3 Actions That Cut Your Check Every Month

Most companies pay their dividends quarterly, semi-annually or annually. However, these payouts may be too few and far between for investors looking to retire or live off dividend income.

For these investors, monthly dividend payers may be more attractive. Real estate income (A 0.58%), LTC properties (LTC 0.20%)and The Gladstone Investment (GAIN 1.33%) all offer monthly income with minimal drama.

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1. Real estate income

Realty Income is one of the largest real estate investment trusts (REITs) in the world. REITs buy lots of properties, rent them out, and share the rental income with their investors. US REITs are also required to pay out at least 90% of their taxable income as dividends to maintain a favorable tax rate.

Realty Income owns approximately 15,450 properties worldwide, and its top tenants include strong retailers such as Walgreens Boots Alliance7-Eleven, general dollar, The dollar treeand Walmart. Some of those tenants have faced some headwinds, but Realty Income has consistently maintained an occupancy rate of more than 96 percent over the past three decades.

The company has paid consecutive monthly dividends since its founding in 1969 and has increased its payout 126 times since its initial public offering in 1994. It currently pays a monthly dividend of $0.2625 per share, which translates to – an annual return of 5.2%. It also still looks cheap at 15 times adjusted funds per share from operations, which is comparable to cash flow for a REIT.

Like many REITs, Realty Income’s valuations have been hurt by high interest rates over the past two years. But with interest rates on the way down, it could be a great time to load up on this evergreen stock to generate steady monthly dividends.

2. LTC Properties

LTC Properties is another REIT. But unlike Realty Income, LTC invests primarily in senior housing and health care properties in the US. Both markets have expanded as the US population ages. Its portfolio currently includes 115 assisted living facilities, 78 skilled nursing facilities and five other facility types.

LTC’s focus on senior citizens naturally insulates it from economic downturns and makes it a more conservative play than retail or trade-oriented REITs. Through the first quarter of 2024, it maintained steady occupancy rates of over 83% and 75% across all of its nursing and skilled nursing facilities, respectively.

LTC pays a monthly dividend of $0.19, which equates to a forward annual yield of 6.4%, and trades at just 12 times forward earnings. The high yield and low valuation should limit LTC’s downside potential, but it likely won’t attract too many buyers until interest rates eventually fall and make it easier for the company to buy new properties. That said, it’s still a safe place to park your cash, earn a higher return than most CDs and T-bills, and take advantage of the growing needs of an aging population.

3. Gladstone Investment

Gladstone Investment is a business development company (BDC) that primarily provides loans to smaller, mid-sized and mature companies. Like REITs, BDCs must distribute at least 90% of their taxable income to their investors in the form of dividends. They must also invest 70% of their assets in US companies that are valued at less than $250 million.

Gladstone typically invests up to $75 million in debt and equity per deal. They generally look for companies with experienced management teams, proven business models, stable customer relationships and adjusted annual earnings before interest, taxes, depreciation and amortization (EBITDA) of $4 million to $15 million. Its portfolio consists of two dozen companies in the consumer services, consumer goods and manufacturing sectors.

Gladstone pays a monthly dividend of $0.08 per share, which translates to a forward annual yield of 7.6%. At less than $13, it trades at a discount to $13.43 in net assets per share (at the end of Q1 2024) and 11 times its forward earnings. They trade at such low valuations because high interest rates make it more difficult to offer loans at favorable rates. But if interest rates fall, its profitability should improve and allow it to pay higher dividends. So for now, it’s a pretty safe way to collect sizable monthly payouts until the macro environment stabilizes.