Investors seeking consistent monthly income often face limited options in the stock market, as most dividend-paying companies distribute dividends on a quarterly basis. However, there are a few exceptions, and two companies, Realty Income (NYSE: O) and SL Green Realty (NYSE: SLG), stand out as attractive choices for those looking to secure a reliable $100 per month in their investment portfolio.
Why Realty Income is a Solid Choice
Realty Income is a real estate investment trust (REIT) with a diverse portfolio of over 13,000 properties, primarily leased to retailers. Despite concerns about economic downturns, Realty Income’s tenants are largely in defensive industry segments. In fact, all of its top 20 tenants fall into categories such as non-discretionary, low price point, service-oriented, or non-retail (e.g., FedEx).
This tenant mix ensures that Realty Income maintains a remarkable 99% occupancy rate, with an average of 9.6 years remaining on its leases. While the company can only increase rent by 1% to 2% annually due to its long-term renter base, it continually expands by acquiring or developing new properties. A recent acquisition, Spirit Realty, is a testament to this growth strategy and will add over 2,000 properties to the REIT’s portfolio.
For investors, buying 195 shares of Realty Income would generate approximately $50 per month in dividends for an investment of $9,756 (as of the time of writing). With shares trading at just 12 times funds from operations (FFO), there is the potential for significant capital appreciation in addition to reliable monthly income.
SL Green Realty: The Return to Office Space
SL Green Realty specializes in managing commercial real estate, primarily office buildings in Manhattan, totaling 32.5 million square feet. Like many companies in the real estate sector, SL Green faced challenges in recent years due to the pandemic, ongoing remote work trends, and high-interest rates. Occupancy fell from 96% at the end of 2019 to 89.8% by the end of the second quarter this year, and FFO per share declined by 24% to $1.27 per share in the third quarter, primarily due to higher interest expenses.
However, there are indications that SL Green is on the path to recovery. Occupancy increased slightly last quarter to 89.9%, signaling a positive trend. Additionally, the Federal Reserve has hinted at a halt in interest rate hikes, which would relieve the pressure on SL Green’s interest expenses, further supporting its FFO.
As more businesses encourage employees to return to the office and interest rates stabilize, SL Green is poised to benefit. Meanwhile, it continues to pay a monthly dividend of $0.2708, albeit slightly reduced from the previous year. Management is committed to safeguarding the dividend by reducing expenses and ensuring it remains an attractive proposition for shareholders.
For investors considering SL Green Realty, purchasing 185 shares would yield approximately $50 per month in dividends for an investment of $6,099 (as of the time of writing). With shares trading at less than five times its trailing 12-month FFO and signs of improvement on the horizon, SL Green offers an enticing opportunity for high-yield income investors.
In conclusion, if you aim to secure steady monthly income from your investments, Realty Income and SL Green Realty are compelling choices. These high-yield stocks offer the potential to generate $100 per month in dividend income, providing a consistent source of passive income to enhance your financial portfolio.
