1 Under-$5 Dividend Stock to Buy for Monthly Passive Income

This monthly dividend stock recently cut its dividend, but now that the worst is over, should investors hop back in on the stock?

| More on:

There are a few dividend stocks out there producing incredibly high dividend yields. However, that passive income can come at a price. Such was the case for under-$5 real estate stock NorthWest Healthcare Properties REIT (TSX:NWH.UN).

NorthWest stock fell in half this year, helped along by a slice in its dividend as well. Yet now, with the cut out of the way, and future growth potentially on the way, is this dividend stock a buy once more for monthly passive income?

What happened?

NorthWest stock seemed to fall into that trap that many other stocks on the TSX today fell into. Namely, the trap of growing too fast, too soon. The company looked like it had the world at its fingertips. After all, even during the pandemic, the real estate investment trust (REIT) was doing well. If hospitals and doctors’ offices aren’t essential, then nothing is.

Yet even with long-term contracts keeping the company strong, it was its acquisitions that seemed to hurt the stock. The company used its equity to fund these operations. So, when that equity dropped, it looked like it wasn’t as certain of a future as they hoped.

While it holds essential real estate, there is trouble for NorthWest stock. But just how much trouble?

Earnings look

During the latest earnings report, NorthWest stock reported positive revenue growth and same-property net operating income for the third quarter and year to date. It managed to secure $140 million in term loans to extend its maturities as well.

Now, the company is looking to strengthen its balance sheet. It’s been refinancing and extending its corporate debt obligations. In fact, it looks to eliminate corporate debt facilities before November of 2024. Part of this comes from selling off some assets to help fuel this debt repayment.

Meanwhile, fundamentals were up. Revenue increased 5.1% for the quarter, though net income decreased by $116.4 million. Its occupancy rate remains at 96%, supported by an average lease expiry of 13.2 years as of writing.

What about the dividend?

The thing is, the company also recently made an announcement that upset investors. NorthWest stock cut its annual dividend to $0.36 annually, down to $0.03 per unit monthly. This certainly didn’t impress investors, but this cut will help the REIT manage debt and strengthen the bottom line.

“While a Strategic Review is underway, management and the board have taken key actions in the near term to strengthen the balance sheet and the business…We are working to divest our remaining investment units in Australian Unity Healthcare Fund. To date we have completed investment and non-core asset sales that have generated gross proceeds of $235.1 million, with additional non-core assets being under contract. We remain committed to building on our position as a healthcare real estate leader, focused on creating value for our many stakeholders.”

Craig Mitchell, Northwest’s chief executive officer

So, while the company has some work to do, it also has long-term contracts to get it there. What’s more, management remains responsible in funding the company’s debts. Therefore, if you’re looking for that dividend, now is the time. You can grab an 8.04% dividend yield as of writing, all while paying under $5 per share. And hopefully, it’s only going up from here.

Fool contributor Amy Legate-Wolfe has positions in NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

A woman stands on an apartment balcony in a city
Dividend Stocks

How to Rebalance Your Portfolio for 2026

There are plenty of to-dos for investors before the year ends and 2026 starts. One thing to not forget is…

Read more »

Asset Management
Dividend Stocks

3 of the Best Dividend Stocks to Buy for Long-Term Passive Income

These three stocks consistently grow their profitability and dividends, making them three of the best to buy now for passive…

Read more »

container trucks and cargo planes are part of global logistics system
Dividend Stocks

Down 32%, This Passive Income Stock Still Looks Like a Buy

A beaten‑up freight leader with a rising dividend, why TFII could reward patient TFSA investors when the cycle turns.

Read more »

monthly calendar with clock
Dividend Stocks

Invest $20,000 in This Dividend Stock for $104 in Monthly Passive Income

Here is a closer look at a top Canadian monthly dividend stock that can turn everyday retail demand into reliable…

Read more »

man looks surprised at investment growth
Dividend Stocks

This 7.5% TSX Dividend Stock Slashed its Payout by 50% in 2025: Is it Finally a Good Buy?

Down more than 30% in 2025, this TSX dividend stock offers you a forward yield of 7.4%, which is quite…

Read more »

c
Dividend Stocks

1 Canadian Stock to Buy Today and Hold Forever

Trash never takes a day off. Here’s why Waste Connections’ essential, low‑drama business can power a TFSA for decades despite…

Read more »

Forklift in a warehouse
Dividend Stocks

Retiring in Canada: Build $1,000 a Month in Dividend Income

Granite REIT’s warehouses generate steady monthly cash, and rising cash flow and occupancy show why it can anchor a TFSA…

Read more »

data analyze research
Dividend Stocks

2 Canadian Dividend Giants to Buy and Never Sell

Here's why Great‑West and TELUS can power a TFSA with steady cash and decade‑long compounding.

Read more »