We recently compiled a list of the 10 Stocks that Pay Dividends Monthly.In this article, we are going to take a look at where Phillips Edison & Company, Inc. (NASDAQ:PECO) stands against the other stocks that pay dividends monthly.
Over the years, dividend stocks have consistently demonstrated resilience in challenging market conditions. While the recent focus on AI might suggest otherwise, the long-term attractiveness of these stocks has increased. Income investors have taken note of this trend, which is reflected in the growing role of dividends as a portion of personal income. According to a report by S&P Dow Jones Indices, the share of dividend income has risen from 2.68% in the fourth quarter of 1980 to 7.88% in the second quarter of 2024, highlighting dividends as a significant source of income. The report also mentioned that since 1936, dividends have contributed to over one-third of the broader market's total equity returns, with the remaining two-thirds coming from capital appreciation.
This highlights how dividends have become increasingly important over the years. When considering inflation, dividends have outpaced it, suggesting that investors should focus on these stocks. A report by Wisdom Tree noted that from 1957 to 2023, dividends grew by an average of 5.7% annually, which is more than 2% higher than the inflation rate. The report also pointed out that in the last 64 years, dividends only declined in six years, and only once by more than 5%. In contrast, stock prices fell in 18 of those years, with the worst annual decline exceeding 40% and an average drop of over 11%. Stock prices were more than twice as volatile as the dividend cash flows, as short-term prices are more influenced by market sentiment, while long-term value is driven by cash flow stability.
When investing in dividend stocks, receiving payments more often is definitely a plus. Although most dividend stocks distribute payments to shareholders on a quarterly basis, there are a few hundred publicly traded companies that opt to pay dividends monthly instead. However, monthly dividend stocks have their downsides. While they offer appealing investment opportunities, their high yields can be misleading, often accompanied by multiple dividend cuts. The high yields are primarily due to the nature of the companies that opt for monthly payments, such as real estate investment trusts (REITs), closed-end funds, business development companies (BDCs), and royalty trusts, which are common among monthly dividend payers. That said, many monthly dividend companies have not only kept up their payouts over the years but have also increased them, all while maintaining high yields.
Once the risks associated with high yields are addressed, investors can concentrate on the benefits of compounding. Monthly dividend stocks provide cash to investors more frequently than other stocks, allowing them to reinvest it sooner and take advantage of faster compounding. Since 1960, 85% of the cumulative total return of the broader market Index can be traced back to reinvested dividends and the effects of compounding, as reported by Hartford Funds. With this, we will take a look at some of the best dividend stocks that offer monthly payouts.
Our Methodology:
For this list, we reviewed a list of companies providing monthly dividends to their shareholders. Among these, we specifically chose businesses with robust dividend practices, consistently maintaining their payouts across multiple years. The majority of these selected companies operate within the Real Estate Investment Trust (REIT) sector, as they are required to allocate 90% of their income towards dividends. From that list, we picked 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s Q2 2024 database of 912 hedge funds and their holdings.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
The exterior of a modern shopping center, with its clean lines and well landscaped outdoor areas.
Phillips Edison & Company, Inc. (NASDAQ:PECO) is an Ohio-based real estate investment trust company that owns and develops shopping centers throughout the US. The company reported a strong quarter of growth and leading operating metrics. Year to date, same-center NOI grew by 2.8%, Nareit FFO increased by 4.1%, and Core FFO rose by 3.7%. This sustained strength in performance is due to their focused strategy of owning right-sized, grocery-anchored neighborhood shopping centers, anchored by the top two grocers in each market, the team's effectiveness at driving property-level results, and the benefits of operating in suburban markets. Given the continued strong operating environment and the financial health of its tenants, the company has reaffirmed its full-year 2024 earnings guidance for Nareit and Core FFO per share, projecting year-over-year growth of 6.0% and 3.0% at the midpoints, respectively. It also reaffirmed its full-year 2024 earnings guidance for same-center NOI, expecting 3.75% year-over-year growth at the midpoint.
In the second quarter of 2024, Phillips Edison & Company, Inc. (NASDAQ:PECO) reported core funds from operations (CFFO) of $80 million, which showed a 3% growth from the same period last year. As of June 30, the company's wholly-owned portfolio comprised 286 properties, covering around 32.6 million square feet across 31 states. This marks an increase from June 30, 2023, when the portfolio included 274 properties, totaling approximately 31.4 million square feet in the same 31 states.
Phillips Edison & Company, Inc. (NASDAQ:PECO) announced a monthly dividend of $0.0975 per share on July 31, which was in line with its previous dividend. The company started paying dividends in 2021 and has raised its payouts every year since then, which makes PECO one of the best dividend stocks on our list. The stock's dividend sits at 3.17%, as of August 29.
The number of hedge funds tracked by Insider Monkey owning stakes in Phillips Edison & Company, Inc. (NASDAQ:PECO) jumped to 14 in Q2 2024, from 9 in the previous quarter. These stakes have a consolidated value of nearly $92 million.
Overall PECO ranks 7th on our list of the stocks that pay dividends monthly. While we acknowledge the potential PECO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PECO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
