Supermarket REIT Pays A Dividend Every Month

Stocks paying dividends every month are very popular.

Utility bills, mortgage payments, subscription services, and many others are due every month.

So, having dividend income each month to match those expenses makes dividend investing easier.

However, there aren’t many dividend stocks paying a dividend every month.

But I just found a good one.

Phillips Edison & Company (ticker: PECO) has a name associated with lightbulbs, but it is an excellent REIT with properties all over the United States.

Phillips Edison owns hundreds of retail locations anchored by supermarkets.

These are excellent properties to own since supermarkets generate tons of foot traffic.

Like other REITs, Phillips Edison doesn’t operate these locations.

It makes money by collecting rent from the retailers.

One area I’m really excited about is Phillips Edison’s diversification.

The REIT owns over 300 properties spread across many US markets.

Florida, Texas, and California are Phillips Edison’s largest markets, and they happen to be some of the fastest-growing states.

But the REIT has more than just geographic diversification.

Kroger is Phillips Edison’s largest customer, accounting for only 5% of total rental income.

The top 10 tenants only account for 15% of its revenue, so if one business falters, it doesn’t kill Phillips Edison’s entire operation.

Let’s talk about Phillips Edison’s dividend.

Phillips Edison started trading in 2021, so there isn’t a long track record of payments.

However, I’m excited about what I’m seeing in its short history.

As mentioned earlier, Phillips Edison pays a dividend every single month.

And it’s raised its dividend each year.

Since 2021, Phillips Edison has raised its dividend by 6% each year on average.

Its current 3.5% dividend yield is a little low for a REIT.

However, a 3.5% yield coupled with 6% dividend growth is a really nice balance of income and growth.

Plus, its dividend payout ratio is excellent, especially among REITs.

REITs use Funds From Operations (FFO) rather than EPS since depreciation expense usually makes EPS negative.

FFO adds back the depreciation expense, which makes FFO positive for REITs.

Most REIT payout ratios using FFO hover between 60% and 70%.

But Phillips Edison keeps its payout ratio right around 50%, which leaves a lot of extra cash for it to reinvest in its business.

And a lower payout ratio means the dividend is safer from cuts since there’s more room to handle any potential downturn.

Do you own any dividend stocks making payments every month?

Michael Jennings

This post originally appeared at Dividend Stocks Research.

Category: Dividend Stocks