Here's How Many Shares of NorthWest REIT You Should Own to Get $1,000 in Yearly Dividends

Here’s How Many Shares of NorthWest REIT You Should Own to Get $1,000 in Yearly Dividends

NorthWest REIT can add an extra grand onto your investment, but make sure it aligns with your investment strategy.

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 March 10, 3:30 pm EDT

| More on: NWH.UN

Investing in dividend-paying stocks is a great way to generate passive income, and NorthWest Healthcare Properties Real Estate Investment Trust (TSX:NWH.UN) is a strong option for Canadian investors. This real estate investment trust (REIT) focuses on healthcare properties across Canada, the United States, and internationally. With a forward annual dividend of $0.36 per unit and a yield of approximately 7.5%, it’s an attractive choice for those looking to earn steady income from their investments.

The numbers

NorthWest Healthcare Properties REIT has had a mixed financial performance in recent quarters. As of Sep. 30, 2024, the REIT managed 171 income-producing properties with around 15.8 million square feet of leasable space. The most recent earnings report showed revenue from investment properties at $133.5 million, a slight dip of 1.3% compared to the previous year. The decline was primarily due to asset sales. Yet, on a positive note, same-property net operating income (NOI) grew by 6%, reflecting stronger performance from existing properties.

One of the biggest concerns for investors has been the REIT’s high payout ratio and leverage. NorthWest has taken steps to improve its financial position, including the completion of a $500 million issuance of senior unsecured debentures earlier this year. This move strengthens its balance sheet and provides more flexibility for growth initiatives, helping to stabilize its long-term outlook.

Despite these efforts, the REIT’s stock price remains under pressure, reflecting broader concerns in the real estate sector, particularly for companies with high debt loads. Interest rate fluctuations have also impacted investor sentiment, making it a volatile time for REITs in general. However, NorthWest’s focus on healthcare properties provides a level of stability that other real estate sectors may not offer, as demand for medical facilities tends to remain steady regardless of economic cycles.

Future outlook

Looking ahead, the REIT continues to pursue its core strategy of investing in high-quality healthcare properties with long-term, indexed leases. These types of leases provide a hedge against inflation, ensuring that rental income grows over time. With a global portfolio that includes properties in Europe, Brazil, and Australasia, NorthWest also benefits from geographic diversification, reducing its exposure to risks in any single market.

For investors considering NorthWest Healthcare Properties REIT as a long-term holding, the key question is whether its dividend remains sustainable. While the current payout ratio appears high, management has indicated that improving cash flow and reducing debt remain top priorities. If successful, these efforts should help maintain or even strengthen the dividend, making it an appealing choice for income-focused investors.

The stock’s recent performance suggests that investor sentiment is still cautious, but for those willing to take a long-term view, there may be an opportunity to buy at a discounted price. The REIT’s current price-to-book ratio of 0.72 indicates that it is trading below the value of its underlying assets. This could suggest potential upside if financial conditions improve.

Bottom line

So, how much could you own? To earn $1,000 extra each year, here is how much investors would need to put aside for NorthWest REIT.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
NWH.UN	$4.72	2,778	$0.36	$1,000.08	monthly	$13,112.16

There you have it. If you invest $13,112, you gain an extra grand! Ultimately, NorthWest Healthcare Properties REIT offers an intriguing mix of high-yield income and long-term stability, but it does come with some risks. Investors should consider how it fits into their overall portfolio and whether they are comfortable with the company’s debt levels and efforts to improve financial health. For those looking to generate a reliable income stream, understanding how many shares to buy to achieve their desired dividend income is a crucial part of the decision-making process.