Editor’s Note: Today, we have a guest essay from colleague and real estate investing expert Brad Thomas. As Brad shares, there is a way to collect regular “rent checks” like big landlords without the hassle of managing your own properties. Read on…
Long before I became a stock analyst and newsletter writer… I got my start as a real estate developer.
For over two decades, I built commercial properties for companies like CVS (CVS), Dollar General (DG), and Advance Auto Parts (AAP).
I sold some of those locations. But many, I kept to lease. That’s how I grew used to getting rent checks in the mail every month.
And let me tell you, it’s a great feeling.
At the peak of my landlord career, I had over 100 payments coming in 12 times a year.
Most were from high-quality tenants, too. So I rarely had to remind them to pay, much less send out default letters.
That was intentional on my part. I vetted potential lessees up and down to avoid just that. It’s one of the most important rules of being an intelligent investor.
Naturally then, it’s one I kept when I became a market analyst. And my team at Wide Moat Research is just as laser-focused at vetting companies and finding reliable income-producing investments.
Today, I want to show how you can collect your own “monthly rent checks” from strong tenants – just like I’ve done throughout my career – simply by owning the right stocks.
These payouts could help you boost your income stream year after year. And I’ll share one name in particular that’s trading on the cheap.
Dividend-Paying Stocks Work Well – Both When Spending and Saving
Owning a portfolio of companies that deliver predictable income can help you save up for retirement… pay your mortgage… buy groceries… or put gas in your car.
All things that are, unfortunately, more expensive now than they’ve been in decades. That’s especially true with the inflation rate hovering in the 6.5% range instead of the long-term average of 3.3%.
That makes owning dividend-paying stocks more important than ever – both for those who are retired and can’t rely on Social Security payments alone to meet their needs… and for those still working.
If you’re retired, you can use the extra income to supplement your day-to-day expenses. And if you don’t need to rely on passive income just yet… you can start using dividends to save up much more than you otherwise could.
And if you’re still working… well, monthly dividend checks can go a long way towards supplementing your income.
I don’t know about you, but I’d much rather collect passive income as a “side hustle” rather than driving an Uber or renting out one of my spare bedrooms on AirBnB.
The Power of Compounding
Consider the power of compounding: the concept of getting interest on interest.
This happens best when you keep reinvesting dividend payments right into the stocks that gave them to you.
As you do, you buy more shares. And as you buy more shares, you get more dividends. Which you then reinvest to buy more shares.
The highest quality companies accelerate this compounding process with annual dividend increases.
Oftentimes, these annual dividend increases exceed the inflation rate. So not only is your passive income rising, but your dividend stocks are protecting your purchasing power from being eroded away by inflation.
That’s especially important for retirees who rely on dividend income to pay their bills.
The combination of organic dividend raises and dividend reinvestment results in a beautiful cycle.
Though it does require time and patience to really pay off, compound interest is an incredibly powerful financial force that you can benefit from by owning dividend stocks.
A Favorite Monthly Payer
As for me, I find dividend-paying stocks to be universally good investments – or about as much as any group can be.
That’s why I never waste an opportunity to talk about them.
Several of my favorite monthly dividend-paying stocks are real estate investment trusts (REITs).
If you’ve been following me at Intelligent Income Daily, you’ve seen me write about REITs before. They’re dividend-paying stocks because they have to be.
By law, they must pay out at least 90% of their taxable income to shareholders…
Which means they often pay higher dividend yields than non-REITs. And reliable ones at that.
Through REITs, we can target the three fundamentals every income investor looks for: stability, reliability, and predictability.
That’s what I used to look for in my developer days… and what I continue to help you find today.
You see, many REITs have long-term lease agreements in place with their tenants so investors can peer far out into the future with regard to incoming cash flows.
When it comes to REITs, those cash flows trickle down to shareholder pockets in the form of dividends. Therefore, investors can rest easy, knowing their future passive income stream is relatively safe.
I know many investors who like getting these types of “monthly rent checks” so they can match-fund their living expenses with their monthly income.
If that’s something that interests you, one name I suggest paying attention to is STAG Industrial (STAG). This is not a formal recommendation, but it is one of my favorite REITs right now.
STAG is a warehouse landlord that owns 563 properties across 41 states. That’s 563 monthly rent checks from companies like:
Penguin Random House
It’s diversified… expects to see some of the highest warehouse demand it’s ever seen… and has a 4.4% dividend yield that’s expected to grow 9% this year as of the time of writing this.
Clearly, you don’t have to be a landlord to collect monthly payments from some of the strongest commercial tenants out there.
And if you’re looking for monthly dividend checks – or reliably increasing passive income, I have some exciting news for you.
This Tuesday, I’ll be unveiling our “Fortress Portfolio.” As the name suggests, it’s my strategy for protecting and growing your wealth through turbulent markets. It even helped me earn back my millions after I lost it all – in a fraction of the time.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily