The first one is STAG Industrial (STAG), a REIT that owns and operates single-tenant industrial properties throughout the U.S. Its biggest tenant is Amazon.
The company’s portfolio consists of 517 buildings totaling approximately 103 million rentable square feet across 40 states.
Note that 434 of the 517 properties are warehouses, which happen to be an essential part of e-commerce.
Moreover, a tenant survey in 2020 revealed that around 40% of the REIT’s portfolio handles e-commerce activity.
To see how solid STAG Industrial is, take a look at its dividend history.
Since the company went public in 2011, it has paid a higher dividend every single year.
While most dividend-paying companies follow a quarterly distribution schedule, STAG Industrial pays shareholders every month. The monthly dividend rate stands at 12.08 cents per share, which translates to an annual yield of 3.2%.
STAG Industrial shares are up 50% year to date. If you don’t feel comfortable picking individual stocks in this elevated market, you can always build a diversified passive income portfolio automatically just by investing your spare change.
When it comes to paying monthly dividends, one company stands out above all — Realty Income (O).
Realty Income has been paying uninterrupted monthly dividends since its founding in 1969. That’s 616 consecutive monthly dividends paid.
Better yet, since the company went public in 1994, it has announced 114 dividend increases.
Realty Income has a diverse portfolio of nearly 11,000 commercial properties located in all 50 states, Puerto Rico, the UK and Spain. It leases them to around 650 tenants operating across 60 industries.
This means even if one tenant or industry enters a downturn, the impact on company-level financials will likely be limited.
For instance, while Realty Income rents some properties to AMC Theaters — whose business was hurt by COVID-19 — it also has Walgreens, FedEx and Walmart as some of its top tenants. And these businesses turned out to be largely pandemic-proof.
Earlier this week, the REIT increased its monthly cash dividend to 24.65 cents per share, giving the stock an annual dividend yield of 4.4%.
To put things in perspective, the average dividend yield of S&P 500 companies is just 1.3% today.
Looking beyond REITs
Of course, stocks are volatile. And even the best REITs are not immune to the market’s ups and downs.
Diversification is key — and you don’t have to stay in the stock market to get it.
If you want to invest in something insulated from stock market swings, take a look at some lesser-known alternative assets.
Traditionally, investing in sectors like exotic vehicles or multifamily apartment buildings or even litigation finance have only been options for the ultrarich.
But with the help of new platforms, these kinds of opportunities are available to retail investors, too.