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 EPR Properties (NYSE:EPR) 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).
A modern REIT building with a bright and inviting entrance.
EPR Properties (NYSE:EPR)
Number of Hedge Fund Holders: 23
EPR Properties (NYSE:EPR) leases its properties to various entertainment and educational businesses, including amusement parks, movie theaters, and ski resorts, across the US and Canada. As a triple net lease REIT, the company requires its tenants to cover all real estate taxes, insurance, and maintenance costs. It owns 352 properties and leases to over 200 tenants in 44 US states and Canada.
In the past 12 months, EPR Properties (NYSE:EPR) has declined by over 10.4%. The company’s reliance on the shrinking movie theater market is a significant concern. In 2023, only 852 million movie tickets were sold in the US, a sharp decline from 1.85 billion tickets in 2002, and this downward trend may persist. The rise of streaming platforms, affordable large-screen TVs, and increasing ticket prices have led more people to watch movies at home. Despite these challenges, the company achieved a 99% occupancy rate by the end of Q3 2024. It managed this by selling off vacant theaters, attracting more non-theater tenants for experiential businesses, and expanding its education-related property portfolio.
During the quarter, EPR Properties (NYSE:EPR) finalized the sale of two theater properties and one early childhood education center, generating net proceeds of $8.7 million. The company’s cash position remained strong. It ended the quarter with over $35.3 million of cash on hand with total assets amounting to nearly $5.7 billion.
EPR Properties (NYSE:EPR), one of the best dividend stocks, started paying quarterly dividends to shareholders since its IPO in 1997. The company shifted to monthly payments in 2013 and has paid regular dividends to shareholders since then. Its monthly dividend comes in at $0.285 per share for a dividend yield of 7.79%, as of December 28.
As of the close of Q3 2023, 23 hedge funds held stakes in EPR Properties (NYSE:EPR), according to Insider Monkey’s database. These stakes are worth $247.4 million in total.
Overall EPR ranks 5th on our list of the best stocks that pay monthly dividends in 2024. While we acknowledge the potential of EPR 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 EPR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
