A 6.9% Dividend Super Star Paying Out Every Month

This dividend stock has a stellar long-term outlook, with a higher yield for those wanting income every single month.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 19, 2024 2:00 am EDT

So you want dividends that last? There’s one real estate investment trust (REIT) which still offers major potential. NorthWest Healthcare Properties REIT (TSX:NWH.UN) is a hidden gem for dividend seekers, particularly those looking for steady monthly payouts. Specializing in healthcare real estate, this company has carved out a unique niche, making it a reliable option for passive income investors. Despite facing challenges, the stock has proven its resilience and continues to provide a generous monthly dividend, making it a dividend superstar.

Nurse talks with a teenager about medication — Source: Getty Images

A shining dividend provider

One of the standout features of NorthWest REIT is its monthly dividend, which currently offers a forward annual yield of 6.9%. With a payout ratio that might seem high at first glance, it’s important to understand that the healthcare sector offers steady demand, especially as populations age. Healthcare facilities like hospitals and medical offices need to operate continuously, and NorthWest REIT benefits from these long-term, stable leases. This stability allows the company to keep paying dividends to its shareholders each month, making it a dependable source of income.

In its most recent earnings report for Q2 2024, NorthWest reported quarterly revenue growth of 11.1% year-over-year – a positive sign in an uncertain market. While the company had a negative net income due to some financial restructuring and debt, the operating margin was a solid 66.4%, thus indicating the underlying business remains strong. The focus on managing costs and boosting cash flow means NorthWest REIT can continue to sustain its monthly dividend payouts.

A solid strategy

NorthWest REIT has a clear strategy focused on expanding its global healthcare real estate portfolio. The trust owns properties across Canada, Europe, and Australasia, offering exposure to international healthcare markets. Management is keen on growing through strategic acquisitions and joint ventures, thus ensuring long-term revenue streams. This focus on geographical diversification helps mitigate risks tied to any single market, enhancing the company’s ability to maintain its dividend.

Yet despite its positive earnings growth, NorthWest REIT stock has faced pressure, partly due to broader market concerns about high debt levels and interest rate hikes. With a debt-to-equity ratio of 129.4%, some investors are wary of how rising interest rates might impact NorthWest’s financials. Plus, concerns about profitability, with net income down $394.4 million, have contributed to the stock’s decline. However, management has been taking steps to manage the debt load, and as interest rates stabilize, investor sentiment could improve.

Think long term

Looking ahead, NorthWest REIT remains in a strong position to capitalize on the ever-growing demand for healthcare infrastructure. With an aging population worldwide, the need for healthcare services and facilities is only expected to rise. NorthWest’s focus on modernizing and expanding its portfolio will likely lead to increased occupancy rates and rental income. Coupled with management’s proactive approach to debt reduction, NorthWest REIT is positioned for a brighter future.

What truly makes NorthWest REIT a dividend superstar is its commitment to providing consistent monthly payouts, regardless of short-term stock price fluctuations. Its business model, built on long-term leases and essential services, offers a level of security that few other REITs can match. Investors looking for a steady stream of income will appreciate the stability this stock provides, even in uncertain economic environments.

Bottom line

NorthWest REIT stands out as a dividend superstar thanks to its unique focus on healthcare real estate, steady earnings growth, and a management team dedicated to long-term success. While the stock has faced challenges due to rising debt concerns, its future outlook remains promising as global healthcare demand continues to grow. For those seeking reliable monthly income with growth potential, NorthWest REIT is a compelling choice.