Amazon’s landlord

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 544 buildings totaling approximately 109 million rentable square feet across 40 states.

Note that 459 of the 544 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 12.17 cents per share, which translates to an annual yield of 3.8%.

STAG Industrial shares are up 22% over the past 12 months.

The best, though, could be yet to come. On Feb. 22, Raymond James reiterated an Outperform rating on STAG Industrial. The firm’s price target of $47 implies a 21% upside from the current levels.

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Walmart’s landlord

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 619 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 over 11,000 commercial properties located in all 50 states, Puerto Rico, the UK and Spain. It leases them to around 1,040 different 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.

In December, the REIT increased its monthly cash dividend to 24.65 cents per share, giving the stock an annual dividend yield of 4.5%.

To put things in perspective, the average dividend yield of S&P 500 companies is just 1.4% today.

Investors who hold onto Realty Income shares for the long term might earn more than just dividends. Mizuho Securities analyst Vikram Malhotra has a Buy rating on the company with a price target of $76.

Considering that Realty Income trades at $66 today, the price target implies a potential upside of 15%.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.

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