Investors looking for dividend stocks in October may want to keep an eye on Realty Income (NYSE: O), which stands out for its monthly dividend and long record of increases, and Nvidia (NASDAQ: NVDA), which combines a dividend with a newly expanded share-repurchase program.
Realty Income offers monthly income and decades of dividend growth
A real estate investment trust, or REIT, Realty Income offers a dividend yield of roughly 5.9% and distributes it on a monthly basis. Moreover, the company also has a long history of increasing its payout – it announced its 136th dividend increase since 1994 earlier this month.
As mentioned, Realty Income’s monthly payment schedule is what distinguishes it from many traditional dividend stocks. That is, for investors who use dividend income to cover regular expenses, receiving distributions throughout the year can provide a more consistent stream of passive income.
The company’s track record also extends through multiple economic cycles. While the shares are dowen roughly 13% over the past five years, Realty has continued paying and increasing its dividend through periods of economic uncertainty.
Of course, past performance does not guarantee future results. The company’s valuation remains relatively high, with its price-to-earnings ratio above 40, which could affect future returns even if the company’s underlying business and dividend remain resilient.
Realty’s current monthly dividend is $0.2715 per share, up about 34% from a decade ago, which represents an annualized dividend-growth rate of roughly 3% over the period. The next payout, issued to investors on record as of September 30, is scheduled for October 15.
Nvidia pairs its dividend with a major buyback authorization
Compared to Realty, Nvidia represents a very different dividend story. In short, its dividend yield is substantially lower than Realty’s, but the semiconductor company’s shareholder-return strategy also includes significant stock repurchases.
Most recently, on September 28, Nvidia announced that its board had authorized an additional $150 billion for share repurchases, bringing the total remaining authorization to $235 billion. The program is expected to run through fiscal 2028.
CEO Jensen Huang further said the company’s strong cash generation gives Nvidia the ability to invest in core businesses – i.e., artificial intelligence (AI) and accelerated computing – while also returning capital to shareholders.
The announcement immediately drew attention from investors, as share repurchases can support earnings per share over time by reducing the number of outstanding shares, although an authorization does not guarantee that the entire amount will ultimately be spent. However, Nvidia’s price appreciation and this year’s dividend increase are promising.
For dividend investors, the two companies therefore represent distinctly different approaches to shareholder returns. Realty Income emphasizes recurring monthly cash distributions and a long history of dividend increases, while Nvidia combines a smaller dividend with substantial potential capital returns through share repurchases.
Nvidia’s next dividend is coming on October 1, when the tech leader is going to reward investors as of September 10 with $0.25 per share.
Featured image via Shutterstock
