For $83 in Monthly Passive Income, Buy 1,250 Shares of This TSX Stock

Starting a passive income is among the most common reasons people buy dividend stocks. If you have a decent amount of savings, you can divert them to a few healthy dividend stocks to generate a passive income, which can serve you in at least two ways.

You can either use it to supplement your income or get more breathing room (financially). It can also prevent you from accumulating debt just to sustain your lifestyle.

Or you can use the cash generated by your dividend stocks to replenish your savings and grow your portfolio by buying stocks and other investment assets. These dividends can also be diverted to the same company via a dividend-reinvestment plan, but that practice is ideally viable for the top stocks in the country.

If you are looking for a stock that can help you generate around $80 a month with just $10,000 in the capital, NorthWest Healthcare Properties REIT (TSX:NWH.UN) is a strong contender.

The company

NorthWest Healthcare is a commercial real estate investment trust (REIT) focusing on a particular asset class — i.e., healthcare properties. The bulk of the portfolio is made up of healthcare properties/hospitals, and about one-third is made up of medical office buildings. Life science properties/research facilities make up a very small portion of the portfolio.

There are over 230 properties in the REIT’s portfolio, spread out over eight countries. The total assets under management are worth about $10.9 billion. But the two most compelling characteristics of its portfolio are the 97% occupancy rate and the weighted average lease of 14 years.

Hospitals are long-term and almost evergreen businesses, and long-term leases benefit the tenants just as much as they benefit the landlord. This also benefits the investors in this REIT as it promises consistent long-term rent, which is used to fund the dividends this REIT offers to its investors.

The stock and dividends

Unlike most REITs that are only worth considering for their dividends, NorthWest Healthcare can also be a decent buy for its capital-appreciation potential, or at least it was before the pandemic. The stock steadily rose to over 70% between 2015 and 2020. It offered decent growth after the pandemic, which is natural considering the value placed on the healthcare sector during the coronavirus pandemic.

Unfortunately, it also experienced a correction just as brutal as the recovery was strong. As a result, it’s trading at $8 per share as of writing, a price that’s over 43% lower compared to its 2022 peak price. This has resulted in a significant boost to the yield, which has gone up to about 9.9%, ready to enter the double digits.

Foolish takeaway

At this yield, you will only need to invest about $10,000 in this REIT to generate an income of about $83 a month. That amount of capital would buy you about 1,250 shares of this REIT at the current price, possibly more if it keeps slumping further.