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 EPR Properties (NYSE:EPR) 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 modern REIT building with a bright and inviting entrance.
EPR Properties (NYSE:EPR)
Number of Hedge Fund Holders: 30
EPR Properties (NYSE:EPR) invests in theaters, fitness, and wellness properties. The American real estate investment trust company faced challenges from rising interest rates and ongoing issues with some theater tenants affected by the pandemic. However, it has made progress in overcoming these difficulties. For instance, last year it completed a thorough lease restructuring agreement with a bankrupt theater tenant. As a result, the company has managed to expand its portfolio, increase its cash flow, and raise its dividend.
In the second quarter of 2024, EPR Properties (NYSE:EPR) generated over $173 million in total revenues, which grew modestly by 0.11% from the same period last year. The revenue also surpassed analysts’ estimates by $22.2 million. During the quarter, the company spent $46.9 million on investments, raising the total investment expenditure for the year to $132.7 million. It plans to invest between $200 million and $300 million in new properties this year, using free cash flow remaining after dividends and leveraging its robust balance sheet. As interest rates decrease, the company anticipates being able to increase its investment spending, which should enhance its earnings growth and enable future dividend increases.
On August 15, EPR Properties (NYSE:EPR) declared a monthly dividend of $0.285 per share, which was in line with its previous dividend. The stock’s dividend yield sits at 7.26%, as of August 29.
As of the end of the second quarter of 2024, 30 hedge funds held stakes in EPR Properties (NYSE:EPR), up from 26 in the previous quarter, as per Insider Monkey’s database. These stakes have a total value of more than $223 million.
Overall EPR ranks 1st on our list of the stocks that pay dividends monthly. While we acknowledge the potential EPR 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 EPR 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.