As the stock market continues to be volatile, TFSA (Tax-Free Savings Account) investors are finding it increasingly difficult to pick quality stocks for their portfolio. While most beaten-down growth stocks witnessed a sharp recovery at the start of 2023, their roller-coaster ride may extend further, as macroeconomic concerns continue to take a toll on investors’ sentiments. In such an unpredictable market environment, it makes sense for TFSA investors to buy dividend stocks that can help them earn reliable monthly passive income irrespective of market cycles.
In this article, I’ll talk about one of my favourite monthly-paying TSX dividend stocks that you can consider adding to your TFSA right now.
TFSA investors can buy this monthly dividend stock now
The first thing new TFSA investors usually look at in a dividend stock is its dividend yield. However, doing so might not always be the ideal way of picking stocks as the dividend yield can’t solely give you a good idea about a stock’s underlying financial growth trends and fundamental growth prospects. That’s why you may want to always carefully analyze a stock’s business growth prospects and financial position before arriving at your final investment decision.
With that in mind, NorthWest Healthcare Properties REIT (TSX:NWH.UN) could be a reliable monthly dividend stock to consider now in Canada now. It’s an open-ended real estate investment trust (REIT) headquartered in Toronto with a market cap of $2.1 billion. Its share prices have seen a 39% value erosion in the last year to currently trade at $8.75 per share, taking its annualized dividend yield to 9.1%.
Although NorthWest’s price performance in the last year has been disappointing, it has the potential to yield healthy returns on your investments in the long run if you buy on the dip. Let me explain why.
A great stock to buy for monthly passive income
NorthWest Healthcare Properties REIT has a large portfolio of 233 income-producing properties spread across eight countries in the world, including key markets like Australia, New Zealand, Canada, Brazil, and Europe. Its portfolio’s weighted average lease expiry currently stands at 14 years, with a strong occupancy rate of close to 97%. Most of its properties are leased out to large and reliable tenants to use as hospitals and healthcare facilities, medical office buildings, and other healthcare-focused research and educational institutes.
While NorthWest Healthcare REIT is yet to report its full-year 2022 results, its revenue in the five years between 2016 and 2021 advanced by 35%. To add optimism, its earnings during the same five-year period rocketed by 231%, thanks to its consistently expanding asset base and improving rental rates.
As many of its tenants receive funding from public healthcare systems, NorthWest’s business growth is likely to remain stable over the long term with limited risks, which should help its share prices appreciate.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND||TOTAL PAYOUT||FREQUENCY|
|NorthWest Healthcare Properties REIT||$8.75||3,000||$0.06667||$200||Monthly|
|Prices as of Mar. 21, 2023|
You can buy 3,000 shares of NorthWest Healthcare Properties REIT right now to start earning $200 in monthly passive income from its dividends, which is equivalent to $2,400 a year. To buy these many shares at the current market price, you’ll need to invest $26,250 in its stock now. While this example aims to give you a clear idea of how to earn monthly passive income by investing your TFSA money in dividend stocks, you should always try to diversify your portfolio by including more such stocks in it.