In most cases, investing in dividends rewards the patient. That’s because the standard dividend payment cycle is once a quarter, so only four times a year.
Of course it is very nice to be paid more often. While there aren’t many companies that pay out a payout every month, there are; you just have to know where to look. Here are two real estate investment trusts (REITs) that only distribute their dividends in weeks, not quarters: real estate income (O 0.13%) and Apple Hospitality REIT (APLE -2.17%).
1. Real Estate Income
We can safely assume that most people don’t spend a lot of time thinking about companies that pay monthly dividends. But when such thoughts arise, we can also rest assured that the first name that often springs to mind is Realty Income. The retail real estate-focused company has been paying dividends monthly for decades.
Retail is a good sector to get deep exposure to these days. The pandemic seems finally at last ease (although we should remain cautious on this). As a result, people carry out normal activities such as shopping, going to the movies, and eating at restaurants.
That adds to the strength of Realty Income, whose fundamental business strategy is to rent to tenants who can withstand the retail apocalypse. These are places that offer retail experiences that simply cannot be duplicated – like going to the cinema to see a premiere film or spending a cozy evening with your sweetheart in a cozy restaurant.
Realty Income tends to take on long-term contracts and its tenants are typically top performers in their industries. As a result, the utilization is constantly high.
The occupancy rate at the end of March was 98.6%. Even in the midst of the pandemic, that number didn’t fall much below 98%, which says something about the durability of this portfolio. It’s also significant that the REIT is able to hold those numbers with nearly 11,300 properties on its asset list.
The latter number is sure to increase as Realty Income is an opportunistic and ever-hungry buyer of new properties. That, combined with the rent increases it usually mandates in its contracts, should keep the growth train moving. It should also keep that monthly dividend buoyant, which currently yields a buoyant 4.4% on a shadow of under $0.25 per share.
2. Apple Hospitality REIT
Another REIT dedicated to paying a monthly dividend is Apple Hospitality, a hotel operator.
If you think retail has been hit hard during the pandemic, think of the world’s hoteliers. Travel slowed sharply, to the point where empty lobbies and unoccupied rooms were the norm rather than the exception.
What a difference a few years make. Travel and hotel occupancy are on the rise again, and companies like Apple Hospitality are back in the spotlight.
Based on collective occupancy figures that fell below 20% at times in mid-2020, the company’s properties are on a strong upward trend. For the first three months of the year, the metric was 56%, 69%, and 76%, respectively. And in stark contrast to its first-quarter 2021 net loss of $46 million, the REIT posted a profit of more than $18 million in the opening quarter of this year.
Profitability isn’t the only financial metric making Apple Hospitality a roaring comeback. After reasonably suspending its monthly dividend in early 2020, the company reintroduced its quarterly payout the following year. And finally, earlier this year, it put them back on the month clock; it has landed in investors’ pockets every few weeks since March.
Unless the pandemic worsens again, Apple Hospitality is poised to take advantage of excellent travel time.
Demand from restless wanderers is through the roof, planes to key destinations are packed with passengers, and both business and leisure travelers are busy booking hotel rooms. As the manager of a number of hotels (219 in total) sensibly spread across the US, Apple Hospitality will be happily busy filling those rooms and it should benefit accordingly.
The REIT’s recently reintroduced monthly payout is currently $0.05; at the last closing price, this results in a return of 3.5%.