Real estate investment trusts (REIT) are some of the best ways to create passive income. And one major winner over the last few years has been NorthWest Healthcare Properties REIT (TSX:NWH.UN).
Well, that is, overall. Yet when the pandemic restrictions came down and interest rates rose, NWH stock fell in share price. This led to a slice of its dividend. But now, things are looking up. Literally. Shares of NWH stock have risen 29% since 52-week lows. So should you get in before it reaches 52-week highs?
Here’s what investors need to know before making the move.
The dividend
First, the reason you’re here. The REIT pays dividends on a monthly basis, which is appealing for investors seeking regular income. For June 2024, the distribution was $0.03 per unit, which translates to an annualized distribution of $0.36 per unit. That dividend comes to a yield of 7.2% as of writing.
NorthWest Healthcare REIT offers a Dividend Re-Investment Plan (DRIP), allowing unitholders to reinvest their cash distributions into additional units of the REIT. This reinvestment is done at a discounted price, providing an incentive for investors to compound their investment over time. Specifically, participants in the DRIP receive bonus Trust Units equal to 3% of their cash distributions. This feature not only boosts the number of units held but also enhances the potential for long-term growth.
The combination of regular monthly distributions and the advantageous DRIP makes NorthWest Healthcare REIT an attractive option for investors looking for both steady income and growth potential through reinvestment.
Geographically diverse
NorthWest Healthcare REIT’s global diversification is one of its core strengths, providing stability and reducing risk through geographical spread. The REIT owns and operates a portfolio of healthcare real estate properties across North America, Brazil, Europe, and Australasia.
This wide geographical footprint helps mitigate the risks associated with any single market or economic environment. As of March 31, 2024, the REIT’s portfolio included 210 income-producing properties and 17.4 million square feet of gross leasable area.
The portfolio is diversified not only geographically but also by property type. It includes medical office buildings, clinics, and hospitals, which are leased to healthcare operators. These leases are typically long-term and indexed to inflation, providing a stable and predictable income stream.
The REIT continues to pursue strategic acquisitions and partnerships to expand its global portfolio. This includes acquiring high-quality healthcare properties and entering into joint ventures with leading healthcare providers.
Strategic initiatives
NorthWest Healthcare REIT has undertaken several strategic initiatives to strengthen its financial position, enhance its portfolio, and drive long-term growth. The REIT is actively involved in acquiring high-quality healthcare properties and disposing of non-core assets. This strategy helps in optimizing the portfolio, ensuring that it is comprised of properties that align with the REIT’s long-term goals of stability and growth. Recent acquisitions have focused on high-demand markets with strong healthcare infrastructure, while dispositions have aimed at divesting properties that no longer meet strategic objectives.
NorthWest Healthcare REIT has engaged in various financing activities to strengthen its balance sheet and support its growth initiatives. This includes refinancing existing debt at favourable terms and securing new financing to fund acquisitions and development projects.
NorthWest Healthcare REIT continues to form strategic joint ventures and partnerships with leading healthcare operators. These collaborations enable the REIT to leverage the expertise and resources of its partners, facilitating entry into new markets and enhancing its service capabilities.
Bottom line
The combination of regular monthly distributions and the advantageous DRIP makes NorthWest Healthcare REIT an attractive option for investors, especially those looking for both steady income and growth potential through reinvestment.
Add in its geographically diverse operations, high occupancy rates, and bringing its finances under control, and NWH stock is certainly one to consider. Especially as it continues to climb.
