3 Options for Investors Looking to Create Monthly Passive Income Creatively

PBT +1.13% STAG +0.01% O +1.30%

There's no such thing as a binary choice (it's got to be option A or B) when it comes to creating monthly passive income. Investors have dozens of options to choose from, many of which involve publicly-traded securities (and many of which don't).

Quick Read

• Realty Income (O) is highlighted as a top REIT for generating monthly passive income through real estate investments.

• STAG Industrial (STAG) focuses on warehouses and distribution facilities driven by e-commerce demand and yields 3.8%.

• Permian Basin Royalty Trust (PBT) offers monthly dividends as a unique royalty company option.

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Some investors may choose to look at private investments in rental properties, private equity, and other sources to create meaningful passive income streams for retirement. I'm going to talk about some options tied to this space in this piece, but am going to focus my attention on publicly-traded securities for now.

Why? Well, publicly-traded securities provide much better liquidity, allowing investors to enter and exit positions as they need capital. I think that those investing for retirement may want or require this liquidity, so that's the basis for this overarching perspective.

Without further ado, let's dive in!

Realty Income (O)

I did mention I would touch on real estate as an overarching thesis for creating monthly income. Indeed, when many investors think of monthly passive income-generating assets, real estate is the first sector that comes to mind, after all.

In this space, Realty Income (NYSE:O) is among the top real estate investment trusts (REITs) out there for investors to choose from. The fund's status as a leading monthly income stock is well-documented, and this is often the go-to option for those seeking to benefit from rising rental income (and stable balance sheets) among blue-chip commercial properties in the U.S. market.

With more than 15,000 properties in its portfolio, most of which are anchored by quality tenants under long-term agreements, Realty Income remains a go-to option for those in the passive income investing world. The company's recent results this past quarter, in which EPS surge from $1.26 the same quarter a year prior to $1.41 (and revenue shot to nearly $5 billion for the quarter), suggests that the company's 5.7% dividend yield is not only sustainable, but could have room to rise over time.

With a more than three-decade-long track record of dividend growth, this is a top REIT I think is worth considering for monthly income generation, or simply as a long-term total return play, for investors of all kinds.

Permian Basin Royalty Trust (PBT)

Shifting our focus toward a unique royalty company that also pays a monthly dividend, we have Permian Basin Royalty Trust (NYSE:PBT) on this list.

This company operates in a similar way to other royalty and streaming companies in the mining sector. However, as this company's name suggests, a focus on the permian basin and energy stocks playing in this sector provides unique revenue streams which may be more enticing to investors that are concerned that surging precious metals prices may come down (but energy prices remain robust).

Indeed, with all the spending going into building next-generation AI infrastructure, the reality is we're going to need plenty of energy to power what could be an incredibly transformative (and profitable) economic shift. Permian Basin Royalty Trust provides energy companies looking for up-front capital to explore or develop operations with the capital to do so, in exchange for taking a royalty payment until they're paid back in full (with some cream on the top).

Thus, this company can be viewed as a higher-leverage way to play rising energy prices over time. With a 1.8% dividend yield (which has come down considerably thanks to strong capital appreciation of late), this is a top monthly income stock I think is still worth considering here, and even more so on dips moving forward.

STAG Industrial (STAG)

Another REIT I think long-term investors would do well to consider is STAG Industrial (NYSE:STAG).

Two REITs on the same list? Yes. But STAG Industrial operates in a very different segment of the real estate market than Realty Income, making both options deserving of a portfolio position, at least in my view.

Where STAG differs in its business model is in the type of real estate the company pursues. Industrial real estate, mainly warehouses and distribution facilities, continue to be in high demand. Operators looking for the ability to ship products same day to consumers (a trend that's picked up thanks to the rise of e-commerce giants) means that there's greater value created by these properties than in years past.

As a result, companies like STAG have had unique pricing power in an overall real estate market that's been pretty stagnant of late, thanks to high interest rates.

But with interest rates likely to decline, and cap rates likely to continue to head lower in the industrial real estate sector thanks to supply and demand fundamentals improving in favor of investors, this 3.8%-yielding stock (paid monthly) is one I think is worth picking up right now.

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