We recently compiled a list of the 15 Best Monthly Dividend Stocks To Buy Right Now. In this article, we are going to take a look at where Agree Realty Corporation (NYSE:ADC) stands against the other monthly dividend stocks.
Despite common perceptions, 2024 turned out to be a strong year for dividends, even though the Dividend Aristocrats Index underperformed the broader market. Throughout the year, US companies consistently maintained or raised their dividend payouts. In addition, several major tech firms introduced dividends, demonstrating that companies can balance both growth and shareholder returns. By September 30, 2024, around 80% of the companies in the S&P index were paying dividends—a level that has remained relatively stable over the past decade. Notably, the technology sector accounted for nearly 24% of dividend-paying companies, up from 13% a decade ago, while the healthcare and industrial sectors also saw an increase in dividend issuers. This broader adoption of dividends has expanded investment opportunities, allowing equity-income investors to access high-growth and innovative companies. Given these trends, analysts remain optimistic about dividend performance moving into 2025.
Also read: 8 Best Value Dividend Stocks to Invest in According to Warren Buffett
Dividend stocks have long been a popular choice for investors, regardless of how often payouts are distributed. Companies carefully determine their dividend schedules, with annual or semi-annual payments offering larger sums but lacking consistency. While most major firms prefer quarterly payouts for their practicality, some choose monthly distributions, which many investors favor for their steady income stream. Monthly dividends provide immediate cash flow, making financial planning easier and offering a sense of stability, similar to a paycheck. Moreover, a reduction in monthly dividends tends to have a less noticeable short-term impact. However, while companies that pay dividends monthly often offer higher yields, they have historically struggled to maintain consistent payout policies over time.
Dividend stocks have consistently generated strong returns over time, regardless of their payment frequency. Historically, dividends made up about 40% of the market’s total return between 1936 and 2012. However, over the past decade, their contribution dropped to just 16%, according to a research note from BofA Securities published late last year. Looking ahead, Ohsung Kwon, a US equity strategist at BofA Securities, expects dividends to play a larger role in overall returns compared to the previous ten years.
Analysts point out that dividend growth has historically been closely tied to earnings performance. With strong earnings growth in 2024, they expect an even better showing in 2025. Goldman projects an 11% rise in earnings per share this year, up from an estimated 8% last year, which is likely to drive a 7% increase in dividends, compared to a 6% bump in 2024. Meanwhile, Kwon holds an even more bullish view, predicting a 12% jump in dividends this year, driven by accelerating earnings growth.
Analysts reassure investors not to be concerned about the widening gap between dividend stocks and the broader market. Chris O’Keefe, a portfolio manager at Logan Capital Management, views this divergence as an attractive entry point for those looking to invest in dividend stocks. Other analysts echo this sentiment, highlighting a positive outlook for dividend-paying companies. The Dividend Aristocrats Index, which tracks 66 companies with at least 25 years of consecutive dividend growth, has struggled to keep pace with the broader market since 2020. Dividend stocks saw renewed interest in 2022 as fears of a recession led investors toward defensive sectors like utilities and consumer goods. However, the rally was short-lived. By 2023, rising interest rates made bonds and money-market funds more appealing than dividend yields, prompting companies to conserve cash amid economic uncertainty. In 2024, many of the same high-growth stocks that surged during the pandemic have once again driven the market to record levels. That being said, dividend stocks have maintained steady performance over time and continue to be a strong long-term investment option. Given this, we will take a look at some of the best dividend stocks that pay monthly dividends.
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 15 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q3 2024 database of 900 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: 26
Agree Realty Corporation (NYSE:ADC) is an American real estate investment trust company that is recognized as a prominent player in the retail industry, with major tenants like Walmart, Tractor Supply, Dollar General, Best Buy, TJX, Dollar Tree, Lowe’s, and Kroger, which together account for approximately one-third of the REIT’s annual rental income. The remaining two-thirds of the income is generated from other stable businesses. In the past 12 months, the stock has delivered a nearly 19% return to shareholders.
As of September, Agree Realty Corporation (NYSE:ADC) maintained an impressive 99.6% occupancy rate across its portfolio. In the third quarter of 2024, the company generated $154.3 million in revenue, marking a nearly 13% increase from the previous year. In addition, it invested approximately $237 million in 93 retail net lease properties during the quarter.
Agree Realty Corporation (NYSE:ADC) operates efficiently, with tenants shouldering most of the property-related operating costs. Over the past decade, the company has demonstrated strong growth, raising its dividend by approximately 6% per year. Its portfolio has also seen significant expansion, growing from 130 properties in late 2013 to 2,271 properties by the end of the third quarter of 2024. It is one of the best dividend stocks on our list as the company has been paying uninterrupted dividends since its IPO in 1994. The company currently offers a monthly dividend of $0.253 per share and has a dividend yield of 4.22%, as of January 29.
The number of hedge funds tracked by Insider Monkey owning stakes in Agree Realty Corporation (NYSE:ADC) grew to 26 in Q3 2024, from 23 in the previous quarter. These stakes are worth roughly $565 million in total.
Overall ADC ranks 1st on our list of the best monthly dividend stocks to buy. While we acknowledge the potential for 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 time frame. 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.
