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Piplovic's Picks for Monthly Payouts
08/06/2019 5:00 am EST
Ned Piplovic highlights three investment vehicles that offer monthly dividend payments. The income expert and editor of DividendInvestor looks at an oil & gas royalty trust, a water management firm and a healthcare REIT.
Sabine Royalty Trust (SBR) — one of the approximately two dozen of publicly traded oil and gas royalty trusts, as well as one of the monthly dividend stocks — offers investors an above-industry average yield of more than 7%.
Based in Dallas, Texas, and formed in December 1982, the Sabine Royalty Trust currently owns royalty rights in properties across Florida, Louisiana, Mississippi, New Mexico, Oklahoma and Texas.
In addition to a high yield generally associated with royalty trusts, the Sabine Royalty Trust also offers a steady flow of dividend income associated with monthly dividend stocks. The dividend distribution amount is driven by the monthly financial results.
Therefore, the dividend payout level fluctuates from month to month, as well as annually. However, just over the past decade, the instances of total annual dividend payouts exceeding the prior year’s payout outnumbered the drops in annual dividend payouts by a six-to-four margin.
Royalty trusts generally offer safe long-term opportunities to investors seeking alternatives for traditional investment vehicles. These trusts are publicly traded corporations that invest in commodities such as oil, natural gas or metals. Most royalty trusts are located in North America.
The trusts generally do not run their own mining and drilling operations. Instead, the trust grants outside drilling and mining companies exploration and production rights in exchange for royalty payments.
This arrangement allows a royalty trust to operate very efficiently with very few employees and generate high levels of income. Most of this income is redistributed to investors as dividends, which is the primary lure of these investments.
Even with payout fluctuations, the trust increased its annual dividend distribution amount 140% over the past 20 years. This enhancement corresponds to an average dividend growth rate of 4.5% per year. Furthermore, the trust has enhanced its annual payout over the past two consecutive years. The two-year gain of 84% is equivalent to an average annual growth rate of 22.4%.
Investors interested in monthly dividend stocks should consider Global Water Resources (GWRS), which offers above-average yields and double-digit-percentage one-year total returns.
Based in Phoenix and founded in 2003, Global Water Resources, Inc. is a water resource management company. The company owns, operates and manages water, wastewater and reclaimed and recycled water utilities in strategically located communities, mainly in the Phoenix metropolitan area.
Through the full ownership and control of the entire supply chain, the company can maximize water conservation and usage efficiency. Global Water Resources’ conservation and efficient management approach is especially important in areas that face water supply scarcity, such as in Arizona.
At the current share price level, this annual payout amount is equivalent to a 2.82% forward dividend yield. Despite a share price pullback in late 2018, the price recovery combined with dividend income payouts to reward shareholders with a 14% total return on investment over the trailing 12 months. The three-year total return is 38%. However, the total return since the dividend inception is nearly 85% and dividend income contributed 30% of those gains.
TC Properties, Inc. (LTC) — a health care real estate investment trust — continues to reward its shareholders with above average dividend yields and double-digit-percentage returns.
Headquartered in Westlake Village, California, and founded in 1992, LTC Properties, Inc. operates as a health care REIT. The company invests in senior housing and long-term health care properties, including skilled nursing properties, assisted living properties and independent living properties.
The company’s share price struggled with increased volatility over the past few years. However, the share price’s long-term trend maintains its upward trajectory. Over an extended time horizon that began after the REIT’s largest share price drop in 2000, LTC Properties grew its share price more than 13-fold. Additionally, the REIT nearly tripled its share price since the 2008 financial crisis.
In addition to a long-term share price uptrend, LTC Properties offers investors a steady flow of monthly dividend income payouts, as well as abundant liquidity to manage current obligations and invest into expansion.
These characteristics should entice interested income investors to at least take a closer look at LTC Properties and analyze the REITs potential for growth against other monthly dividend stocks.
TC Properties has been distributing its current quarterly current $0.19 monthly dividend distribution since late-2016. This monthly dividend payout amount corresponds to a $2.28 annualized amount for 2019. At the current share price level of approximately $45, the REIT’s income distributions yield 5%.
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