3 Dividend Stocks to Buy Now Before They Explode

All three of these dividend stocks are due for a recovery in 2023, which is why now is the time to lock up some strong rates.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published April 28, 2023 12:30 pm EDT

It might not seem like it now, but 2023 is likely to end with a bull market. We’re still waiting on a recession, I know. But once we reach that bottom, it’s going to be up from there. That’s why now is a great time to get in on these top dividend stocks, before they explode.

a person looks out a window into a cityscape — Image source: Getty Images

PRO REIT

PRO REIT (TSX: PRV.UN) is a solid choice among dividend stocks for several reasons. First, there’s the payout ratio, which currently sits at 31.5%. Then, there’s the ultra-high dividend yield, at 8.06% as of writing. And it remains cheap, trading at 3.9 times earnings, and down 23% in the last year alone.

PRO REIT focuses on creating a diversified portfolio of commercial properties across Canada. And while other REITs might be struggling during earnings, PRO REIT has managed to do well. The REIT reported that its total assets passed the $1 billion mark, up 4.6% year over year. Property revenue was up 9.3% as well compared to the year-ago quarter, and 25.2% for the full year compared to 2021. Finally, it continues to boast a 98.5% occupancy rate.

Right now, then, is a great time to consider PRV.UN among dividend stocks with shares at just $5.60. Those shares could certainly reach 52-week highs before the year is out, which would be a potential upside of 30%.

Nexus REIT

Then we have Nexus REIT (TSX: NXR.UN), which has many of the same valuable reasons to pick it up with your other dividend stocks. Its payout ratio sits at 35.7% as of writing, with a dividend yield at 6.59%. NXR.UN trades at a valuable 5.4 times earnings, and is down 25% in the last year.

Nexus REIT also focuses on growth in Canada, targeting the acquisition, management and ownership of industrial, office, and retail spaces. During its most recent earnings report, the REIT held a 97% occupancy rate, while net operating income increased 71.2% year over year.

So again, it’s a great time to consider this REIT with your dividend stocks while shares trade at $9.83. Should those shares hit 52-week highs before the year is out, that would give it a potential upside of 36%.

NorthWest REIT

Finally, NorthWest Healthcare Properties REIT (TSX:NWH.UN) is the final stock I would consider, but it’s definitely on the riskier side. That’s because NorthWest stock has been using its funds to expand rapidly to create an international portfolio of healthcare properties.

Problem is, this has led to a payout ratio at 299.4% as of writing, which certainly isn’t sustainable. It now holds a dividend yield at 9.77%, which certainly is great. But after shares dropped 38% in the last year, I would be wary should the stock not recover.

That being said, NorthWest stock continues to perform well, with revenue increasing 23% year over year during the fourth quarter. The healthcare REIT continues to hold a 97% occupancy rate, and 98.3% for its international portfolio. Its average lease expiry sits at 14 years, with its international portfolio of hospital and healthcare facilities at 18.2 years. So that’s pretty good stability, though weighed down by shares.

Shares now trade at 30.7 times earnings, and 0.8 times book value, so it has some value there. Should shares rebound back to 52-week highs, that leads to a potential upside of 64% with shares trading at $8.21 as of writing.