Very few public companies offer monthly dividends, and the ones that do are typically real estate investment trusts (REITs) because they are legally required to pay out 90% of their taxable earnings to shareholders.

REITs are unlikely to deliver higher price appreciation than the benchmark S&P 500, but some, including the three stocks below, have a history of beating the market when their dividends are reinvested.

Let's examine three stable REITs with a long history of consistent monthly dividends that can both deliver steady income or compete with the best index funds.

1. EPR Properties

EPR Properties (NYSE: EPR) is a REIT that invests primarily in experiential real estate, such as amusement parks, ski centers, movie theaters, and Top Golf locations. It pays a monthly dividend of $0.285 per share, resulting in a hefty annual yield of 7.2%.

EPR has a long history of dividend payments and raises. The company first issued a quarterly payment in 1998 and transitioned to a monthly distribution in 2013.

The REIT cut its dividend during the Great Recession and did not issue any dividends during the height of the pandemic. However, it reinstated its monthly dividend in early 2022 and has raised it annually since.

EPR Properties experienced stagnant growth in the first half of 2024, with revenue of $340.3 million, a decrease of about 1.16% compared to the same period last year. The company's funds from operations (FFO) also declined by 7.5% year over year, dropping to $179.2 million.

A potential risk is that the company is highly focused on a declining industry. Nearly 50% of its portfolio is tied to movie theaters, which have faced significant challenges since the pandemic. Management projects the North American box office gross to be between $8.2 billion and $8.5 billion in 2024, representing a significant decline from $11.4 billion in 2019. Management has stated its intention to reduce its exposure to movie theaters in favor of other experiential properties.

The stock is valued similarly to its 2019 levels, trading nearly five times its trailing-12-month FFO. However, management has successfully reduced net debt to $2.8 billion, a decrease of about 13.3% from its peak, suggesting it is better valued today than pre-pandemic.

2. LTC Properties

LTC Properties (NYSE: LTC) is a REIT with a portfolio of 194 investments, split almost evenly between senior housing and skilled nursing properties. The company pays a monthly dividend of $0.19 per share, equating to an annual yield of 6.4%.

LTC is remarkably consistent with its monthly dividend, having paid it without interruption since 2005. And before that, it had a quarterly dividend dating back to 1995. However, investors shouldn't expect frequent dividend raises, with the last coming in 2016.

Unlike EPR Properties, LTC Properties experienced an increase in revenue and FFO in the first half of 2024 compared to the first half of 2023. Specifically, LTC generated $101.5 million in revenue and adjusted FFO of $58.5 million, representing year-over-year growth of 3.8% and 6.9%, respectively.

Prospects look promising for LTC Properties because America's aging population should keep demand for its services high. According to management, about 4.1 million Americans will turn 65 annually through 2027, and the 85-and-up population could reach 11 million by 2035.

The company's debt has been steadily increasing as it invests in more properties, rising by 235% over the past decade. However, management has been able to manage this debt, as shown by its coverage ratio, which has slightly dropped from 6.0 to 5.3 times its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years.

As for its valuation, LTC Properties trades at 3.1 times its FFO per share, which is right in line with its average over the past five years.

3. Realty Income

Realty Income (NYSE: O) arguably leans more into its monthly dividend than any other publicly traded company, even going as far as calling itself "The Monthly Dividend Company." It has provided a payout for 652 consecutive months and increased it for 30 consecutive years by primarily investing in retail and commercial properties.

Its three largest clients are Walgreens, 7-Eleven, and Dollar Tree. Today, Realty Income pays a monthly dividend of $0.2635 per share, which equates to an annual yield of 5.1%. It also has by far the highest market capitalization of these three REITs, at $57.3 billion, and management has its eyes on growth.

The company invested approximately $9 billion in 2023, including $950 million in the Bellagio Las Vegas casino resort, and plans to invest another $3 billion in 2024. In January, it closed a merger agreement with Spirit Realty Capital, a REIT investing in single-tenant real estate assets, in an all-stock deal valued at $9.3 billion.

As a result of these moves, Realty Income's net debt and shares outstanding have skyrocketed over the past five years, up 218.6% and 161%, respectively. This is important because when a company's debt rises quickly during periods of high interest rates, it can strain financial stability. Additionally, an increasing share count reduces the value of each shareholder's stake. Still, management remains confident in its debt levels, with CFO Jonathan Pong stating on its most recent quarterly earnings call, "We remain comfortable with the liability side of the balance sheet and believe we are well-positioned to act on larger investment opportunities should they present themselves."

Lastly, Realty Income's valuation does appear on the higher side, with its FFO per share at 3.9 over the past 12 months, which is near a five-year high and up nearly 19% from five years ago.

Are these monthly dividend-paying stocks worth buying?

Beyond monthly dividends, these three stocks provide exposure to real estate without the hassle of managing physical properties. All three companies offer some risk, whether because of the nature of their tenants' businesses, debt levels, or valuation. Still, with a long track record of consistent payments, they are quality investments, especially for those seeking monthly income.

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Collin Brantmeyer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool recommends EPR Properties. The Motley Fool has a disclosure policy.

3 Stocks That Cut You a Check Each Month was originally published by The Motley Fool