We recently compiled a list of the 12 Monthly Dividend Stocks with Over 5% Yield. In this article, we are going to take a look at where EPR Properties (NYSE:EPR) stands against the other dividend stocks.
Dividend stocks have always been a go-to choice for investors, no matter how frequently they receive payouts. Companies carefully decide how often to reward their shareholders. While annual or semi-annual dividends can offer larger sums, their unpredictability can leave investors in a bit of a pickle. Most major firms stick to quarterly payouts for practical reasons, but some opt for monthly distributions, which many investors find appealing as they provide a steady flow of passive income. Monthly payouts offer immediate cash flow, helping with day-to-day financial management. Moreover, a cut in monthly dividends would have a smaller immediate impact, making them feel almost like a regular paycheck. However, history shows that while companies offering monthly dividends may offer higher yields, they sometimes fall short on maintaining consistent dividend policies.
Regardless of how often they are paid, dividend stocks have delivered impressive returns over the years. Investors often aim to reduce risk in their portfolios, and dividend stocks offer a dependable way to do so. A report by S&P Dow Jones Indices underscored the growing importance of dividends as a source of personal income. Over the years, dividend income has consistently increased, rising from 2.68% in late 1980 to 7.88% by mid-2024. In contrast, interest income has declined, falling from 14.58% to 7.61% during the same timeframe.
Analysts also suggest adding dividend stocks to portfolios due to the advantages they offer. Savita Subramanian, an equity and quant strategist at Bank of America Corp., also recommended that investors increase their holdings of dividend stocks. Here are some comments from the analyst:
“You want to be in safe dividends — and I know this is the most boring call of all time, but sometimes boring is good. We believe that we are now in a total return world in which the contribution of dividends to total market returns could be significantly higher than it was in the last decade, a period marked by falling cash yields and lofty price returns. We advise investors to seek out companies with above-market and secure (not stretched) dividend yields.”
Within dividend strategy, investors are increasingly drawn to companies that regularly boost their dividends, prompting many firms to focus on sustaining and growing these payments, even in tough economic times. This approach has proven effective, as companies with a track record of dividend growth have yielded impressive long-term returns. A report by Cohen & Steers highlighted that from 2000 to 2010, dividend-paying firms outperformed their non-paying counterparts by an annual margin of 620 basis points, while also experiencing significantly lower risk, as indicated by standard deviation. Over a 30-year period ending in 2011, the advantages of dividend-paying companies became even clearer, with those initiating or increasing dividends consistently outperforming both other dividend-payers and non-payers, delivering higher returns with less volatility.
Although dividend stocks underperformed in 2024, their outlook remains promising. Analysts expect a strong rebound for these stocks, especially with the addition of several major tech companies to the dividend-paying ranks, signaling potential growth in this sector. Given this, we will take a look at some of the best dividend stocks that pay monthly dividends.
Our Methodology:
For this article, we looked through a list of companies that pay monthly dividends and picked those with yields above 5% as of January 14. While analysts don’t usually recommend stocks with extremely high dividend yields because they may indicate financial issues, we chose companies with a consistent history of stable dividends despite their high yields. The stocks are ranked in ascending order of their dividend yields. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A modern REIT building with a bright and inviting entrance.
EPR Properties (NYSE:EPR)
Dividend Yield as of January 14: 7.52%
An American real estate investment trust company, EPR Properties (NYSE:EPR) eases its properties to various entertainment and educational businesses, including amusement parks, movie theaters, and ski resorts, across the US and Canada.
Analysts have not been particularly fond of the company’s business model, as EPR Properties (NYSE:EPR) focuses solely on experiential assets. Owning properties that provide entertainment and bring people together in group settings was a challenging business during the coronavirus pandemic. As a result, the company reduced its dividend in 2020 and completely eliminated it after posting a significant $156 million net loss for the year. The company reinstated the dividend in the second half of 2021.
That said, while movie theater operators are still facing challenges, the rest of the REIT’s tenants are in a stronger position now than they were before the pandemic. To quantify this, rent coverage outside of theaters was 1.9 times in 2019 and has since risen to 2.1, indicating a significant increase in how much rent payments cover EPR’s property ownership expenses. Moreover, EPR Properties (NYSE:EPR) reached a 99% occupancy rate at the end of Q3 2024. It achieved this by selling vacant theaters, bringing in more non-theater tenants for experiential businesses, and growing its portfolio of education-related properties.
During the quarter, EPR Properties (NYSE:EPR) completed the sale of two theater properties and one early childhood education center, raising net proceeds of $8.7 million. The company’s cash position remained solid, finishing the quarter with more than $35.3 million in cash and total assets nearing $5.7 billion.
EPR Properties (NYSE:EPR) has been making regular dividend payments to shareholders since its IPO in 1997. The company shifted to monthly payments in 2013 and currently offers a monthly dividend of $0.285 per share. With a dividend yield of over 7.5% as of January 14, EPR is one of the best monthly dividend stocks.
At the end of Q3 2024, 23 hedge funds tracked by Insider Monkey held stakes in EPR Properties (NYSE:EPR), worth over $247.4 million. Jim Simons’ Renaissance Technologies was the firm’s leading stakeholder in Q3.
Overall EPR ranks 7th on our list of the best monthly dividend stocks with over 5% yield. While we acknowledge the potential of EPR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EPR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.