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3 Stocks That Cut You a Check Each Month

Dan Caplinger, The Motley Fool

Income investors like dividend stocks because owning dividend payers lets them collect predictable streams of cash year after year. By focusing on dividend stocks that grow their payouts over time, investors can even seek to build a portfolio that will produce income that rises along with costs of living.

The challenge that many investors face with dividend stocks is that the vast majority of companies only make payouts every few months. If you prefer monthly dividend income, though, there are some companies that will cut you a check each and every month. That can make budgeting a lot easier.

For those who like the convenience of monthly dividend stocks, it makes sense to take a closer look at Realty Income (NYSE: O), STAG Industrial (NYSE: STAG), and Main Street Capital (NYSE: MAIN), all of which have a history of making monthly dividend payments to their shareholders.

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The star of monthly payers

Whenever you talk about monthly dividend stocks, you pretty much have to talk about Realty Income. This company is a real estate investment trust (REIT), which means that it owns various forms of real estate and then pays out the income that those holdings generate to its own shareholders. Realty Income has a 4.6% dividend yield, and it's paid monthly dividends for 576 consecutive months -- that's 48 years. Moreover, for those who like to see their income grow, Realty Income boasts a track record of 83 straight quarters in which it's boosted its monthly payouts.

How Realty Income generates that income is through a portfolio of more than 5,400 real estate properties that it owns and manages. Realty Income has relationships with more than 250 commercial tenants in four dozen different industries, giving it substantial diversification both geographically and in terms of sector exposure. By focusing on high-demand tenants with stable business models, Realty Income seeks to ensure that it'll keep receiving reliable income that it can pay to its investors.

So far, that business model has worked perfectly. Though some investors are nervous about a possible end to the long expansion in real estate, Realty Income has plenty of experience getting through tough times while treating shareholders well.

Another tack on real estate

Realty Income isn't the only company that thrives on smart real estate moves. STAG Industrial is also a REIT, but its focus is different: Instead of having a multisector approach to its business, STAG focuses largely on leasing industrial properties to single tenants under long-term agreements. That way, STAG can foster a long-term relationship with its partners, in hopes that minimal turnover will lead to the most stable streams of income possible for its shareholders.

STAG has 370 buildings in its portfolio across 37 states, encompassing 72.5 million square feet. With a dividend yield over 5%, STAG regularly acquires new properties to ensure that it can sustain and grow its dividend over time. At the same time, ensuring solid renewal rates also keeps the company moving forward. With a noteworthy portion of its leases extending more than a decade into the future, STAG has positioned itself well to deal with changing conditions in the industrial real estate market.

Getting a little extra

Beyond REITs, there are other types of companies that often make monthly dividend payments. One set includes business development companies (BDCs), which typically provide financial support to small and midsized businesses early in their histories. For instance, Main Street Capital provides financing in both debt and equity for up-and-coming businesses, reaping the rewards of an equity investment in its partners when they do well, while assuming somewhat more risk than some of its peers.

Main Street has an impressive dividend history, paying a current yield of 5.8% and boasting almost $24 per share in total dividend payments since the BDC went public in late 2007. Unlike many monthly dividend stocks, Main Street not only makes its normal 12 payments each year -- it also adds some special dividends on a regular basis, typically once per year. The supplemental income this gives shareholders can be a nice bonus. With good times in corporate America, Main Street will have ample opportunity to find winning investments from smaller companies in the business world.

Look at monthly dividends

If you'd like to keep things simple for your income investing, give monthly dividend stocks a try. The right companies can give you the income you need when you need it, and also put you on track to see your payments grow over the long haul.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.