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 Phillips Edison & Company, Inc. (NASDAQ:PECO) 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).

Phillips Edison & Company, Inc. (NASDAQ:PECO)

Number of Hedge Fund Holders: 18

Phillips Edison & Company, Inc. (NASDAQ:PECO) ranks eighth on our list of the best dividend stocks that offer monthly dividends. The real estate investment trust company owns and develops shopping centers throughout the US. The company attributes its ongoing strong performance to a targeted strategy of owning well-sized, high-quality neighborhood shopping centers anchored by the top one or two grocers in their respective markets. This success at the property level reflects the effectiveness of its integrated operating platform and the expertise of its seasoned team. Supported by a robust operating environment and the stability of its tenants, the company has raised its full-year 2024 earnings guidance for Core FFO per share. In addition, the acquisitions guidance for 2024 has been increased to a range of $275 million to $325 million, net of dispositions. With sufficient resources and leverage capacity, the company remains positioned to pursue additional assets as promising opportunities emerge.

Phillips Edison & Company, Inc. (NASDAQ:PECO) generated $165.5 million in revenues in the third quarter of 2024, up 8.56% from the same period last year. The revenue also beat analysts’ estimates by $2.11 million. The company ended the quarter with nearly $6.5 million available in cash and cash equivalents, up from $4.8 million at the end of December 2023. Its total assets amounted to roughly $5 billion, up slightly from $4.8 billion at the end of December 2023.

On October 30, Phillips Edison & Company, Inc. (NASDAQ:PECO) declared a monthly dividend of $0.1025 per share, having raised it by 5.1% in September this year. The company started paying dividends in 2021 and has raised its payouts every year since then. With a dividend yield of 3.26%, as of December 28, PECO is one of the best dividend stocks on our list.

The number of hedge funds tracked by Insider Monkey owning stakes in Phillips Edison & Company, Inc. (NASDAQ:PECO) grew to 18 in Q3 2024, from 14 in the previous quarter. These stakes have a consolidated value of nearly $116 million. Among these hedge funds, Alyeska Investment Group owned the largest position in the company.

Overall PECO ranks 8th on our list of the best stocks that pay monthly dividends in 2024. While we acknowledge the potential of PECO 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 PECO 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.