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Build A Basket of Monthly Paying Dividends With These 5 REITs

In these days of rampant inflation, everyone could use more income.

Quarterly dividends are nice, but wouldn’t it be great to have regular dividend income you can count on every month?

One way is to take some spare cash and build a basket of monthly dividend-paying real estate investment trusts (REITs). With REIT prices down so much this year and dividend yields so high, now is a great time to pick up some high monthly income payers.

But be careful and build this basket the right way. A good basket of REITs should have diversity among sectors, a decent dividend yield and funds from operations (FFO) that will cover the dividend payments to prevent dividend cuts. You can build a basket with a lump sum of money divided evenly among all five REITs or just buy an equal amount of shares of each.

Here are five REITs that fit the above criteria and could provide safe and dependable monthly income, with a combined average dividend yield of 6.63%. A $25,000 basket will produce over $138 of income per month:

Realty Income Corp. (NYSE: O) is a retail REIT with over 11,400 worldwide commercial properties on long-term net leases. Its tenants are large, well-known companies like Walgreens Co., Dollar Tree Inc. and FedEx Corp.

Realty Income is one of the most popular, well-followed REITs. It’s one of only 65 S&P 500 Dividend Aristocrats because it has increased its dividends 117 times for at least 25 consecutive years. The annual FFO of $4.92 easily covers the annual $2.98 dividend, which now yields 4.71%.

EPR Properties (NYSE: EPR) is a diversified experiential REIT that owns and operates 358 movie theater chains, amusement parks, resorts and other recreational venues.

The 2020 pandemic forced EPR Properties to cut its quarterly dividend from $0.385 to $0.25, but it has since been raised to $0.275. The Chapter 11 bankruptcy filing by its movie theater tenant Cineworld Group plc in August pushed EPR Properties stock down from $54 to $35, but it’s up 11.5% since early October.

The annual FFO of $4.67 easily covers the dividend of $3.20 for a yield of 8.19%. A bad recession or more theaters filing Chapter 11 could lead to a dividend cut or price decline, but EPR Properties has shown remarkable resiliency in the past, and it should find a way to overcome the current risks to continue providing secure income every month.

LTC Properties Inc. (NYSE: LTC) is a healthcare REIT that owns and leases 202 senior housing and skilled nursing facilities in 29 states across the U.S. LTC Properties’ revenue is derived from triple-net leases, mortgages and mezzanine loans.

The annual FFO of $2.54 covers the $2.28 annual dividend for a yield of 5.86%. While not a huge margin of safety, third-quarter FFO of $0.63 was $0.08 higher than the year-ago period, and management recently guided an increase in fourth-quarter FFO of $0.09 to $0.10 per share.

SL Green Realty Corp. (NYSE: SLG) is an office REIT and the largest office landlord in New York City with 62 buildings totaling 33.6 million square feet.

SL Green is not a well-loved stock on Wall Street because of fears that at-home workers will not return to office work. Short interest is also very high. But the price to FFO (P/FFO) of 5.67 seems to indicate that much of that fear is already baked into the stock price.

The annual FFO of $6.70 provides huge shade over the annual dividend of $3.73 and yields a whopping 9.83%. At a recent price below $38, it seems to have more upside potential than downside risk.

STAG Industrial Inc. (NYSE: STAG) is an industrial REIT that owns and operates 563 single-tenant industrial properties across 41 states. Amazon.com Inc. is STAG Industrial’s largest tenant and accounts for about 3% of its total rent.

Stag Industrial’s third-quarter earnings were good and the Core FFO of $0.57 beat last year’s same-quarter results of $0.53 per diluted share.

The annual FFO of $2.20 covers the $1.46 dividend and yields 4.59%.

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