This 7.1% Dividend Stock Pays Cash Every Month

This dividend stock is a solid choice for investors looking for long-term cash from the healthcare sector, with monthly dividends to boot!

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 November 19, 2024 8:45 pm EST

| More on: VITL.UN

Looking for top dividend stocks offering long-term monthly income? Think of long-term sectors. And one that certainly falls into this category is the healthcare industry. And NorthWest Healthcare Properties REIT (NWH.UN) is a standout on the TSX, especially for income-seeking investors looking for a steady monthly dividend payer in the healthcare real estate space. Let’s get into why.

Hourglass and stock price chart — Source: Getty Images

Solid base

NorthWest stock is currently trading at a price-to-book ratio of about 0.7, suggesting it’s undervalued compared to its asset base – thus making this a great entry point for investors who see the value in healthcare properties with global exposure.

The dividend yield on NWH.UN is compelling, sitting at approximately 7.1% based on a forward annual dividend of $0.36 per share. Real estate investment trusts (REITs) focused on healthcare tend to offer stability because healthcare services are always in demand. NorthWest’s focus on medical office buildings, hospitals, and clinics creates a layer of resilience that other types of real estate investments can’t always match.

Beyond dividends, NorthWest’s diversified portfolio gives it a solid foundation. The REIT owns 186 income-producing properties across North America, Brazil, Europe, and Australasia, totalling around 16.1 million square feet of leasable space. This global spread allows NorthWest to tap into varying healthcare systems and economies, balancing out region-specific risks.

Portfolio growth

NorthWest stock recently bolstered its portfolio’s stability with strategic leasing moves. A significant achievement was the renewal of the lease at Sabará Hospital in São Paulo, Brazil, for a 10-year term, addressing the REIT’s only major lease maturity for 2025. Early lease extensions with Rede D’Or, a leading private hospital operator, extended lease terms to nearly 24 years on two key properties in São Paulo. These lease renewals extended the weighted-average lease expiry (WALE) in Brazil to 18.2 years, with inflation-indexed rents, locking in long-term income stability for NorthWest and its investors.

Financially, NorthWest reported trailing 12-month revenue of approximately $523.9 million, an 11.1% increase year-over-year. While it posted a net loss of $394.4 million due to non-cash valuation changes, this is fairly typical for REITs that experience periodic fluctuations in property values. More importantly, NorthWest’s operational efficiency is reflected in an operating margin of 66.4, showing that the trust effectively manages its costs to sustain profitability.

One reason for optimism about NorthWest’s future is its proactive management. NorthWest’s CEO, Craig Mitchell, has announced his retirement for mid-2025, and the dividend-paying company has already started the search for a successor. Mitchell’s leadership has been marked by significant strategic growth, including global expansions and major lease deals. So the seamless transition plan is a reassuring sign for stakeholders.

Future outlook

In terms of valuation, NWH.UN is trading at a price-to-book ratio well below 1, signalling that it may be undervalued compared to the value of its underlying assets. For a REIT with such an extensive and geographically diversified portfolio, this low valuation provides a potentially lucrative opportunity for investors. A significant advantage of this stock’s current valuation is the high dividend yield, thus making it a rare find among healthcare-focused REITs.

Finally, NorthWest’s monthly dividend distribution offers investors a rare combination of liquidity and income stability. In an economic climate where traditional income sources are often volatile, the REIT’s monthly payouts are highly attractive. With NorthWest, you’re not only gaining exposure to a crucial industry. You are also securing regular income from a company positioned to benefit from long-term healthcare trends.

Bottom line

Altogether, the dividend stock presents a compelling opportunity for Canadian investors, especially those who prioritize reliable monthly income, portfolio diversification, and exposure to the healthcare sector. It’s faced some recent financial headwinds. Yet NorthWest’s strong operating margins, proactive lease management, attractive valuation, and stable dividend yield make it a solid choice, especially for those seeking both stability and growth potential in their investments.