Monthly dividend stocks are beloved amongst retail investors, as they offer a stable stream of cash flows that helps anywhere from paying the bills to reinvesting towards additional equity units. Along with every other investment, though, monthly dividend stocks bear operational risks, despite their first glance often stable financials. EPR Properties (EPR), for example, suspended its distributions back in May, as COVID-19 adversely impacted its venues.
Therefore, it is vital for investors who plan to cover a part of their everyday expenses from dividends to ensure that the underlying investments remain financially solid, well-diversified, as well as preferentially including some element of growth to avoid income stagnation. Such examples include Realty Income (O) and Gladstone Investment Corporation (GAIN), which have managed to retain their monthly distributions, despite the challenges in the underlying economy. Another stock with a monthly dividend income that we want to cover in this article is Stag Industrial (NYSE:STAG), as we believe it offers one of the most reliable monthly dividends in the market.
In this article, we will:
- Highlights STAG's operational qualities
- Assess the stock's dividend, valuation, and future expected returns
- Conclude why shares could make for an attractive income pick, but with limited future expected returns.
STAG's operational qualities
STAG's 457 single-tenant properties across 38 states make up the only pure-industrial U.S. REIT, including 91.8 million sq. feet, 6.5 times more space than during the company's IPO, back in 2011. STAG's rapid expansion has been riding the wave of the continuously increasing demand for industrial locations, like warehouses, benefiting from the ever-growing e-commerce sector. As the company claims, around 43% of its portfolio handles e-commerce activities, which has placed the company in an advantageous position during the current economic environment.
Many real estate properties, like malls, movie theaters, retail restaurant locations, etc., saw their cash flows destabilize during the
