If I was just starting out without any savings, though, some of the stocks I’d buy are ones that are in my portfolio. Others, though are different.

In particular, there’s one dividend stock that I don’t own that I’d start with today. The stock is Agree Realty (NYSE:ADC).

Agree Realty

Agree Realty is a real estate investment trust (REIT). That means that it makes money by leasing property to tenants and distributing its earnings as dividends to its shareholders.

The company focuses on retail properties. And it pays its dividends monthly, meaning that if I bought shares today, I wouldn’t have to wait too long before my first payment came in.

So far, the company sounds a lot like Realty Income (NYSE:O). And it’s true that they have a lot in common.

Beyond monthly dividends and a retail portfolio, both attempt to limit their risk in the same way. They each focus on quality tenants that are immune to the threat from e-commerce.

When I was adding REITs to my portfolio, I decided Realty Income shares were the more attractive opportunity. But the situation would be different if I were starting today.

Advantages

The biggest advantage that Agree Realty has over Realty Income is its size. With a market cap of $6.64bn (compared to $42.6bn), Agree Realty is much smaller.

That makes it much easier for Agree Realty to grow its property portfolio and boost its dividend in a meaningful way. And the recent history bears this out.

Over the last five years, Realty Income has grown its dividend by an average of 3.5% per year. But Agree Realty has achieved annual dividend growth of 6.5% on average.

The stock has a dividend yield of 3.9% (compared to 4.4% for Realty Income). But over the long term, I think that the smaller company’s growth prospects will prove decisive.

Interest rates

One thing that I’d want to keep an eye on with this stock is interest rates. I see rising rates as the biggest obstacle to significant investment returns from Agree Realty.

Higher interest rates might cause the share price to fall as investors find easier returns in cash and bonds. And it might weigh on the value of the company’s portfolio if the property market drops.

Neither is a significant concern to me, though. I’d look to use lower share prices to boost my investment at more attractive rates of return, and falling property prices would allow the business to do the same thing.

What would be a concern to me is the possibility of rental income dropping. But there doesn’t seem to be any sign of this — the company’s rent collection has been consistently strong.

If I had no savings and was starting my investment journey today, I’d start by getting enough cash on hand to see me through any emergencies. Then I’d buy shares in Agree Realty and start collecting monthly dividends.

The post With no savings at 35, I’d buy this dividend stock to start earning monthly passive income appeared first on The Motley Fool UK.

We have a $5bn preferred stock that pays us $500m per year. […] It’s been pointed out that our preferred is paying us $15 per second. So as we sit here — tick, tick, tick, tick — that’s $15 every tick. I don’t want those ticks to go away. I just love them. They go on at night when I sleep and on weekends. 

The idea of making $15 every second is almost certainly beyond me, at least in this lifetime. But that doesn’t mean that I shouldn’t benefit from passive income by owning stocks that will pay me a regular dividend. With that in mind, here are three passive income stocks that I’m thinking of buying in April.

Enterprise Products Partners

The first stock is Enterprise Products Partners (NYSE:EPD). The company owns and operates a network of oil and gas infrastructure across the US. In the light of the US’s decision to stop importing oil from Russia, I expect demand for oil produced in the US to increase. Accordingly, I’m anticipating stronger demand for Enterprise’s pipelines, which transport oil from the Permean Basin. 

Of course, if the price of oil falls and drilling becomes less lucrative, then demand for the company’s services might fall. But at the moment, the stock pays a quarterly dividend with a yield of 7.44%. As a master limited partnership, Enterprise is required by law to distribute all of its profits to its shareholders.

Realty Income

My second passive income stock to buy in April is Realty Income (NYSE:O). The company primarily owns retail real estate, with a focus on tenants that are immune to the rise of e-commerce, such as convenience stores. I’ve been an admirer of this business for some time and its consistent ability to maintain high occupancy rates and rent collection stats. I own shares in my portfolio and anticipate buying more in April.

Realty Income is a REIT. As such, it is required to distribute 90% of its rental income to shareholders in the form of dividends. That’s great for investors seeking passive income, but it’s worth noting that being unable to reinvest its earnings does make it difficult for the company to grow. The stock currently distributes its earnings monthly and the dividend yield is 4.42%.

Agree Realty

Lastly, I’m looking at Agree Realty (NYSE:ADC). In many ways, the company is a smaller version of Realty Income — it’s another REIT that concentrates on the retail sector and looks for high-quality tenants. Being smaller can also have its advantages. Opportunities that are too small to make a meaningful difference to an operation with a $40bn market cap (like Realty Income) might be big enough to be attractive for a business with a $4.5bn market cap (like Agree Realty).

I see the risks and rewards of Agree Realty as broadly similar to Realty Income. But since I think they’re both high-quality operations, I’m very happy owning both in my portfolio. When I’m looking to add to my stream of passive income in April, Agree Realty will be near the top of my list.

The post 3 of the best passive income stocks to buy in April appeared first on The Motley Fool UK.

Agree Realty has a lot in common with Realty Income. Both companies focus on leasing retail properties to tenants and distributing rental income in the form of a monthly dividend. Both also target tenants that have investment-grade credit ratings. Lastly, both aim to concentrate their portfolios in areas that are should be immune to the rise of e-commerce.

Agree Realty

I think that Agree Realty has a lot of intrinsic merits as a monthly dividend stock. Two things from the company’s January 2022 investor presentation stand out to me. First, the company is in a strong financial position. Since 2016, it has been strengthening its balance sheet by disposing of properties outside of its core strengths. In doing so, the company has raised around $400m. Its financial strength is further supplemented by the fact that it has less than $100m in debt due to mature before 2025.

Second, the company’s income stream is well diversified. Agree Realty owns 1,404 retail properties in 47 US states. The company’s tenant base is also well diversified, with the largest three tenants only accounting for 15% of its overall base. This limits the risk of losing substantial income due to a particular tenant being unable to pay rent.

Risk

The biggest risk with Agree Realty as a monthly dividend stock, in my opinion, comes from the quality of its tenant base. While the company targets tenants with investment grade credit ratings, only 67% of the company’s tenant base has this rating. I’d like the number to be higher, especially with interest rates rising. Higher interest rates might increase the risk of tenants with weaker credit ratings being unable to pay their rents. 

In my view, however, this risk is reduced by the company’s strong record of rent collection. Between July 2020 and December 2021, Agree Realty collected at least 99% of its rent in every month. This indicates that the vast majority of the company’s tenants are generally reliable when it comes to paying. It also indicates that the monthly dividend is reasonably secure, which good for investors.

Insider buying

I think that Agree Realty shares trade at an attractive price today. My conviction is strengthened by the fact that insiders at the company seem to share this view. During 2021, the company’s CEO, COO, and other executives bought substantial amounts of shares for their own portfolios at prices higher than the current share price. When a company’s executives buy shares with their own money I view this as a strong sign that they have confidence in the company and view the shares as priced attractively.

The combination of an impressive record of consistent rent collection, a strong balance sheet that allows financial flexibility, and recent insider buying at levels higher than the current share price brings me to believe that Agree Realty is the best monthly dividend stock in my portfolio. I’d happily buy more today.

The post Is this the best monthly dividend stock in my portfolio? appeared first on The Motley Fool UK.