Most companies pay out their dividends on a quarterly, semi-annual, or annual basis. However, those payments might be too few and far between for investors who want to retire or live off their dividend income.

For those investors, monthly dividend payers might be more attractive. Realty Income(NYSE: O), LTC Properties(NYSE: LTC), and Gladstone Investment(NASDAQ: GAIN) all deliver monthly income with minimal drama. Image source: Getty Images.

1. Realty Income

Realty Income is one of the largest real estate investment trusts (REITs) in the world. REITs buy up a lot of properties, rent them out, and split the rental income with their investors. U.S. REITs are also required to pay at least 90% of their taxable income as dividends to maintain a favorable tax rate.

Realty Income owns about 15,450 properties around the world, and its top tenants include resilient retailers like Walgreens Boots Alliance, 7-Eleven, Dollar General, Dollar Tree, and Walmart. Some of those tenants have been facing some tough macro headwinds, but Realty Income has consistently kept its occupancy rate at more than 96% during the past three decades.

The company has paid consecutive monthly dividends since its founding in 1969, and it's raised its payout 126 times since its initial public offering in 1994. It currently pays a monthly dividend of $0.2625 per share, which translates to a forward annual yield of 5.2%. It also still looks cheap at 15 times its per-share adjusted funds from operations, which is comparable to cash flow for a REIT.

Like many REITs, Realty Income's valuations were hurt by high interest rates during the past two years. But with interest rates poised to decline, it might be a great time to load up on this evergreen income stock to generate stable monthly dividends.

2. LTC Properties

LTC Properties is another REIT. But unlike Realty Income, LTC mainly invests in senior housing and healthcare properties across the U.S. Both of those markets have been expanding as the U.S. population ages. Its portfolio currently includes 115 assisted living facilities, 78 skilled nursing facilities, and five other types of facilities.

LTC's focus on senior citizens naturally insulates it from economic downturns and makes it a more conservative play than retail or commercial-oriented REITs. It maintained stable occupancy rates of more than 83% and 75% across its assisted living and skilled nursing facilities, respectively, in the first quarter of 2024.

LTC pays a monthly dividend of $0.19, which equals an annual forward yield of 6.4%, and it trades at just 12 times forward earnings. That high yield and low valuation should limit LTC's downside potential, but it probably won't attract too many buyers until interest rates finally decline and make it easier for the company to buy new properties. That said, it's still a safe place to park your cash, net a higher yield than most CDs and T-bills, and profit from the growing needs of an aging population.



3. Gladstone Investment

Gladstone Investment is a business development company (BDC) that mainly offers loans to smaller, midsize, and mature companies. Like REITs, BDCs are required to distribute at least 90% of their taxable income to its investors as dividends. They also need to invest 70% of their assets in U.S. companies that are valued at less than $250 million.

Gladstone typically invests up to $75 million in debt and equity per deal. It generally seeks out companies with experienced management teams, proven business models, stable customer relationships, and annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $4 million to $15 million. Its portfolio consists of two dozen companies in the consumer services, consumer products, and manufacturing sectors.

Gladstone pays a monthly dividend of $0.08 per share, which translates to a forward annual yield of 7.6%. At less than $13, it trades at a discount to its $13.43 in net assets per share (at the end of the first quarter of 2024) and 11 times its forward earnings. It's trading at such low valuations because high interest rates make it tougher to offer loans at favorable rates. But if interest rates decline, its profitability should improve and enable it to pay out higher distributions. So for now, it's a fairly safe way to collect hefty monthly payments until the macro environment stabilizes.

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Leo Sun has positions in Realty Income. The Motley Fool has positions in and recommends Realty Income and Walmart. The Motley Fool has a disclosure policy.

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