Monthly Payouts: Five Dividend Stocks for Retiree Income Planning

For retirees facing regular monthly expenses that quarterly dividend payments often fail to align with, there are five particular stocks that disburse dividends twelve times a year, with yields reaching an impressive 6.65%. However, it's crucial to note that two of these investments carry inherent risks that could potentially diminish payouts unnoticed.

When shifting from accumulating wealth to drawing income, the timing of returns becomes as vital as the yield itself. Since obligations like mortgages, utility bills, and insurance premiums are typically due monthly, a stock that pays out on a monthly basis can transform an investment portfolio into a more consistent income stream, akin to a regular salary. The five companies highlighted below all provide monthly dividends, with the highest current yield among them standing at 6.65%. They are broadly categorized into two types, each with distinct risk profiles: three are Real Estate Investment Trusts (REITs), which own property and are evaluated by their adjusted funds from operations (AFFO), and two are Business Development Companies (BDCs), which invest in and lend to private enterprises, measured by net investment income (NII). For each, the key question remains: what proportion of its own cash flow is distributed to shareholders?

**Realty Income: The Monthly Payout Standard**

Realty Income (NYSE:O) has cemented its reputation as “The Monthly Dividend Company,” a claim well-supported by its track record. As of the first quarter, the company had declared 670 consecutive monthly dividends, a streak it continues to maintain. Shareholders currently receive $0.2715 per share each month, totaling $3.258 annually. At a live share price of $56.47, this translates to a high yield of 5.77%.

Regarding dividend safety, as a REIT, Realty Income's performance is best assessed by its AFFO. The second quarter saw AFFO at $1.09 per share, with a payout ratio of 74.5%. The full-year AFFO guidance has been revised upwards to between $4.44 and $4.45 per share. Fitch has assigned the company an “A” rating, occupancy rates are strong at 98.8%, and pro rata liquidity stood at approximately $3.5 billion at the close of the quarter.

The bull case for Realty Income is its ability to sustain and grow its monthly payouts through scale. Full-year investment guidance has increased to $10 billion, with the quarter’s transactions yielding a blended 7.4%. The company's finance chief succinctly described their position: “We continue to operate from a position of significant liquidity, conservative leverage, and broad access to multiple capital channels.” However, a risk factor is the gradual increase in leverage, with net debt to EBITDAre climbing to 5.4x from 5.2x in the previous quarter, especially concerning given that 65.7% of its rental income is derived from non-investment-grade tenants.

**Agree Realty: Strong Tenant Base, Lower Yield**

Agree Realty (NYSE:ADC) has been a consistent monthly payer since 2021. The current dividend stands at $0.267 per share, or $3.204 on an annualized basis, marking a 4.3% increase from the prior year. Trading at $67.615, its yield is 4.74%, the lowest among this group. This lower current income is exchanged for one of the most robust coverage profiles among the REITs.

In terms of dividend safety, Agree Realty distributes close to 70% of its AFFO. Its second-quarter AFFO saw a 7.4% rise to $1.14 per share, and full-year guidance has been adjusted upwards to $4.57 to $4.59. Management anticipates free cash flow, after dividend payments, to exceed $140 million this year. Net debt to recurring EBITDA is 3.7x on a pro forma basis for forward equity, and liquidity is approximately $1.9 billion, with no significant debt maturities scheduled until 2028.

The bull case for Agree Realty rests on its portfolio, which achieved a company-record 99.8% occupancy across 2,825 properties, with nearly two-thirds of its holdings exposed to investment-grade tenants. Credit and occupancy losses for the year to date were minimal, at just 10 basis points. Management directly affirmed: “Our consistent and reliable earnings growth continues to support a growing and well-covered dividend.” The primary risk, however, is rising interest costs, with interest expense increasing to $40.3 million from $32.3 million a year ago. Furthermore, $497 million in floating-rate commercial paper leaves earnings vulnerable should interest rates climb further.

**EPR Properties: High Yield from Experiential Real Estate**

EPR Properties (NYSE:EPR) specializes in “experiential real estate,” encompassing assets like theme parks, golf courses, theaters, and fitness centers. It pays $0.31 per share monthly, or $3.72 annually, following a 5.1% increase. At a live share price of $55.91, this ultra-high-yield payout reaches 6.65%.

Regarding dividend safety, EPR Properties demonstrated the lowest payout ratio among these three REITs, with its second-quarter AFFO payout ratio at 65%. AFFO per share grew by 15.3% to $1.43, and full-year FFO as adjusted guidance has been raised to between $5.41 and $5.57. Tenants provide rent coverage twice over at the unit level, and fixed-charge coverage stands at 3.4 times. Of its $3.3 billion debt, $3 billion is either fixed or swapped, and a new $1.6 billion credit agreement is in place to address upcoming maturities later this year.

The bull case for EPR involves strategically reducing its theater exposure to approximately one-third of its portfolio, reallocating capital into former Six Flags parks and a Netflix House, with Netflix being an A-rated credit. Investment guidance has been increased to $600 million to $700 million, and second-quarter deals secured initial cash yields of about 8.5%. Management stated: “Our common dividend continues to be very well covered with an AFFO payout ratio of 65% for the second quarter.” The main risk, however, is high tenant concentration; Topgolf and AMC each contributed 13.1% of second-quarter revenue, and the top 10 customers collectively accounted for 63.