We recently compiled a list of the 10 Stocks that Pay Dividends Monthly. In this article, we are going to take a look at where Agree Realty Corporation (ADC) stands against the other stocks that pay dividends monthly.
Over the years, dividend stocks have consistently demonstrated resilience in challenging market conditions. While the recent focus on AI might suggest otherwise, the long-term attractiveness of these stocks has increased. Income investors have taken note of this trend, which is reflected in the growing role of dividends as a portion of personal income. According to a report by S&P Dow Jones Indices, the share of dividend income has risen from 2.68% in the fourth quarter of 1980 to 7.88% in the second quarter of 2024, highlighting dividends as a significant source of income. The report also mentioned that since 1936, dividends have contributed to over one-third of the broader market’s total equity returns, with the remaining two-thirds coming from capital appreciation.
This highlights how dividends have become increasingly important over the years. When considering inflation, dividends have outpaced it, suggesting that investors should focus on these stocks. A report by Wisdom Tree noted that from 1957 to 2023, dividends grew by an average of 5.7% annually, which is more than 2% higher than the inflation rate. The report also pointed out that in the last 64 years, dividends only declined in six years, and only once by more than 5%. In contrast, stock prices fell in 18 of those years, with the worst annual decline exceeding 40% and an average drop of over 11%. Stock prices were more than twice as volatile as the dividend cash flows, as short-term prices are more influenced by market sentiment, while long-term value is driven by cash flow stability.
Also read: 10 Highest Paying Monthly Dividend Stocks
When investing in dividend stocks, receiving payments more often is definitely a plus. Although most dividend stocks distribute payments to shareholders on a quarterly basis, there are a few hundred publicly traded companies that opt to pay dividends monthly instead. However, monthly dividend stocks have their downsides. While they offer appealing investment opportunities, their high yields can be misleading, often accompanied by multiple dividend cuts. The high yields are primarily due to the nature of the companies that opt for monthly payments, such as real estate investment trusts (REITs), closed-end funds, business development companies (BDCs), and royalty trusts, which are common among monthly dividend payers. That said, many monthly dividend companies have not only kept up their payouts over the years but have also increased them, all while maintaining high yields.
Once the risks associated with high yields are addressed, investors can concentrate on the benefits of compounding. Monthly dividend stocks provide cash to investors more frequently than other stocks, allowing them to reinvest it sooner and take advantage of faster compounding. Since 1960, 85% of the cumulative total return of the broader market Index can be traced back to reinvested dividends and the effects of compounding, as reported by Hartford Funds. With this, we will take a look at some of the best dividend stocks that offer monthly payouts.
Our Methodology:
For this list, we reviewed a list of companies providing monthly dividends to their shareholders. Among these, we specifically chose businesses with robust dividend practices, consistently maintaining their payouts across multiple years. The majority of these selected companies operate within the Real Estate Investment Trust (REIT) sector, as they are required to allocate 90% of their income towards dividends. From that list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q2 2024 database of 912 hedge funds and their holdings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A city skyline with multiple office buildings, symbolizing the company’s diverse investments in real estate.
Agree Realty Corporation (NYSE:ADC)
Number of Hedge Fund Holders: 23
An American real estate investment trust company, Agree Realty Corporation (NYSE:ADC) ranks third on our list of the best dividend stocks that pay dividends monthly. One of the most appealing aspects of the company is its impressive growth over the years. At the beginning of 2013, the REIT owned just 109 properties. By the end of the second quarter of 2024, a little over a decade later, its portfolio had grown to more than 2,202 properties. This represents a significant increase, both in percentage terms and in absolute numbers.
In the second quarter of 2024, Agree Realty Corporation (NYSE:ADC) reported revenue of $152.5 million, which showed a 17.4% growth from the same period last year. During the quarter, the company raised nearly $650 million to further strengthen its balance sheet, bringing total liquidity to $1.7 billion after the closing of the expanded Credit Facility. With growing pipelines across all three external growth platforms, it is confident enough to increase its full-year acquisition guidance to approximately $700 million. Due to accelerating investment activity and strong portfolio performance so far this year, the company has raised its 2024 AFFO per share guidance to a range of $4.11 to $4.14, representing 4.4% growth at the midpoint.
Agree Realty Corporation (NYSE:ADC) started paying quarterly dividends in 1995 and shifted to monthly payments in 2021. The company currently offers a monthly payout of $0.25 per share, having raised it by 12.5% in April this year. Through this increase, the company stretched its dividend growth streak to seven years, which makes it one of the best dividend stocks on our list. As of August 29, the stock has a dividend yield of 4.12%.
According to Insider Monkey’s database of Q2 2024, 23 hedge funds held stakes in Agree Realty Corporation (NYSE:ADC), compared with 27 in the previous quarter. These stakes have a total value of over $401.3 million. With more than 2.5 million shares, Long Pond Capital was the company’s leading stakeholder in Q2.
Overall ADC ranks 3rd on our list of the stocks that pay dividends monthly. While we acknowledge the potential ADC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ADC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
