1 Under-$10 Dividend Stock to Buy for Monthly Passive Income

NorthWest (TSX:NWH.UN) stock reported a strong year end that sent shares up by 21%! But there could be more to come.

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If you’re looking for passive income on the cheap, then I have the dividend stock for you. One that has been on a wild ride, but finally looks as though it’s providing some value for investors to consider the monthly passive-income stock once more. And should it reach 52-week highs once more, that could mean it starts trading past that $10 per share mark.

So, let’s look at why investors may (finally) want to consider NorthWest Healthcare Properties REIT (TSX:NWH.UN).

What happened?

First off, let’s look at why the company was rising in the first place. Shares of NorthWest stock climbed after the company reported their full-year earnings report. The real estate investment trust (REIT), with a focus on healthcare properties, managed to make a dent in refinancing its debt as well as extending maturities to lock in lower rates. This made its finances more stable.

Furthermore, the stock also sold assets of non-core properties, including a healthcare REIT in Australia. This was to raise cash and focus on its core healthcare real estate. Overall, this should also help improve profitability.

What’s more, there were strong signs of future growth. This particularly came from revenue growth in the last quarter. So, while the dividend was cut in the past, they’re still bringing in money, and the business isn’t stagnating. Furthermore, there is healthy income, rental rates, and occupancy rates for NorthWest stock. All of this was seen as a strong sign.

What might happen next?

It’s unclear whether the company might go back into growth mode, but at this rate, that doesn’t look likely. Instead, the focus on its core operations is likely the right one, with acquisitions more in the distant future.

Instead, over the next year, NorthWest stock will likely continue to improve its balance sheet to bring back investors. This would mean more successful refinancing as well as perhaps more sales to increase cash flow. And should that really improve, we could indeed see an increase back to the original dividend — especially as the healthcare REIT market grows.

The industry overall is definitely expected to rise with the aging population. Even so, an economic downturn and rising interest rates as well as competition could hinder this. So, only time will tell.

Bottom line

All in all, however, NorthWest stock looks like a great deal at these rates. Shares are currently at $4.70 as of writing. That’s an increase of 21% from 52-week lows! Meanwhile, should it hit 52-week highs, that would be an increase of 86%. And right now, you can lock up a 7.71% dividend yield.

Overall, there is still work to be done for NorthWest stock. Its payout ratio remains high, and its debt-to-equity ratio — not to mention, its very low profit margin — also needs work. But there has certainly been enough progress that I believe we’ve seen the worst of it, and the future could be a lot brighter for investors at these rates.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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.

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