While balanced market ideas that offer a blend of capital gains and income may be a tricky topic under certain circumstances, at the present juncture, investors ought to consider growth stocks that pay monthly dividends. True, sometimes a compromised approach yields a jack-of-all-trades-master-of-none result. Still, compromise is the name of the game right now.
Let’s look at our reality. For one thing, consumer confidence suffers due to stubbornly high inflation. Also, the latest fallout in the airliner industry suggests that the revenge travel catalyst may be fading. If that wasn’t enough, the Federal Reserve may continue raising interest rates, putting in question prospects of a soft landing.
In other words, a balanced approach may be ideal. On that note, below are three growth stocks that pay monthly dividends.
EPR Properties (EPR)
We’ll start off with arguably the riskiest idea on this list first with EPR Properties (NYSE:EPR). Structured as a real estate investment trust (REIT) – as are all the growth stocks that pay monthly dividends in this piece – EPR focuses on entertainment-related properties. That means amusement parks, movie theaters and ski resorts, among other categories.
Since the start of the year, EPR lands in double-digit percentage growth territory. That’s decent. However, in the trailing month, shares have conspicuously slipped, indicating possible weariness among consumers. Nevertheless, the financials tell a different story. Yes, EPR suffered badly in 2020 due to a temporary shutdown in non-essential activities. However, from 2021 onward, it’s been posting encouraging growth.
With consumers possibly transitioning their spending from expensive experiences to more local fare, EPR could still win out. As for passive income, the company carries a forward yield of 8.04%. Still, watch out for its 135.28% payout ratio. Analysts rate EPR a hold with a $47.33 target, implying over 15% upside potential.
Realty Income (O)
A go-to favorite among growth stocks that pay monthly dividends, Realty Income (NYSE:O) is an obvious idea. However, given the dearth of ideas that even remotely qualify for the underlying theme, I’m going to take it. I have zero shame about that whatsoever. Plus, as a REIT that specializes in single-tenant commercial properties – including vital services for local communities – Realty Income is tremendously relevant.
For full disclosure, though, you must be aware that investors don’t give a hoot about the relevance angle. Since the start of the year, O stock dropped heavily amid headwinds such as inflation pressuring consumer sentiment. Nevertheless, in terms of financial performance, Realty features a three-year revenue growth rate of 5.1%, above nearly 69% of its peers.
As for passive income, the REIT offers a forward yield of 6.22%. And while its payout ratio is sky high at 228.23%, the firm benefits from 30 years of consecutive dividend increases. Lastly, analysts rate O a moderate buy with a $62.80 target, implying over 27% growth.
Agree Realty (ADC)
Another REIT specializing in commercial properties, Agree Realty (NYSE:ADC) may benefit – eventually, that is – from shifts in the consumer economy. As stated earlier, phenomena such as revenge travel have absorbed many consumer dollars. However, as economic pressures build, people will likely be more careful with their discretionary expenditures. And that should ultimately help Agree Realty.
After all, recession or no recession, people will still need to buy the essentials: food, water, soap, what have you. Also, there are some important acquisitions such as computers that, while they may fall under the discretionary category, are vital for academic and career development. Since myriad retailers operate on properties controlled by Agree, there’s potential opportunity here.
Financially, Agree prints a three-year revenue growth rate of 6.1%, which again is above average for the sector. For passive income, the REIT offers a forward yield of 5.41%, though you’ll have to be mindful of the 172.53% payout ratio.
Finally, analysts peg ADC a strong buy with a $70.56 target, implying nearly 29% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
