growth. As always, investing involves risks and trade-offs, but for those seeking out monthly income from their investments, either one of them provides good reasons to deserve a closer look.
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Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
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