Top Monthly Dividend Stocks for Passive Income in 2026: Strategic REIT and BDC Picks with Proven Dividend Growth and Financial Sustainability

Investors seeking passive income in 2026 are increasingly turning to real estate investment trusts (REITs) and business development companies (BDCs) that offer monthly dividends. These vehicles combine the stability of real estate and private debt markets with the predictability of regular income streams. However, with rising interest rates and economic uncertainty, selecting companies with proven dividend growth and financial sustainability is critical. This analysis evaluates top candidates, focusing on payout ratios, earnings coverage, and long-term growth potential.

1. Realty Income (O): The Dividend Stalwart

Realty Income Corporation, known as "The Monthly Dividend Company," has paid 665 consecutive monthly dividends since 1969, according to a Investing.com report. Its latest payout of $0.2695 per share in December 2025 yields 5.74% at its current price of $56.86, according to the same source. The company's triple-net lease model-where tenants pay property taxes, insurance, and maintenance-ensures predictable cash flows.

Financial Sustainability:
- Payout Ratio: 75.4% (projected for 2026 if earnings reach $1.50/share), as noted in a MarketBeat alert.
- Growth: RBC Capital raised its price target to $61, citing strong revenue performance and a 4.2% compound annual dividend growth rate over 54 years, per the Investing.com report.

Realty Income's conservative leverage and diversified tenant base make it a low-risk choice for income-focused investors.

2. Agree Realty (ADC): Industrial Real Estate Powerhouse

Agree Realty, a net-lease REIT, has raised its monthly dividend to $0.262 per share, a 3.6% increase from 2024, according to a MarketBeat alert. Its 2025 full-year adjusted funds from operations (AFFO) guidance of $4.31–$4.33 reflects 4.4% growth, per the same alert.

Financial Sustainability:
- Payout Ratio: 179.53% (2025), as reported in the MarketBeat alert. While high, this is partially offset by its industrial property focus, which benefits from e-commerce demand.
- Portfolio: 98.7% occupancy rate as of June 2025, with tenants like Amazon and Walmart, according to a StreetInsider article.

Risks: A 16.3% stake reduction by Nisa Investment Advisors in Q2 2025 raises questions about institutional confidence, as noted in a MarketBeat alert. Investors should monitor 2026 AFFO trends to assess sustainability.

3. Main Street Capital (MAIN): BDC with Mixed Signals

Main Street Capital, a BDC, declared $0.26 monthly dividends for Q1 2026, a 2.0% increase from Q4 2025, per a StockTitan report. However, its Q3 2025 earnings of $0.97/share missed estimates, and its Zacks Rank of #4 (Sell) signals underperformance, as reported in a Sharewise article.

Financial Sustainability:
- Payout Ratio: 75.4% (projected for 2026), as noted in the MarketBeat alert.
- Earnings Volatility: Investment income from non-control investments is expected to decline 13.4% YoY, as reported in a Sharewise article.

Despite these challenges, Main Street's diversified loan portfolio and supplemental dividends (e.g., $0.30/share in December 2025) provide short-term income, per the StockTitan report.

4. Gladstone Commercial (GOOD): High-Yield with Caution

Gladstone Commercial's $0.10/month dividend (12% yield) is supported by a 98.7% occupancy rate and a portfolio of industrial/office properties, according to a StreetInsider article. However, its current payout ratio of 333.33% is alarming, per the same source.

2026 Outlook:
- Projected Payout Ratio: 80.0% if earnings reach $1.50/share, as noted in the StreetInsider article.
- Risks: High debt-to-equity ratio and unhedged debt exposure could strain liquidity, as reported in the StreetInsider article.

Investors should balance its aggressive growth strategy with its reliance on balance sheet resources.

5. Essential Properties Realty Trust (EPRT): Growth-Driven REIT

EPRT raised its 2026 AFFO guidance to $1.98–$2.04/share, projecting 6–8% growth, according to a Investing.com report. Its 3.88% yield and $370 million in Q3 2025 investments highlight its expansion potential, per the same source.

Financial Sustainability:
- Payout Ratio: 75.0% (based on $1.20/share dividend and $1.50/share earnings projection).
- Portfolio: Focused on single-tenant industrial properties with long-term leases.

EPRT's disciplined capital allocation makes it a compelling pick for growth-oriented income investors.

Comparative Analysis: Risks and Rewards

Company	Yield (2026)	Payout Ratio (2026)	Growth Outlook	Key Risks
Realty Income	5.74%	75.4%	Stable	High valuation multiples
Agree Realty	4.3%	179.5%	Moderate	High leverage, tenant risks
Main Street	4.0%	75.4%	Mixed	Earnings volatility
Gladstone	12.0%	80.0% (projected)	Aggressive	Debt exposure
Essential	3.88%	75.0%	Strong	Interest rate sensitivity

Eagle Point Credit (ECC), with a 26.9% yield and 193.6% payout ratio, serves as a cautionary example of unsustainable payouts, per a MarketBeat alert.

Conclusion: Strategic Picks for 2026

For investors prioritizing sustainability over yield, Realty Income (O) and Essential Properties (EPRT) offer balanced growth and conservative payout ratios. Agree Realty (ADC) and Main Street Capital (MAIN) are suitable for those willing to tolerate moderate risk for mid-tier yields. Gladstone Commercial (GOOD), while high-yielding, requires close monitoring of its debt and earnings trajectory.

As always, diversification and regular portfolio rebalancing are essential to mitigate sector-specific risks in a volatile market.