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Most dividend stocks pay shareholders quarterly or semi-annually. But there is a group of dividend stocks that pays investors even more frequently. Monthly dividend stocks pay dividends each month, equating to 12 payments per year. These stocks are appealing for income investors who want more consistent and frequent payouts throughout the year.

STAG Industrial (STAG) is a top-quality REIT, and it also pays shareholders monthly dividends. Its long-term track record of monthly dividends and steady dividend growth makes it a hold-forever monthly dividend stock.

Business Overview & Recent Events

STAG Industrial is an owner and operator of industrial real estate. It is focused on single-tenant industrial properties and has 563 buildings across 41 states in the United States. STAG Industrial went public in 2011 and has a market capitalization of $6 billion. The focus of this REIT on single-tenant properties might create higher risk compared to multi-tenant properties, as the former are either fully occupied or completely vacant. However, STAG Industrial executes a deep quantitative and qualitative analysis on its tenants. As a result, it has incurred credit losses that have been less than 0.1% of its revenues since its IPO.

As per the latest data, 53% of the tenants are publicly rated and 31% of the tenants are rated “investment grade.” The company typically does business with established tenants to reduce risk. In late April, STAG Industrial reported (4/26/23) financial results for the first quarter of fiscal 2023. Core FFO per share grew 4% over the prior year’s quarter, in line with the analysts’ consensus, thanks to the sustained strength of the REIT’s tenants and material hikes in rent rates. Net operating income grew 8% over the prior year’s quarter.

The REIT has collected essentially all its rental income in the last eight quarters. STAG Industrial has provided guidance for core FFO per share of $2.22-$2.26 in 2023.

Dividend Analysis

For a REIT, the ability to grow dividends over the long-term relies on underlying growth of Funds From Operation, or FFO. STAG Industrial has grown its FFO per share at a 4.9% average annual rate over the last decade and at a 5.4% average annual rate over the last five years. The U.S. industrial market is more than $1 trillion in size and STAG Industrial still has a market share that is less than 1% of its target market, which includes the top 60 markets of the country.

Therefore, the REIT has ample room to continue to grow for years. As STAG Industrial has proved fairly resilient to the ongoing economic slowdown, we expect it to grow its FFO per share around its historical pace in the upcoming years.

Another important consideration for dividend safety is debt. STAG Industrial has a well-laddered lease maturity schedule, with a weighted average lease term of 4.9 years and about half of the leases maturing after the end of 2025. Thus, the cash flows of the REIT can be considered fairly reliable under normal business conditions.

Income investors should also note that STAG Industrial currently offers a 4.2% yield and has never cut its dividend throughout its history. 

Final Thoughts

STAG Industrial has proved markedly resilient to the pandemic and the ongoing economic slowdown, partly thanks to the strong profile of most of its tenants. The REIT has a high quality portfolio that is focused on a long-term growth industry. With a sustainable dividend payout yielding over 4%, STAG is a monthly dividend stock to hold forever.

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