Why I Can’t Stop Buying Shares of This Magnificent High-Yield Dividend Stock in My TFSA

This dividend stock continues to be a top winner, even with returns falling the last few years. We’re nearing some superior growth in the year ahead.

| More on:
Portrait of woman having fun in the street.

Image source: Getty Images

When it comes to investing, I’m all about the long-term approach. And that’s what I’ve had to keep in my mind during the last few years. It’s been quite difficult, to be honest. There have been companies that I firmly believe can do well, and yet shares have dwindled down.

But in the case of this dividend stock, I’ve continued to hold and even to buy now and again. That’s because the company continues to have a strong, simple future that will help the dividend stay alive.

Let’s get into why I’ll continue to hold and buy NorthWest Healthcare Properties REIT (TSX:NWH.UN).

Simple and predictable

Investors looking for an investment they can hold long term shouldn’t just take someone else’s conviction and call it their own. They need to understand and appreciate the future of a company. And that’s what I’ve long felt with NWH stock.

NWH stock deals with healthcare real estate. Healthcare real estate tends to be relatively stable and recession-resistant. Demand for healthcare services remains consistent regardless of economic conditions, providing a stable income stream for real estate investment trusts (REITs) like NWH stock.

What’s more, demographic trends, such as an aging population, are driving increased demand for healthcare services and facilities. As the population ages, there is a growing need for healthcare facilities, including hospitals, medical office buildings, and senior living facilities, which can benefit the stock.

With geographic diversification, long-term leases of quality tenants, and strong income generation, the company has long been a solid choice in my portfolio. However, the last few years have been difficult.

Interest rate fears

With higher interest rates, NWH stock went through a difficult period early on in its TSX history. High interest rates increase the cost of borrowing for NWH stock when refinancing existing debt or acquiring new properties. This can lead to higher interest expenses, reducing the REIT’s profitability and cash flow.

What’s more, high interest rates can dampen demand for healthcare properties among investors and tenants. Additionally, potential tenants may face higher borrowing costs, making it more challenging for them to lease space from the REIT. This could lead to decreased occupancy rates and rental income.

Today’s improvements

NWH stock saw its shares fall by more than half, and high interest rates caused the company strife. The company sold non-core assets and refinanced its debts. Now, it’s looking in a far better position than even a couple of quarters ago.

Most recently, this came up during the company’s fourth-quarter results. Revenue increased 4% year over year to $124 million, with an average lease expiry of 13.3 years. It held a global portfolio occupancy rate of 97%, with global rent collections at 99%.

While higher interest rates continued to weigh on the stock, the company strengthened its business and balance sheet. It brought in $450 million from divesting assets while amending, extending, repaying and refinancing total debt facilities of over $1.4 billion. 

While there is still work to be done, NWH stock looks like a company on the recovery. Shares are now up 30% since 52-week lows, offering a 7.13% dividend yield as of writing. So, it’s certainly one I’ll continue to pick up on the TSX today.

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.

More on Dividend Stocks

Dividend Stocks

10 Years From Now, You’ll Be Glad You Bought These Magnificent TSX Dividend Stocks

The TSX is lucrative to buy these magnificent dividend stocks in bulk and be proud of this decision 10 years…

Read more »

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

We’re Only Getting Older: A Top TSX Stock That Benefits From an Aging Population

For a bet on the aging population, consider this small-cap stock with growth potential.

Read more »

Growing plant shoots on coins
Dividend Stocks

Yield Today, Growth Tomorrow: 3 Stocks to Keep Building Your Wealth

For investors seeking yield today and growth tomorrow, these top Canadian dividend stocks are certainly worth considering right now.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 10.72% Dividend Stock Pays Cash Every Month

This dividend stock remains a consistent, defensive dividend producer that will give up over 10% in income each and every…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA Investors: 2 Standout Domestic Stocks With 7% Yields

These top dividend-growth stocks look oversold.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Despite their recent declines, the long-term growth outlook of these two top dividend stocks remains strong, which could help their…

Read more »