everyone loves the idea of monthly dividend stocks and while stock paying out dividends every single month doesn't technically make it any better than other stocks it's a great feeling seeing that cash flow come in every single month now the reality is there are very few stocks that are quality and payout dividends every single month I mean off the top of my head I can name a few we have companies like realy income Main Street Capital and we also have stag industrial but one of the Lesser talked companies is one we're going to be looking at today and that is agree realy Corporation stock ticker ADC trading at $61 and 48 now they haven't always paid out dividends monthly in fact if we go over to the dividend history tab here on Seeking Alpha and zoom out we can see they made this change actually in early 2021 before that we can see they were actually making quarterly dividend payments so this compan is now paying out big monthly dividends and we can see they actually have a starting yield sitting at about 4.84% so high starting dividend yield and monthly dividend payments now over the past year like most streets they're down quite a bit due to the high interest rate environment we're operating under down by about 5% and if we look at them year-to date down by about 2.34% now because this company just recently started paying out monthly dividends let's jump over to my dividend breakdown sheet so we can see those dividend payouts on a yearly basis we'll come up here plug in ADC and hit enter and what we can see when this data loads in is those yearly dividend payments have grown by quite a bit over the past decade especially for a real estate investment trust we can see that 5-year dividend kager sitting at about 5.64% which I think is good for re that also has a yield of around 5% and keep in mind like always if you'd like to be able to download any of my spreadsheets and also get access to the ticker data add-on in Google Sheets you can head over to Ticker dat.com at the link in the description now one of the things you'll also notice on the spreadsheet is it's showing a payout ratio of 167 75% now typically this would be a huge concern for me as an investor but we have to keep in mind again this is a real estate investment trust there's a very specific metric we have to look at to better understand the safety of these dividend payments and it's actually not the payout ratio and it's not even the free cash flow payout ratio what we want to look at is the afo payout ratio we jump over to Seeking Alpha and click on dividends click on dividend safety and scroll down we should be able to find this metric and we can see it right here afo payout ratio forward looking for this company sitting at about 72.9% now what is affo what does that stand for well affo stands for adjusted funds from operations and essentially what it does is it provides a more accurate representation of a ret ability to generate cash flow from its operations and actually one of the things we can do is if we jump over to the company's most recent earnings report we can see right here they said that their adjusted funds from operation per share increased 4.6% to $13 now my opinion this is the most important metric to look at when you're analyzing a real estate investment trust and one of those reasons like we just saw is it gives us a better idea of the dividend sustainability REITs are required by law to pay out 90% of their earnings in the form of dividend so the payout ratio isn't always the most accurate representation so like I just said we look at the affo payout ratio but there's more than adjusted funds from operation than just understanding dividend sustainability it's also going to help us better understand the company from a cash flow perspective it helps provide a clear picture of the re's cash flow available for distribution to shareholders again crucial for income focused investors so if this re's going to be able to continue to grow its dividend payments and distributions over time they're going to have to grow their affo over time which we can see in the scenario in the most recent earnings report they were able to do by growing afo per share by about 4.6% a couple of other key metrics we can see from this earnings report they invested approximately 140 million in 50 retail net lease properties we'll talk about that here just a little bit in a second but we can also see the balance sheet very well positioned at 4.3 times perform a net debt to recurring ebitda and again this is something else we'll talk about here in just a moment now I want to jump into the investors presentation and point out some key aspects of this company that make them a pretty quality reat in my opinion but first off there's something really interesting that's been going on within this company lately that I have to point out and that is the amount of insiders buying this company we can see over the past year there have been a multitude of insiders buying and there have been zero sells and this reminds me of the famous investor Peter Lynch's quote about Insider buying insiders might sell their shares for any number of reasons but they buy them for only one they think the price will rise so this should give you a lot of confidence as a potential investor in this company because insiders have been loading up on this stock over the past year and we haven't seen any sales now with that being said there is something else that I do want to point out if we jump back over to Seeking Alpha and go to the summary tab this company has a little bit more short interest than I typically like seeing from potential Investments we can see it's sitting at about 6.51% I don't like seeing these big hedge funds bet against companies that I could potentially own now if we jump into the investor presentation we can actually get a better idea of who ADC is and what they do but we can see this is a net lease reap focused on the acquisition and development of high quality retail properties and it's been publicly traded since 1994 if we jump over to the seventh slide we can get a better idea of what their top tenants look like we can see these tenants are pretty popular companies you're very likely familiar with we have companies like Walmart tractor supply Dollar General Best Buy CVS and a lot of other companies you should be familiar with and so if we break it down by sector we can see grocery stores are going to be the majority of their portfolio at about 99.7% we also have Home Improvement pretty large position at 8.6 Tire and Auto Service 8.5 convenience stores 8.4 and then it jumps down to Dollar Stores sitting at about 7.6% we have off price retail at 6.1 general merchandise around 6% and everything other than that it's below 6% as we can see here now the great thing about these tenants is 69% of them are considered investment grade and for reference this is actually even higher than realy income one of the most popular monthly reads out there this is considered one of the strengths of this company now something that I definitely want to point out when looking at this company is the strength of their balance sheet we can see ADC has been at or below 4.5 times pro forma net debt to recurring EIT since 2018 now if you're wondering what that means let me explain first off we have to understand ebit do stands for earnings before interest taxes depreciation amortization so this is basically a financial ratio telling us how much net debt they have compared to how much money they're bringing in before interest taxes depreciation and amortization and in ADC scenario that Financial ratio comes out to about 4.5 times so it kind of gives us an idea of the health of their balance sheet and how easily they can repay those debts now you may be wondering is 4.5 times good or is it bad if we compare ADC to realy income again stock ticker o ADC is sitting at about 4.5x while for o this is sitting at 5.3x and typically as we can see The Sweet Spot in the net leas re segment is going to be at around 5x so ADC is actually better than most reats in this position and they're even better than realy income so from a balance sheet perspective things seem to be looking pretty good for this company and then finally if we look at the 23rd slide we can see what most investors love about this company and it's the growing well- covered monthly dividend like we already talked about the dividend payments do appear to be safe but here's what's also very very impressive yes nice starting dividend yield monthly dividends but look at the rate that they're growing at 6% plus 10-year dividend kager that's absolutely phenomenal and this is showing from 2012 to 2022 so this company checks all the boxes from a dividend perspective Ive like I said it looks sustainable they're paying out every single month the dividend payments are growing and they have a very nice starting dividend yield of close to 5% that sounds like a pretty good deal so far now I do want to show you one of the things that a lot of investors are concerned about when it comes to ADC if we come over to my stock screener plug in ADC and hit enter if we come down here and look at shares outstanding we can see this has grown dramatically over the past decade going from around 13 million in 2013 now all the way up to 95 million at the end of 2023 now this is scary because if you're a shareholder in this company then you know that this company is greatly diluting your ownership but we also have to keep in mind there are typically two different ways that a rate can grow because remember they have to pay out 90% of their earnings in the form of dividend payouts so one they can take out new debt which isn't always the best choice depending on the interest rate environment and interest rates are pretty high right now so their second option is to issue new shares which we can see this has definitely been part of the strategy for this company over the past decade especially since 2021 and 2020 so they have been issuing a lot of new shares it is diluting shareholders but really this has always been a part of the plan if interest rates increase they just simply issue new shares so they can continue to grow now with all of this being said is agree realy Corporation trading at $61 and 47 cents trading at a good value again over the past 5 years we can see they're down by about 6% and over the past 10 years they've actually done pretty good for Reit not including dividends up over 100% so again are they trading at a good value to answer that let's go ahead and jump over to to my re valuation spreadsheet and run it through a few different valuation models we'll come up here plug in ADC and hit enter and this data will load in and one of the things we can notice about this company is if we come down here look at the beta it's sitting at about 0.59 so we should see very low levels of volatility from this company quite a bit lower than that of the market now the first valuation we'll run it through is going to be our affo multiples valuation and again the idea is we should be able to Value this company based on how the market is valuing companies that are similar in structure and like always there's no perfect comparable we can see I went with four companies right here took their stock price divided by their affo to get the price to affo multiple and the average for these companies was sitting at about 14.44% right now giving us an intrinsic value of $576 just a little bit lower than that current trading price now we do have to keep in mind I think there are a couple of things that a lot of people really like about this company that could potentially make it trade at a premium like the balance sheet like them from a dividend perspective and they still have a lot of room for growth while some people argue that companies like Roy income are a little bit too large to be able to grow at the same rate that they have over the past 10 to 20 years so something to keep in mind now the next valuation we'll look at will be our historical price to ffo valuation and I love this one for REITs it helps us understand how they've traded historically and we can compare how they're trading right now so we take all the share prices over the past decade and what it's doing right now and divide by the historical ffo per share over the past decade so so we get the historical price to ffo so let's go ahead and zoom in just a little bit more so we can take a closer look at this we can see right now the historical price to ffo is sitting at 16.93 and if we look at what the average has been over the past decade it's actually 19.45 so we can see especially since 2016 it's been sitting at 19 or above but over the past few years since 2021 we can see this has been trending downward and at the end of 2023 it was sitting at 17.77% all the way down to 16.93 so we did find that compared to its peers it looks like it's a little bit overvalued maybe but compared to how this company has traded historically it's actually quite a bit undervalued pretty interesting perspective to keep in mind now lastly we want to look at the dividend discount model and this is one of my favorite ways to value a dividend paying company because it values the company based on how much they pay out in dividends and how much that dividend is increasing over time so you can see we have the dividend payouts here and the yearly dividends here and the dividend growth rates so assuming dividend growth rate of about 3.25% and a discount rate of 8% we come to a dividend discount model price per share of $652 for this company which is about 6% above that current trading price so when we jump over to our output tab we can see the two valuations we used here afo multiples and dividend discount model the intrinsic value when we average these two together comes out to price per share but we did find that the company was slightly undervalued when using this model so something else to keep in mind so with a 5% margin of safety you could see our acceptable Buy price at about $58 per share 10% at about $55 per share and if we look at the Historical trading price for this company over the past five or so years we can see there have definitely been opportunities at around $55 per share I would say this is one of the higher quality rat so we don't typically see huge sell-offs and of course that's with the exception of the 2020 selloff ask for me I don't plan on adding shares of this company to my portfolio right now but it's definitely on my watch list and one that I'll keep a close eye on if we do see interest rate Cuts in the next 6 months that could definitely be a catalyst for this company moving forward but the beauty of a quality re like agree realy Corporation is even if the share price remains stagnant until we see interest rate Cuts you get a very predictable high yield monthly dividend payment and a growing dividend payment going into your portfolio every single month so go ahead let me know what you think of a GRE realy Corporation in the comments down below if we plan on buying or selling or just simply keeping on your watch list and like always if you'd like to be able to download any of my spreadsheets and also get access to the ticker data add-on in Google Sheets it allows you to automatically import stock Financial straight into your spreadsheet then you can head over to Ticker dat.com at the link in the description so with all that being said thank you guys so much for watching and please don't forget to like And subscribe to the channel