This net-lease retail landlord pays its dividend every month and offers a 4.65% forward yield, funded by rent from nearly 2,900 stores leased mostly to retailers with strong credit ratings. That yield ranks in the top 40% of all dividend stocks, and it comes from a business that kept occupancy at a record 99.8% last quarter.
The company owns stores rented to national chains that sell groceries, home improvement goods, discount apparel and auto parts. Tenants pay most property costs, including taxes, insurance and maintenance, which keeps the landlord’s cash flow steady and predictable. Growth comes from buying existing stores, building new ones for retailers and funding projects led by partner developers. Development activity is running at a record pace, and management raised its full-year cash earnings guidance.
The main challenge is interest rates. A sharp rise in long-term Treasury yields has made new capital more expensive and narrowed the gap between borrowing costs and purchase yields. Management responded by cutting lower-return deals and leaning on roughly $2 billion of capital it raised earlier at cheaper prices. Weaker grocers and more cautious shoppers add some tenant risk.
We reaffirmed this holding in the Best Monthly Dividend Stocks Portfolio because its monthly income rests on high-quality tenants, locked-in funding and 16% expected growth in cash earnings next year. The shares have pulled back with rising rates, but the business behind the dividend continues to perform, which is what our mandate for safe, high monthly income requires.
