3 Stocks That Cut You a Check Each Month

Most income investors are accustomed to receiving quarterly dividend distributions, but there are more than 80 stocks that cut shareholders a check every month.

Most of them are real estate investment trusts (REITs) or business development companies (BDCs), which are investment vehicles that get tax breaks in exchange for paying out at least 90% of their taxable income to investors through dividends.

So, while many do offer quarterly distributions, some REITs and BDCs do so every month. Here are three in particular that have been the most consistent in increasing their dividends.

Image source: Getty Images.

1. Realty Income

No list of monthly dividend payers would be complete without Realty Income (NYSE: O), which has long been the gold standard -- it even calls itself the "monthly dividend company."

In January, the company paid out a monthly dividend of $0.27 per share, marking the 667th consecutive month it has paid out a dividend. It also marks the 32nd straight year that Realty Income has increased its dividend, dating back to 1994.

That represents an annual payout of $3.24 for each share, at a high yield of 5.07%.

Realty Income owns commercial real estate, mostly retail, with a decent stake in industrial buildings. It owns or invests in more than 15,500 properties leased to more than 16,000 clients in 92 different industries. Most of its clients are single-lease, meaning they are the only ones in the building, and they are under long-term lease agreements, which provides dependable rental revenue. The occupancy rate is about 98.7%.

In addition to its reliable dividend, the stock is up 13% year to date and 17% over the past year.

Over the past 10 years, with its dividend reinvested, it has averaged a return of 6.4% per year. Without the dividend reinvested, its annualized 10-year return is about 1.5%.

2. Main Street Capital

Main Street Capital (NYSE: MAIN) is a business development company (BDC) that invests in lower middle market companies, providing debt and equity solutions. It invests in companies with annual revenues between $10 million and $150 million and provides loans to companies with annual revenues between $25 million and $500 million. It currently has a portfolio of about 200 companies.

One of the things that sets it apart is its one-stop shop, meaning, it offers both debt and private equity solutions. Another thing that sets it apart is its monthly dividend.

Outside of Realty Income, it is one of the most consistent dividend payers, increasing its annual payout for 18 straight years dating back to its inception in 2007. It is currently paying out a $0.26 per share monthly dividend at a high yield of 6.96%. That totals $4.32 per share for the full year.

Main Street Capital stock has also been a consistently strong performer, averaging an 8.3% annualized return over the past 10 years, and 16.3% annually with the dividend reinvested. The latter beats the S&P 500.

3. Phillips Edison & Company

Phillips Edison & Company (NASDAQ: PECO) is a retail REIT that invests in grocery stores, or more specifically, grocery-anchored shopping centers, where the grocery store is the primary tenant.

It is one of the largest owners of grocery stores in the country with 324 shopping centers across 31 states in its portfolio. And it has some 5,500 tenants within these shopping centers. It has a 97.3% occupancy rate.

Phillips Edison has been successful in part due to its neighborhood strategy -- that is, buying shopping centers in neighborhoods, closer to home, as opposed to regional malls or shopping centers. These neighborhood shopping centers are filled with services people use every day, like nail salons and pharmacies and pizza shops. Also, grocery stores, particularly those in neighborhood centers, are a more sturdy tenant in all types of markets.

While Phillips Edison has been around since 1991, it has only been a public company for four years. And in each of those four years, it has raised its dividend. It currently pays out $0.11 per month and $1.30 per year at a yield of 3.42%.

The stock has also averaged a 7% return annually, which goes up to about 11% with the dividend reinvested.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.