Creating a steady stream of monthly passive income through dividend investing is an appealing strategy for Canadians looking for financial stability and flexibility. With dividend stocks, investors receive regular payments without having to sell their shares, thereby allowing for the potential to see both income and growth over time. This approach means you can enjoy an income flow that doesn’t depend on the whims of the stock market. When you see your account balance ticking upward each month, that’s not only rewarding; it’s also a smart way to watch your investments work for you!
NorthWest stock
One standout option for monthly passive income is NorthWest Healthcare REIT (NWH.UN). This real estate investment trust (REIT) specializes in healthcare real estate, owning properties like hospitals, medical offices, and clinics across North America, Brazil, Europe, and Australasia. By focusing on healthcare properties, NorthWest taps into a high-demand sector with stable, long-term tenants. This adds a layer of security for investors. As of writing, NWH.UN offers a solid annual dividend yield of 7.17%, thus making it an attractive choice for income-seeking investors. The dividend stock pays out monthly, which makes budgeting and managing cash flow a breeze.
NorthWest has been delivering stable returns, even with the economic ups and downs. Recently, NorthWest reported a year-over-year revenue increase of 13% for the second quarter of 2024, highlighting the trust’s resilience and its ability to keep up with demand in the healthcare sector. However, adjusted funds from operations (AFFO) per unit saw a slight drop, from $0.20 in the same period last year to $0.13, largely because of rising interest expenses. While this slight decrease could be concerning to some, the overall performance and growth trends remain positive, supported by long-term leases and high occupancy rates.
Showing strength
To keep things interesting, NorthWest stock has been making proactive moves to strengthen its portfolio. For example, in October 2024, it announced a successful lease renewal at the well-known Sabará Children’s Hospital in São Paulo, Brazil. This hospital, one of São Paulo’s leading pediatric centres, now has a lease term extending to 23.7 years with full inflation indexing. This renewal, along with the decision to list the property for sale, shows NorthWest’s active management strategy. This is a reassuring sign for investors interested in long-term stability and growth.
While NorthWest offers a generous monthly dividend, it’s always essential to dig into the financials. Over the past year, NWH.UN reported a net income loss of approximately $394.4 million, and the dividend stock’s profit margin is down 75.29%. These figures underscore the fact that REITs can face financial pressures, particularly with higher interest rates impacting real estate investments. Still, NorthWest’s focus on healthcare properties, which are often more resilient in tough economic times, might mitigate some of these risks. After all, people still need healthcare regardless of economic conditions, so the demand for NorthWest’s properties remains robust.
Still stable
On the balance sheet, NorthWest shows strength in other areas, such as occupancy rates and the diversification of its properties across several countries. These high occupancy rates mean more stable rent collections and, thus, more consistent dividends. NorthWest’s strategy of geographic and sector diversification also minimizes risks tied to any single market or healthcare system. For instance, it owns properties not just in Canada but also in rapidly growing healthcare markets in Brazil, Europe, and Australasia.
Looking ahead, NorthWest stock appears well-positioned for the future. With a book value per share of $7.14 as of June 30, 2024, it’s priced attractively compared to its underlying assets. Furthermore, the dividend stock’s management continues to focus on asset sales and debt management. This could lead to a more sustainable payout ratio. For investors, this means NorthWest is not only committed to maintaining its dividends and making sure those dividends are sustainable in the long run.
Bottom line
Monthly dividend stocks like NWH.UN offer a straightforward path to passive income that aligns well with Canadian investors’ financial goals. NorthWest Healthcare dividend stock stands out as a reliable choice for monthly passive income, especially for those looking to balance yield with long-term growth potential.
