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 STAG Industrial, Inc. (NYSE:STAG) 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).
Aerial view of a large industrial property, with its single-tenant structure.
STAG Industrial, Inc. (NYSE:STAG)
Number of Hedge Fund Holders: 28
STAG Industrial, Inc. (NYSE:STAG) is a real estate investment trust company that acquires and operates industrial properties throughout the US. This sector has thrived in the post-pandemic period, largely due to disrupted supply chains and initiatives to bring production back to domestic locations. In the past 12 months, the stock is up by over 8%.
STAG Industrial, Inc. (NYSE:STAG) reported strong operating performance in the second quarter of 2024. The company acquired ten buildings totaling 2.2 million square feet for $225.6 million, with a Cash Capitalization Rate of 6.7% and a Straight-Line Capitalization Rate of 7.0%. Additionally, it sold seven buildings, totaling 1.1 million square feet, for $78.2 million. As of June 30, 2024, the company achieved an Occupancy Rate of 97.1% across its entire portfolio and 97.5% within its Operating Portfolio. Its performance this quarter has led to favorable ratings from analysts. On June 26, Moody’s Investor Services confirmed an investment grade rating of Baa3 for the company and upgraded its outlook from ‘Stable’ to ‘Positive’.
STAG Industrial, Inc. (NYSE:STAG) generated roughly $190 million in revenues in the second quarter of 2024, which saw a 10.5% growth from the same period last year. The revenue also beat analysts’ estimates by $1.66 million. Its balance sheet also showed strength as the company ended the quarter with over $33.2 million available in cash and cash equivalents, up from $20.7 million six months ago.
STAG Industrial, Inc. (NYSE:STAG) offers a monthly dividend of $0.1233 per share. It is one of the best dividend stocks on our list as the company has been making regular dividend payments to shareholders since 2011. The stock’s dividend yield on August 29 came in at 3.70%.
STAG Industrial, Inc. (NYSE:STAG) also attracted hedge funds’ attention during Q2 2024. The number of hedge funds in Insider Monkey’s database owning investments in the company jumped to 28, from 15 in the previous quarter. Their total stake value is roughly $176 million. Among these hedge funds, Balyasny Asset Management owned the largest stake in the company.
Overall STAG ranks 2nd on our list of the stocks that pay dividends monthly. While we acknowledge the potential STAG 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 STAG 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.
