Investors love dividend stocks. They not only provide dependable income, but they also give investors a great opportunity for solid total return. Total return includes interest, capital gains, dividends and distributions realized over a given period. In other words, the total return on an investment or a portfolio includes both income and stock appreciation.
Most companies pay dividends on a quarterly basis, and for many investors that reinvest dividends, that is fine. But many investors rely on dividends as part of an income stream, and it is more beneficial to them to get a monthly payout. Typically, real estate investment trusts (REITs), business development companies and closed-end funds are among the investment vehicles that pay distributions monthly.
We screened our 24/7 Wall St. research database looking for companies that were rated Buy at major Wall Street firms and also paid dividends on a monthly basis. We found seven that look like great ideas for passive-income-oriented investors looking for some upside appreciation as well.
It is important to remember that no single analyst report should be used as the sole basis for any buying or selling decision.
AGNC Investment
This company has paid solid dividends for years. AGNC Investment Corp. (NASDAQ: AGNC) operates as a REIT in the United States. It invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by U.S. government-sponsored enterprises or agencies.
The company funds its investments primarily through collateralized borrowings structured as repurchase agreements. The company has elected to be taxed as a REIT under the Internal Revenue Code of 1986 and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.
AGNC Investment stock investors receive a 12.17% dividend. Keefe Bruyette has a $13.25 price target. That compares with the $18.25 consensus target and last Friday’s closing price of $11.77.
Broadmark Realty
Similar to a mortgage REIT, this top company is an investor in what is known as deed of trust loans. Broadmark Realty Capital Inc. (NYSE: BRMK) engages in the underwriting, funding, servicing and managing a portfolio of short-term and first deed of trust loans to fund the construction, development and investment in residential or commercial properties in the United States.
The company also provides short-term and first deed of trust loans secured by real estate to fund the construction and development and investment in residential or commercial properties. The company has elected to be taxed as a REIT. As a result, it is not subject to corporate income tax on that portion of its net income that is distributed to shareholders.
Investors receive a 13.27% distribution. The Raymond James target price is $11, and the consensus target is just $8.17. Friday’s final trade was reported at $6.23.
EPR Properties
This REIT invests in some of the most popular entertainment companies. EPR Properties Inc. (NYSE: EPR) is a leading experiential net lease REIT, specializing in select enduring experiential properties in the real estate industry.
The company is focused on real estate venues that create value by facilitating out-of-home leisure and recreation experiences in which consumers choose to spend their discretionary time and money. It has nearly $6.7 billion in total investments across 44 states. EPR Properties adheres to rigorous underwriting and investing criteria centered on key industry-, property- and tenant-level cash flow standards, and it believes a very focused approach provides a competitive advantage and the potential for stable and attractive returns.
EPR Properties posted strong results recently, with funds from operations (FFO) that exceeded Wall Street estimates and were up big from last year’s print. The company has eclipsed FFO estimates for the past four quarters.
Shareholders receive a 7.82% distribution. BofA Securities has set a $55 target price, below the $56.57 consensus target on EPR Properties stock. The shares closed trading on Friday at $42.21.
Gladstone Commercial
This stock was hit hard as interest rates charged higher and is offering the best entry point in over a year. Gladstone Commercial Corp. (NASDAQ: GOOD) is focused on acquiring, owning and operating net leased industrial and office properties across the United States.
As of June 30, 2021, Gladstone owns a diversified portfolio of 121 office and industrial properties located in 27 states and leased to 106 tenants. The company has grown the portfolio in a consistent, disciplined manner at a rate of 18% per year since the IPO in 2003. It matches long-term leased properties with long-term debt to lock in the spread to create a durable, stable cash flow stream to fund monthly distributions to shareholders. Current occupancy stands at 96.5% and occupancy has never dipped below 95.0% since the IPO.
Most importantly for investors, Gladstone has a track record of success, as exhibited by a history of strong distribution yields, consistent occupancy greater than 95.0%, and 10+ years of paying continuous monthly cash distributions.
Investors receive an 8.06% distribution. The $23 B. Riley Securities price target on Gladstone Commercial stock is just less than the $23.60 consensus target. Friday’s close was reported at $18.67 a share.
Main Street Capital
This Wall Street favorite also offers very solid upside potential. Main Street Capital Corp. (NASDAQ: MAIN) is a private equity firm specializing in equity capital to lower middle-market companies. The firm also provides debt capital to middle-market companies for acquisitions, management buyouts, growth financings, recapitalizations and refinancing.
The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one-stop” financing alternatives within its lower middle-market portfolio. Main Street Capital typically invests in lower middle-market companies, generally with annual revenues between $10 million and $150 million. The firm’s middle-market debt investments are made in businesses that are generally larger in size than its lower middle-market portfolio companies. It makes majority and minority equity investments.
The dividend yield here is 6.53%. RBC’s $47 price target compares with a $39.38 consensus target and last Friday’s final print of $40.40.
Realty Income
This is an ideal stock for growth and income investors looking for a safer, inflation-busting idea for the rest of 2022. Realty Income Corp. (NYSE: O) is an S&P 500 company dedicated to providing stockholders with dependable monthly income.
The company is structured as a REIT, and its monthly distributions are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants. To date, the company has declared 608 consecutive common stock monthly dividends throughout its 54-year operating history and increased the dividend 109 times since its public listing in 1994. It is a top real estate member of the S&P 500 Dividend Aristocrats index.
Realty Income stock comes with a 4.39% distribution monthly. The price target at Goldman Sachs is $86. The $77.06 consensus target is closer to the $67.69 a share close on Friday.
24/7 Wall St.STAG Industrial
This strong industrial REIT play offers solid upside potential. STAG Industrial Inc. (NYSE: STAG) is a self-managed full-service real estate company primarily focused on the acquisition, ownership and management of single-tenant, Class B warehouses in secondary markets across the United States. The company continues to focus on expansion of its acquisition platform to find acquisitions to grow the portfolio.
Top Wall Street analysts expect management to be aggressive acquirers over time. Additionally, the in-place portfolio should deliver stable organic growth supported by healthy property-level fundamentals.
Investors receive a 4.83% distribution. Raymond James has a $47 price objective. The consensus target is $39.88. STAG Industrial stock closed on Friday at $30.25.
All these top stocks are way off the highs printed earlier this year, and all seven have paid dependable dividends for years. For those looking for monthly passive income, these are outstanding companies to own. It should be noted that while the summer rally was nice after a severe downdraft, the prospects for September look very cloudy, so it may make sense to scale buy shares over the course of the fall.
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