We recently compiled a list of the 11 Best Stocks That Pay Monthly Dividends in 2024. In this article, we are going to take a look at where Apple Hospitality REIT, Inc. (NYSE:APLE) stands against the other stocks that pay monthly dividends.
Dividend stocks have long been a favorite among investors, regardless of the payout frequency. Companies, however, are deliberate in determining how often to reward their shareholders. Annual and semi-annual dividends might provide larger payouts, but their unpredictability can be challenging for investors. While major firms opt for quarterly payouts due to practicality, some choose monthly distributions, which many investors find attractive for the steady stream of passive income. In addition, a reduction in monthly payouts would have a smaller immediate impact, and receiving dividends monthly is one of the closest alternatives to a regular paycheck, simplifying the management of day-to-day finances. That said, history suggests that companies offering monthly dividends often boast higher yields but may lack consistent dividend policies.
Regardless of market conditions, dividend stocks can be a useful tool for enhancing income and boosting portfolio growth potential. For instance, investors who are years away from retirement often reinvest their dividends to increase returns. According to an estimate by Charles Schwab, a hypothetical $10,000 investment in a broader market at the end of 1993 would have grown to over $182,000 by the end of 2023 if dividends were reinvested, compared to only $102,000 if they had not been reinvested.
Also read: 10 Biggest Dividend Cuts and Suspensions of 2024
This means that investors looking to reduce their risk while still maintaining growth potential may want to consider high-quality dividend-paying companies. This approach is favored by Ramona Persaud, manager of Fidelity Equity-Income Fund and Fidelity Global Equity Income Fund. She tends to focus on shares of high-quality firms that offer attractive valuations and strong dividends. Persaud pointed out that falling interest rates can create a favorable environment for dividend stocks, as their yields become more appealing compared to declining bond yields. She also mentioned that lower interest rates may lead to gains across a wider range of stocks, a shift from the past two years when market gains were largely driven by a few large-cap growth stocks. Here are some other comments from the analyst:
“I’m excited that really good companies may get more credit from investors than they have during the wave of glamour stocks. And investors stand to gain from the stocks’ dividend payments.”
Persaud prioritizes stocks with strong balance sheets, high potential returns on investment, and predictable cash flows. Additionally, she seeks out stocks with attractive dividend yields relative to similar companies and the broader market. Monthly dividend stocks also focus on high dividend yields, which can be a key draw. While high yields may sometimes indicate the possibility of dividend cuts or weaker balance sheets, many monthly dividend companies have been increasing their payouts for years and also maintain solid financial health. However, investors should exercise caution when investing in these stocks.
High dividend yields are not inherently negative. Stocks with high yields can still uphold strong dividend policies if their business fundamentals are solid. Many companies with above-average yields have consistently paid and even increased their dividends over time. Research indicated that, in the long run, these stocks often provide superior returns. For instance, a University of Nevada study found that portfolios consisting of the top 10 highest dividend yield stocks from the Dow 30 index outperformed those with medium and low dividend yields between 1987 and 2012. The study also highlighted that investing in high dividend yield stocks can be profitable over the long term, despite potential short-term fluctuations in returns. In view of 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 11 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).
Long exposure of a busy city skyline featuring tall roof tops of different hotel brands.
Apple Hospitality REIT, Inc. (NYSE:APLE)
Number of Hedge Fund Holders: 19
Apple Hospitality REIT, Inc. (NYSE:APLE) is an American real estate investment trust company that operates in hotel properties across the country. On December 9, BMO Capital initiated its coverage of the stock with an Outperform rating and an $18 price target. An analyst described the company as the largest dedicated select-service lodging REIT, emphasizing its high-quality and diverse portfolio. In a research note, the firm expressed a favorable view of the company, highlighting its defensive qualities while noting its potential to benefit from improvements in revenue per available room (RevPAR).
In the third quarter of 2024, business transient demand showed gradual improvement, while leisure travel remained robust, contributing to solid operating fundamentals across the portfolio during the quarter. Comparable Hotels reported a RevPAR growth of about 1% compared to the third quarter of 2023. Preliminary figures for October indicated occupancy levels around 80%, alongside further increases in average daily rate (ADR). The company’s Q3 revenue came in at $378.8 million, up 5.75% from the same period last year. Its operating income also showed a 2% YoY growth at $77.7 million.
Apple Hospitality REIT, Inc. (NYSE:APLE) is one of the best dividend stocks on our list as the company has never missed a dividend since 2008. On December 19, the company announced a monthly dividend of 0.08 per share, which was in line with its previous dividend. In addition, it also declared a supplemental dividend of $0.05 per share. The stock’s dividend yield on December 28 came in at 6.22%.
Insider Monkey’s database of Q3 2024 indicated that 19 hedge funds held stakes in Apple Hospitality REIT, Inc. (NYSE:APLE), the same as in the previous quarter. These stakes are collectively valued at over $98.4 million. With over 3 million shares, Balyasny Asset Management was the company’s leading stakeholder in Q3.
Overall APLE ranks 7th on our list of the best stocks that pay monthly dividends in 2024. While we acknowledge the potential of APLE 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 APLE 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.