​​3 Stocks That Cut You a Check Each Month

Retired investors who have shifted from building a nest egg to living off their accumulated savings often start to focus on dividend stocks. Going with monthly pay dividend stocks is almost like creating your own paycheck.

That's why such investors will be interested in reliable dividend stalwart Realty Income (NYSE: O), growth-focused Agree Realty (NYSE: ADC), and turnaround story EPR Properties (NYSE: EPR).

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With yields as high as 6.2%, here's a quick look at each one of these monthly dividend payers.

Image source: Getty Images.

There is a common theme

The similarity between Realty Income, Agree Realty, and EPR Properties is that all three are net lease real estate investment trusts (REITs). A net lease requires the tenant (there is usually just one for each property) to pay for most property-level operating costs. While any one property is high-risk, given that there's only one tenant, across a large portfolio, net leases materially reduce risk for the landlord.

Since the tenant has effective control of the property, which is the point of the lease structure, the property owner avoids a lot of costs that rise over time. All the hassle of maintaining the property goes onto the shoulders of the tenant. It's an attractive business model for a REIT. But REITs go about using the approach in different ways.

1. What does Realty Income do?

Realty Income is focused on scale and diversification. It's the largest net lease REIT you can buy, with more than 15,600 properties. The vast majority of its properties reside in the retail sector (about 75% of rents), but it also has material exposure to industrial assets and a diverse "other" category. The "other" grouping is somewhat opportunistic, including things like vineyards and casinos.

On top of this diversification, Realty Income also spreads its portfolio across both the North American and European markets. Overall, it's one of the most diversified REITs you can buy.

That said, Realty Income is a slow and steady tortoise. Given its size, it takes a lot to move the needle on the top and bottom lines. But the company has long prioritized returning value to shareholders via regular dividend increases. The monthly pay dividend has been increased annually for three decades, even though the roughly 4% annualized increase rate over that span isn't huge. With a dividend yield of 5.6%, however, if you are looking for a reliable dividend foundation for your portfolio, you'll probably find Realty Income to your liking.

2. What does Agree Realty do?

Agree Realty competes directly with Realty Income. However, Agree is 100% retail focused and 100% U.S. focused. That said, the most important difference is probably the fact that Agree only owns around 2,400 properties. It is a much smaller business. While that's still a large portfolio, it means that smaller investments can still have a meaningful effect on Agree's growth. That, in turn, shows up in dividend growth.

Agree's dividend has been increased at roughly 6% a year over the past decade. That's just a couple of percentage points faster than Realty Income, but small amounts add up over time. Over the past 10 years, Agree's dividend has grown by a bit over 60%, while Realty Income's dividend has increased by about 40%. If you prefer dividend growth over yield, Agree Realty will probably be to your liking. But you'll have to give up yield to own it, since Agree's dividend yield is 4.1%.

3. What does EPR Properties do?

EPR Properties has the highest yield here at 6.2%. It also has the worst dividend track record, with the dividend getting cut and briefly suspended during the early days of the coronavirus pandemic.

However, that makes a lot of sense when you consider the REIT's focus on experiential properties. When the government shut down non-essential businesses, properties like amusement parks, movie theaters, and ski resorts felt the sting. EPR Properties made the right call to ensure it had the liquidity to survive and to help its tenants survive.

The dividend is back in growth mode, though still below the pre-cut level. EPR Properties isn't quite out of the woods just yet on the business front, either. That's because it has material exposure to the movie theater space, which has been struggling as new forms of video entertainment (streaming, for example) gain share with consumers.

But management isn't ignoring the issue and has been working to focus on its best assets while, at the same time, working to improve its tenant roster. The business is a work in progress, but progress is being made. The added risk, if you appreciate turnaround stories, is made up for with the lofty yield.

A monthly pay dividend stock for every kind of investor

Monthly pay dividend stocks are actually a pretty rare breed on Wall Street. However, high-yield REITs Realty Income, Agree Realty, and EPR Properties still offer a very diverse range of investment choices. Conservative investors will appreciate Realty Income, dividend growth investors will probably gravitate toward Agree, and more aggressive investors willing to deal with special situations stocks will want to dig into EPR's business rebound.

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Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends EPR Properties and Realty Income. The Motley Fool has a disclosure policy.