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 LTC Properties, Inc. (NYSE:LTC) 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).
An aerial shot of a modern health care property, its front entrance flanked by well-manicured gardens.
LTC Properties, Inc. (NYSE:LTC)
Number of Hedge Fund Holders: 13
LTC Properties, Inc. (NYSE:LTC) ranks ninth on our list of the best dividend stocks that pay monthly dividends. The California-based real estate investment trust company invests in senior housing and healthcare facilities through sale-leasebacks. In the third quarter of 2024, the company posted $55.7 million in revenue, marking a 13% increase from the same period a year earlier. This growth was driven by earnings from previously transitioned portfolios, higher income from loan originations, funding for construction loans in 2024, and increased rental income. However, lower revenue from property sales partially offset these gains. As previously announced, the company committed $26.1 million toward a mortgage loan to support the construction of a 116-unit senior living community in Illinois, which will include independent living, assisted living, and memory care services. The borrower has already contributed $12.3 million in equity to initiate construction, with the full loan amount expected to be utilized by early 2025.
LTC Properties, Inc. (NYSE:LTC) experienced a strong quarter in terms of cash flow. By the end of September, its cash and cash equivalents exceeded $35 million, an increase from $20.2 million at the close of 2023. This stable financial position has allowed the company to maintain consistent monthly dividend payments since 2005, following its history of quarterly distributions since 1992. Its monthly dividend comes in at $0.19 per share for a dividend yield of 6.8%, as of January 29.
JMP Securities recently upgraded LTC Properties, Inc. (NYSE:LTC) to Market Outperform while keeping a price target of $40 per share. The firm noted that the company’s operators have fully recovered from the challenges posed by the pandemic, eliminating prior concerns about cash flow. This rebound represents a key achievement for LTC, strengthening its financial stability and supporting future growth prospects.
LTC Properties, Inc. (NYSE:LTC) was included in 13 hedge fund portfolios at the end of Q3 2024, up from 12 in the previous quarter, as per Insider Monkey’s database. The stakes held by these funds are worth more than $75 million in total. Among these hedge funds, Balyasny Asset Management was the company’s largest stakeholder in Q3.
Overall LTC ranks 9th on our list of the best monthly dividend stocks to buy. While we acknowledge the potential for LTC 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 LTC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
