3 Monthly Dividend Stocks to Buy for Safety

Dividend Stocks

Safety in investing is very important. Your first goal should be to protect your capital. Your second is then to generate profits after assuming a certain level of risk. Warren Buffett agrees, famously saying “Rule number one: Never lose money. Rule number two: Never forget rule number one.” These are very important and all-time classic principles in investing.

The three safe monthly income stocks below are suitable not only for yield-focused investors, but for all investors. They can provide recurring passive income, which is ideal to pay bills and for retirees.

Safe Monthly Dividend Stocks: EPR Properties (EPR)

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Dividend Yield: 6%

EPR Properties (NYSE:EPR) is a real estate investment trust that specializes “in select enduring experiential properties in the real estate industry.” It intends to provide both stable and attractive returns to its shareholders.

This REIT focuses on experiential real estate, such as national parks, ski facilities, fitness centers, spas and waterparks. EPR stock has a forward dividend yield of 6.% and a monthly dividend frequency.

The payout ratio of 137.5% is high, but the 370.22% growth in free cash flow is very bullish and supportive of stable dividends.

In 2021, the growth in funds from operations was very strong, up 84.67% to $276.84 million. This can itself sustain the dividend policy throughout 2022. The company has generated profits in four out of five of the past years, so it shows a strong continuation trend in net profits, which also supports dividend payments.

Pembina Pipeline (PBA)

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Dividend Yield: 5.2%

Pembina Pipeline (NYSE:PBA) is an energy transportation and midstream service provider that owns “pipelines that transport hydrocarbon liquids and natural gas products produced primarily in Western Canada.” The company also operates “gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics business.”

The stock has a forward dividend yield of 5.2%  and a monthly dividend frequency with a payout ratio of 90%. The payout ratio has room to increase, supporting higher future dividends.

For a company to continue paying consistent dividends, two main conditions must be met. First, the company should be profitable, and second, it should have a strong positive free cash flow trend. Pembina Pipeline meets these two conditions as it returned to profitability in 2021 with a net income of $1.24 billion, an increase of 493.04%, and its free cash flow trend is both positive and consistent.

Safe Monthly Dividend Stocks: LTC Properties (LTC)

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Dividend Yield: 5.1%

LTC Properties (NYSE:LTC) is “a real estate investment trust (REIT) investing in seniors housing and health care primarily through sale-leasebacks, mortgage financing, joint-ventures, construction financing and structured finance solutions including preferred equity, bridge, mezzanine & unitranche lending.”

REITs are synonymous with attractive and continuous dividend payments as they must pay 90% or more of their taxable income to shareholders as dividends. LTC Properties stock has a forward dividend yield of 5.44% and a monthly dividend frequency.

The payout ratio is 114.5%, and although it is high, two key metrics are positive for consistent dividend payments.

The firm has reported two consecutive quarters of funds from operations growth, for the quarters ending in December 2021 and in March 2022. Free cash flow generation is positive and consistent, although it is volatile.

Lastly, the beat of EPS and revenue estimates in the second quarter of 2022  is a catalyst that supports a higher stock price.

On the date of publication, Stavros Georgiadis, CFA  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.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.

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