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Trio of REITs for Monthly Dividends

05/27/2016 9:00 am EST

Focus: REITS

Tim Plaehn

Investment Research Analyst, Investors Alley

Owning a stock that you know will deposit a check into your bank account each month can give a sense of financial security that many Americans in retirement lack, suggests Tim Plaehn, editor at Investors Alley.

Finding stable companies that regularly increase their dividends is the strategy that I use myself to produce superior results, no matter if the market moves up or down in the shorter term.

With that in mind, I share three of my safest monthly dividend stocks that will pay you every month.

EPR Properties (EPR) is a triple net lease REIT that owns properties in three distinct commercial property sectors. Megaplex theaters, entertainment retail centers, and family entertainment centers make up the majority of their leases.

Additional recreation properties include metro ski parks, resorts, water parks, and golf entertainment complexes. The firm also builds charter and private school facilities.

In January, the company received State of New York approval for a casino on property EPR owns in Sullivan County, NY. The resort is under construction and will include a golf course, water park, and entertainment village.

All of its properties are operated by third party companies and the REIT’s income is the rental payments made on long-term, triple-net leases. EPR yields 5.6% and has been growing the dividend by 6% to 8% every year.

Stag Industrial (STAG) is an industrial REIT that owns free standing single tenant buildings that are used for industrial purposes such as light manufacturing, warehouses, and logistical services.

Client companies are from a wide range of industries including automotive, air freight, containers and packaging, retail companies, industrial equipment and government agencies.

Since its 2011 IPO, STAG has had a goal of 25% growth in the number of properties owned. Actual numbers have been higher with ownership of 291 buildings in 40 states at the end of 2015.

STAG’s acquisition team uses a statistical model to evaluate potential acquisitions based on projected 20-year cash flows. STAG currently yields 6.7% and dividends are growing by about 3% per year.

Chatham Lodging Trust (CLDT) is a hotel REIT that invests in upscale, extended-stay hotels and premium-branded, select-service hotels and owns 133 hotels wholly or through joint ventures.

Hotel REITs in general sold off in 2015. However, even as share values were falling, revenues and free cash flow were growing.

Chatham Lodging increased its monthly dividend by 10% in early April. Currently, CLDT yields 6.0%, compared to 4.2% a year ago.

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By Tim Plaehn, Editor at Investors Alley

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