Dividend growth investing is a strategy that many use to generate passive income. It allows investors to focus on their income stream rather than the fluctuating stock market. By investing in dividend stocks that offer monthly distributions, investors can synchronize their passive income with their monthly expenses. This investment strategy is particularly appealing to those seeking stable income.
Achieving substantial monthly passive income can greatly enhance financial stability and quality of life. Instead of being emotionally impacted by the daily volatility of the stock market, investors can relax and watch their dividends accumulate in their bank account.
In this piece, we will explore three top monthly dividend stocks.
Realty Income Corporation (NYSE:O) leads the triple net lease real estate investment trust (REIT) market. The company, which is valued at nearly $60 billion, owns 11,733 properties rented out to 1,147 tenants. The company’s leases are structured conservatively, with tenants shouldering most of the operational and capital expenses.
Additionally, these leases often span more than a decade and typically include bankruptcy protections and fixed annual rent increases. Currently, the company has a weighted average lease term of 8.8 years until expiration. It generates 43% of its rental income from investment-grade tenants.
Realty Income Corporation’s A-credit rating reflects its strong balance sheet. This includes a 6.3-year weighted average term to maturity for its notes and bonds, a fixed charge coverage ratio of 5.5x, a leverage ratio of 5.2x, and over $2.5 billion in liquidity.
“Over the past 27 years, O has increased its dividend and outperformed the market with total returns.”
Global Water Resources (NASDAQ:GWRS) is a company that manages water resources. It owns, operates, and administers water, wastewater, and recycled water utilities in Phoenix, Arizona. The company has implemented a total water management approach, which involves owning the complete water cycle.
This approach aims to maximize water’s economic value through conservation. This is achieved by operating water, wastewater, and recycling facilities in the same geographical area. The company focuses on communities expected to experience population growth and an increase in demand that could outstrip the available supply.
This business strategy is wise, given that areas with these characteristics are likely to see a rising demand for water production assets.
“Global Water is also experiencing several favorable conditions that include an upswing in recycled water deliveries, substantial rate increases and robust population growth in Phoenix.”
Since water is a fundamental resource, its demand remains stable even in unfavorable economic conditions. Consequently, Global Water’s revenue is expected to remain resilient even during a recession, just as it did during the Great Recession.
TransAlta Renewables (OTCMKTS:TRSWF) is a renewable energy infrastructure company based in Calgary, Alberta. It is Canada’s largest wind energy producer and one of the leading renewable energy suppliers. The company’s involvement in renewable power generation dates back over 100 years. In 2013, TransAlta Renewables spun off from TransAlta, although the parent company still holds a significant stake in the firm.
“TransAlta Renewables has consistently maintained or increased its dividend each year since 2014.”
The company’s strategy is to prioritize renewable and gas-fired power generation for long-term growth. This approach aligns with the global trend towards cleaner energy sources and away from fossil fuels, which has accelerated since the pandemic’s onset. The company’s robust internal cash generation enables strategic investments to expand its portfolio over time, creating a positive growth outlook.
During the Covid-19 pandemic, the company demonstrated resilience. Unlike many oil companies that suffered significant losses due to decreased global oil demand, TransAlta experienced only a modest 12% decline in its funds from operations per share, from $1.13 in 2019 to 99 cents in 2020. The company has since begun to recover, increasing its funds from operations per share to $1.05 in 2021.
Long-term growth prospects for TransAlta are promising, given the increasing demand for clean energy. The company’s growth strategies include organic growth and acquisitions.
The company’s attractive monthly dividend payments and high dividend yield make it an appealing investment for income investors, especially retirees. Therefore, investors seeking a reliable monthly dividend from the renewable energy sector may find TransAlta Renewables a suitable investment.
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