TFSA Magic: $100,000 in This High-Yield Stock Would Pay Out +$600 Monthly!

Are you looking for high-quality stocks that pay dividends monthly?

If so, real estate investment trusts (REITs) are the pile you want to go looking in. Unlike most other stocks, REITs routinely pay dividends monthly. In most sectors, monthly payments are practically unheard of! So, if you want a high monthly income from a stock, REITs are the place you want to look. In this article, I’ll share a 7.4% yielding REIT that could pay you up to $600 per month with just $100,000 invested.

Northwest Healthcare

Northwest Healthcare Property REIT (TSX:NWH.UN) is a Canadian real estate investment trust (REIT) focused on the healthcare industry. It owns a number of healthcare-related properties, including hospitals, healthcare facilities, and healthcare office buildings.

This REIT hit hard times in 2023. That year, the company’s earnings and cash flows declined. Because of the Bank of Canada’s interest rate hikes, which had been going on through 2022 and 2023, the REIT had to slash its distribution in half in late 2023. This predictably caused the REIT’s price to fall off dramatically, and its distribution hasn’t come back up since then.

Can NWH.UN keep its dividend coming?

Here’s what we know:

• The company’s distribution is currently less than its earnings, with an 80% payout ratio.
• The company is also highly profitable, with a 7.9% adjusted funds from operations (AFFO) yield and a 63% operating income margin.
• The company’s properties have a relatively comfortable occupancy rate of 96.5%.

These facts bode well for NWH’s dividends continuing to be paid. However, NWH.UN’s growth metrics still leave much to be desired, with AFFO down 25% in the TTM period. It’s for this reason that I can’t recommend NorthWest Healthcare Properties REIT without reservation: the company delivering strong future performance is not guaranteed. Nevertheless, it is possible to estimate how much dividend income this REIT will produce on the assumption that the dividend is not cut. In the next section, I will do just that.

Income potential

Northwest Healthcare Properties REIT pays a $0.03 distribution every month. That works out to $0.36 per year. At today’s unit price of $4.81, the REIT yields 7.48%. Assuming that the dividend can be maintained at its current level, then an investor who puts $100,000 into NWH.UN will get back $623 in monthly dividends. Here’s the math on that:

As the table above shows, if all goes well with NWH’s dividend payments, then investors can get a real whopper of a monthly yield out of this REIT.

Foolish takeaway: Monthly paying stocks

As the above Northwest Healthcare example illustrates, monthly dividend-paying stocks can sometimes pay out considerable sums of money on a monthly basis. This should by no means be taken as a recommendation to buy Northwest Healthcare stock: it is simply a convenient example to illustrate the cash-flowing power of high-yield monthly payers in general. Still, if you’re building your own diversified portfolio of high-yield monthly payers, a small position in NWH.UN may be worth it.