We recently compiled a list of the 12 Best Stocks That Pay Monthly Dividends in 2025. In this article, we are going to take a look at where Realty Income Corporation (NYSE:O) stands against the other dividend stocks.
The majority of dividend-paying stocks distribute payouts on a quarterly basis, or every three months. However, companies that provide dividends on a monthly schedule are much less common. Those that do typically prioritize rewarding shareholders and offer a consistent income stream.
Real estate investment trusts (REITs) are among the few that pay monthly dividends. These investment vehicles trade like stocks, allowing investors to gain exposure to large-scale commercial real estate projects. To maintain their tax-advantaged status, REITs are required to distribute at least 90% of their taxable income to shareholders, which exempts them from corporate income tax. In general, REITs provide attractive yields, portfolio diversification, and liquidity while also serving as a defensive investment option that can remain resilient during economic downturns.
Regardless of payout frequency, dividend stocks have remained a popular choice among investors. In 2024, dividends remained strong, even though the Dividend Aristocrats Index underperformed the broader market. Throughout the year, US companies consistently maintained or increased their dividend distributions. In addition, several leading tech firms initiated dividend payments, reinforcing the idea that businesses can prioritize both growth and shareholder returns.
By the end of September 2024, roughly 80% of companies in the broader market were paying dividends—a figure that has remained relatively stable over the past decade. Notably, the technology sector accounted for nearly 24% of dividend-paying firms, up from just 13% a decade ago. Other sectors, including healthcare and industrials, also saw an increase in the number of companies offering dividends. This wider distribution of dividend-paying firms has provided income-focused investors with greater access to high-growth and innovative businesses. Given these trends, analysts remain optimistic about dividend stock performance heading into 2025.
Also read: 10 Best Bank Dividend Stocks To Buy Right Now
Historical data consistently indicates that dividend-paying stocks have outperformed other asset classes throughout different market cycles. According to a report from T. Rowe Price, dividends have contributed nearly one-third of total equity returns for US stocks since 1926. Between 1980 and 2019—a period characterized by falling interest rates—dividends accounted for 75% of the broader market’s returns.
The report also emphasized that dividends become particularly valuable in low-interest-rate environments, providing a reliable income stream when other fixed-income investments are less attractive. Once companies initiate dividend payments, they rarely discontinue them, and many tend to increase their payouts over time. Offering dividends can also make a stock more attractive to investors, potentially driving up its value.
Analysts point out that, historically, dividend growth has been closely tied to earnings expansion. With strong earnings recorded last year, expectations for 2025 are even more optimistic. Goldman Sachs projects an 11% rise in earnings per share for the year, improving from an estimated 8% increase in 2024. As a result, dividends are expected to grow by 7%, compared to a 6% uptick in the previous year.
Ohsung Kwon, a US equity strategist at BofA Securities, holds an even more bullish view, predicting a 12% increase in dividends this year, driven by accelerating earnings growth. From 1936 to 2012, dividends made up roughly 40% of the market’s total return. However, over the past decade, their contribution has dropped to just 16%, according to a late 2024 research note from BofA Securities. Looking ahead, Kwon expects dividends to play a more substantial role in total returns compared to the previous ten years. 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 12 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 modern city skyline with a REIT retail building at the center to symbolize the company’s reach.
Realty Income Corporation (NYSE:O)
Number of Hedge Fund Holders: 23
Realty Income Corporation (NYSE:O), an American real estate investment trust company, invests in single-tenant commercial properties in the country. The company has encountered notable difficulties in recent years, largely driven by rising inflation and higher interest rates. These factors have put substantial pressure on real estate investment trusts (REITs), including Realty Income. Elevated interest rates have led to increased borrowing costs across the sector, diminishing the present value of future earnings and resulting in lower price-to-FFO (Funds From Operations) ratios.
Despite these headwinds, Realty Income Corporation (NYSE:O) maintains a strong financial position and possesses unique advantages that enable it to manage its interest obligations with ease. The REIT consistently increases its FFO per share annually and is currently trading at a valuation about 30% below its historical average. This discount suggests a potential upside of approximately 43% once interest rates begin to decline.
Realty Income Corporation (NYSE:O) currently offers a monthly dividend of $0.264 per share and has a dividend yield of 5.77%, as of February 13. A major strength of the company lies in its solid financial foundation, supported by an investment-grade balance sheet. Its significant scale enhances access to capital markets, enabling it to obtain favorable debt terms for expansion. In addition, the company has steadily raised its dividend payments since its public listing in 1994, which makes it one of the best dividend stocks.
Overall O ranks 4th on our list of the best dividend stocks that pay monthly dividends. While we acknowledge the potential for O 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 O 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.
