Top 5 REITs Paying Monthly Income
David Garner
5 REITs Paying Monthly Income
If you’re looking to add more passive monthly income to your portfolio, then Real Estate Investment Trusts (REITs) should definitely be part of the mix. In this article we take a look at 5 of the most popular REITs paying monthly dividends in 2022.
One thing before we start… let’s just remind ourselves that the content of this article does not constitute investment or financial advice. You do with your own money whatever you see fit, and always seek the advice of a suitably qualified professional before investing.
So, with that out of the way, let’s get started…
What is a REIT
Before we dive into individual REIT stocks, let’s first define what a REIT actually is…
A Real Estate Investment Trust is a corporation that owns and operates physical real estate estate and/or real estate debt such as mortgages.
Individual investors can buy shares in the REIT, and so benefit from the income and equity growth in the underlying real estate assets.
REITs can own a wide variety of real estate, including large apartment buildings, commercial properties, retail centres, medical centres, nursing homes and pretty much any other type of real estate you can think of.
For the most part, a REIT will specialize in one particular niche or sector, although there are also hybrid REITs that own both physical real estate and real estate debt.
For investors, REITs are especially appealing due to the tax breaks, and the fact that REITs must distribute 90% of their property income to shareholders.
This high level of distribution means that many REITS pay high dividends compared to other stocks, making this particular asset class an ideal investment for monthly income.
You can also invest in a REIT with a relatively small amount of capital, and this makes investing in larger commercial property portfolios accessible to even the smallest of investors.
Related: REITs vs Real Estate Notes | Which is the Better Investment for Monthly Income
Realty Income Trust (O)
No article of REITs would be complete without mention of Realty Income Trust.
Known as the Monthly Dividend Company, this $42 billion corporation has been around for donkey’s years (since 1969 to be exact), and owns around 5,000 commercial properties with some top-notch tenants such as 7-Eleven.
Realty income Trust’s first commercial property purchase was a Taco Bell restaurant. Today, the company focusses on the acquisition of properties it expects to hold for the long term.
Interestingly, Realty income Trust prefers to fiance it’s acquisitions by issuing new stock or debt rather than take out mortgages. This makes their portfolio as a whole less reliant on banks and other lenders, as well as changes in interest rates.
Most of it’s portfolio is also structured with triple-net leases, which ensures that taxes, insurance and maintenance costs fall on the tenant, and not the company itself
Related: Monthly Dividend Stock Analysis | Realty Income Trust
Chatham Lodging Trust (CLDT)
This interesting REIT owns and manages a portfolio of over 40 brand name hotels in 15 States across the United Stated.
With names like Hilton Garden Inn, Residence Inn, and Hyatt Place in it’s portfolio, it’s no wonder this stock remains a popular choice with investors seeking stable and reliable monthly income from their investments.
The investment strategy at Chatham Lodging Trust involves purchasing properties where demand is high and supply of good quality accommodation locations is limited, especially where there is value-add opportunities in the property or the business.
This value-add approach to investing means that Chatham takes a more active role than simply property owner. They get involved in rebranding, revitalizing or redeveloping properties with the aim of creating extra value for the hotel business and Chatham’s shareholders.
Related: Download the Complete List of all 53 Monthly Dividend Paying Stocks
EPR Properties (EPR )
Known as the diversified experiential REIT, EPR Properties owns and manages entertainment and education type venues such as movie theaters, water parks, ski resorts and golf courses.
Of course, any such business took a huge hit during covid, and EPR was certainly not immune.
From a January, 2020 high of nearly $72, the stock had fallen to just shy of $29 by mid March.
With ihinsdsight,m that would’ve been a great buy, because today EPR stock has recovered more than half it’s Covid-related losses, and still pays around a 6% p.a. dividend.
With current questions around the state of the US economy and a potential period of 1970’s style stagflation (low growth and rising inflation), REITs might be a good bet to cash in on the inflation side of things. But at the same time, entertainment venues such as those owned by EPR may not fare so well as the average household finances are stretched and folks are forced to spend less on leisure and more of essential living costs.
Related: Timber REITs – An Inflation-Focussed Investor’s Best Friend?
LTC Properties Inc. (LTC )
This particular REIT stands is stark contrast to EPR properties in terms of the type of real estate it owns, because LTC Properties owns and operates over 200 healthcare facilities, all of which are focused on senior care.
One might have thought that this would strand LTC in fairly good stead throughout Covid, but this was not so.
In fact, like all stocks the value of this monthly income-paying REIT fell through the floor in January, 2020, and the road to recovery has been anything but smooth since.
When you dig a little deeper into LTC’s portfolio, you might start to understand why.
The properties owned and operated by the company include skilled nursing centers, assisted living communities and memory care facilities, and all of these types of businesses had operational problems keeping their elderly and infirm residents safe during the pandemic.
That said, with a yield north of 6% p.a. this may yet still make for a good addition to a monthly icnome-genertaing portfolio of stocks.
Related: Our Top 3 Monthly Dividend Stock Picks for March 2022
Stag Industrial (STAG )
I’ve written about STAG industrial REIT before.
Owning this stock gives you exposure to a very niche segment of the real estate market; single tenant industrial properties.
This includes assets such as warehouses, distribution centers, manufacturing facilities and office buildings.
The company usually focuses on acquiring discounted real estate to which it can add value to drive up equity and lease values.
As the global economy moves more and more to online sales of physical goods, owning industrial and logistical properties such as this – especially with STAGs vale-add approach – might look like a good idea for the long term investor with reliable monthly income on their mind.
Related: Monthly Dividend Income Stock Analysis | STAG Industrial
What About Now?
So, there you have 5 REITs that could help you build up the monthly investment income you receive.
But buyer beware! REITs tend to be very economically sensitive, and as we head into a period potentially defined by 1970’s style stagflation, those without a solid operating base and sound economic model might suffer as buildings fall vacant.
REITs are also sensitive to interest rates, and with at least 6 rate hikes planned by the Fed so far in 2022, who knows where these stocks could end up as investors flock to the safety of treasuries and away from risk assets such as these real estate holdings.
All that said, each sector is unique, so pick your stocks wisely, and make sure to diversify your investments across a broad range of income-generating assets.
Related: 24 Investments That Pay Monthly Income | The Ultimate List
Links and Resources
- Private Lending 101 | The Complete Guide to Private Money Lending
- Note Investing 101 – Everything you Need to Know About Note Investing
- Ultimate List of Investments that pay Monthly Income
- Complete List of Monthly Dividend Stocks
