This 8.3% Yielder Pays Cash to Investors Every Month
If You Want to Earn Monthly Dividends, Read This
Regular readers of Income Investors know that I’m a big fan of real estate investment trusts (REITs). Because REITs can collect rental income on a monthly basis, some of them can afford to have a monthly dividend policy.
The thing is, though, because of their higher distribution frequency, monthly dividend REITs have been highly sought after. As a result, prices of the most solid monthly dividend REITs are already bid up, meaning they can’t offer much in terms of yield.
Of course, you can also go with the lessor-known names in the business. In fact, there are monthly dividend REITs with yields north of 10%. However, the problem with those companies is that they are not exactly known for providing much in terms of dividend safety. And for income investors with a long-term horizon, buying a stock before its dividend gets cut can turn into a very expensive lesson.
And that’s why today, I’m going to show you a way around this problem: by investing in Global X SuperDividend REIT ETF (NASDAQ:SRET).
As the name suggests, SRET is an exchange-traded fund (ETF) with a focus on REITs and high dividends. The fund was created in March 2015 to track the investment results of the Solactive Global SuperDividend REIT Index. Because SRET trades on the NASDAQ stock exchange, investors can buy and sell it throughout the trading day, just as they would do with a regular stock. (Source: “SuperDividend REIT ETF,” Global X Funds, last accessed January 18, 2018.)
Global X SuperDividend REIT ETF stands out when it comes to providing an income stream to investors. The fund pays a monthly dividend, and based on its payouts over the last 12 months, SRET ETF has an annual yield of 8.34%.
The reason why I like this fund is that it provides something that investors of high yield stocks desperately need: risk management. You see, Global X SuperDividend REIT ETF is well diversified. It currently holds shares of 30 of the highest-yielding REITs in the world. The fund’s portfolio companies owns real estate assets in the U.S., Singapore, Canada, Australia, and the Netherlands. This means that if one company experiences some problems, or when one region enters an economic downturn, the impact on the entire fund’s income stream would likely be limited.
Moreover, while SRET ETF is not actively managed, the underlying index is maintained by professionals. In particular, the Global SuperDividend REIT Index is reviewed annually, with index components also screened on a quarterly basis for dividend cuts or an overall negative outlook regarding the companies’ dividend policies. So when an investor owns REITs through this ETF, they don’t have to worry too much about company-specific news.
At the end of the day, all that benefits do come at a cost in the form of management fees. Right now, Global X SuperDividend REIT ETF has an annual expense ratio of 0.58%.
That cost is certainly not cheap. But for those looking to earn an oversized monthly income stream from REITs, SRET ETF’s portfolio could provide a relatively safe way to do it.