Can Phillips Edison (PECO) Deliver Consistent $100/Month Passive Income for Long-Term Investors?

For long-term investors seeking reliable passive income, the grocery-anchored REIT model has long been a cornerstone of defensive investing. Phillips Edison & Company, Inc. (PECO) operates within this framework, offering a monthly dividend yield of 3.58%-3.59% and a history of consistent payouts. But can it sustain this income stream-and even grow it-over the long term? This analysis evaluates PECO's dividend sustainability, growth potential, and financial health to determine whether it can reliably generate $100/month in passive income for investors.

Dividend Sustainability: A High Payout Ratio, But Stable Cash Flows

PECO's dividend sustainability hinges on its ability to balance a high payout ratio with robust cash flow generation. The company's 2025 payout ratio ranges between 187.24% and 191.91%, significantly exceeding the Real Estate sector average of 141.9% according to Macrotrends. While this suggests reliance on non-core earnings or debt to fund dividends, PECO's grocery-anchored portfolio provides a critical buffer. As of September 30, 2025, the company reported a 97.6% leased portfolio occupancy rate and 97.9% same-center occupancy, with 70% of its annual base rent derived from necessity-based retailers according to Stock Analysis. These tenants, including grocery stores and pharmacies, are less sensitive to economic downturns, ensuring stable cash flows even in volatile markets.

Moreover, PECO's operating cash flow, measured by Core FFO per share, is projected to range between $2.57 and $2.61 for 2025. This metric, which excludes non-operational items like depreciation, provides a clearer picture of the company's ability to service its dividend. While the payout ratio remains elevated, the combination of high occupancy and resilient tenant demand suggests that PECO can maintain its dividend in the near term.

Growth Potential: Earnings Projections and Portfolio Resilience

For investors aiming to grow their passive income, PECO's earnings trajectory is a key consideration. Analysts project a 5.10% increase in EPS for 2026, rising from $2.55 to $2.68, with long-term growth expectations of 12.3% annually. These forecasts are underpinned by PECO's recent performance: in 2025, the company exceeded earnings expectations in Q1 and Q3, leading to upwardly revised guidance for the year. Such resilience is attributed to its tenant retention rate of 93.9% in Q3 2025, minimizing vacancy risks and ensuring steady rental income.

However, short-term volatility remains a caveat. Some models predict a 17.75% decline in Q1 2026 EPS, potentially impacting dividend stability. Yet, the long-term outlook remains bullish, with a 12-month stock price target of $38.33-11.52% above the current $36.15 price. This projected appreciation could enhance total returns, allowing investors to scale their dividend income through share price growth.

Financial Health: Debt and Liquidity Considerations

A critical factor in assessing dividend sustainability is PECO's financial leverage. While the company's debt-to-equity ratio is not explicitly detailed in the provided data, its ability to exceed earnings expectations and raise guidance in 2025 suggests prudent capital management. Grocery-anchored REITs typically benefit from long-term leases and inflation-linked rent adjustments, which PECO leverages to mitigate debt servicing costs. However, investors should monitor its liquidity position, particularly given the high payout ratio, to ensure it can meet obligations without over-reliance on external financing.

Can PECO Deliver $100/Month in Passive Income?

To generate $100/month in dividends, an investor would need approximately 961 shares of PECO based on its $1.25 annual dividend. At the current share price of $36.15 according to CNN Money, this requires an investment of roughly $34,700. While this is a substantial outlay, PECO's projected stock price growth of 9.89% could reduce the number of shares needed over time. For example, if the stock reaches $38.33 by 2026, the same $100/month target would require only 919 shares, lowering the total investment to $35,000.

The key question is whether PECO can maintain its dividend while navigating short-term earnings fluctuations. Its high occupancy rates, stable tenant base, and upward earnings revisions suggest it can weather near-term volatility. However, the elevated payout ratio remains a risk-if earnings decline significantly, management may need to trim the dividend or tap into reserves.

Conclusion: A High-Yield Option with Cautionary Notes

PECO's grocery-anchored model and resilient tenant composition make it an attractive option for passive income seekers. Its high occupancy rates and strong tenant retention provide a solid foundation for dividend sustainability, while long-term earnings growth projections support income expansion. However, the high payout ratio and potential short-term volatility necessitate careful monitoring. For investors who prioritize stability and are willing to accept moderate risk, PECO offers a compelling case for consistent $100/month passive income-provided they remain attuned to its financial health and market conditions.