Valued at a market cap of $1.3 billion, NorthWest Healthcare (TSX:NWH.UN) is a Canada-based real estate investment trust (REIT). In the last decade, the TSX stock has declined by almost 40%. However, if we adjust for dividend reinvestments, cumulative returns stand at 27%.
NorthWest was forced to lower its annual dividend from $0.80 per share to $0.36 per share in 2023 due to elevated interest rates and a challenging macro environment. Despite this dividend cut, the REIT offers you a tasty dividend yield of 6.8%.
Let’s see if it makes sense to invest in this beaten-down TSX dividend stock right now.
Is NorthWest Healthcare stock a good buy today?
NorthWest provides investors with access to a portfolio of high-quality international healthcare real estate infrastructure. It owns a diversified portfolio of 169 income-producing properties and 15.8 million square feet of gross leasable area located throughout major markets in North America, Brazil, Europe, and Australasia.
The REIT’s portfolio of medical outpatient buildings, clinics, and hospitals is characterized by long-term indexed leases and stable occupancies. NorthWest leverages its global workforce in eight countries to serve as a long-term real estate partner to leading healthcare operators.
NorthWest Healthcare demonstrated solid operational performance in the second quarter (Q2) despite ongoing challenges with tenant Healthscope. New CEO Zachary Vaughan, recently joined the REIT and outlined an optimistic vision for the healthcare real estate specialist while addressing investor concerns about the Australian hospital operator’s receivership.
NorthWest delivered strong financial metrics with occupancy exceeding 96% and a weighted average lease expiry of 13.5 years in Q2. Its same-property net operating income grew 2.8% year over year to $73.2 million, with all regions contributing positively. The REIT maintained an 89% renewal rate across 298,000 square feet of leasing activity, which showcases tenant stickiness in healthcare properties.
NorthWest successfully executed its capital-recycling strategy, generating over $208 million through dispositions, including the complete exit from Assura at a 30% total return.
These proceeds enabled debt reduction, lowering proportionate leverage to 56% and consolidated leverage to 48.5%. Interest expenses decreased by $23 million year over year due to refinancing activities and debt repayments.
NorthWest emphasized that all facilities remain operational as it ended Q2 with more than $200 million in liquidity. Vaughan highlighted healthcare real estate’s attractive characteristics, including high-quality cash flows supported by AAA-rated credits, low obsolescence risk, and limited replicability.
He noted increasing institutional interest from real estate and infrastructure investors, positioning NorthWest advantageously for future growth.
Is the TSX dividend stock undervalued?
NorthWest suspended its distribution reinvestment plan effective September 2025, citing meaningful discounts to net asset value. However, analysts forecast the REIT to maintain its annual dividend of $0.36 through 2027.
NorthWest focuses on healthcare real estate, which is a niche market within the broader real estate sector. This specialization allows it to cater to unique tenant requirements that may be underserved.
A growing portfolio of healthcare properties allows NorthWest to benefit from economies of scale in property management, leasing, and financing. This larger scale should lead to better terms with suppliers and service providers, translating to lower operating costs and higher margins.
With $230 million in available liquidity and improving market conditions, NorthWest appears well-positioned for accretive growth opportunities while maintaining focus on capital-allocation optimization.
Given consensus price targets, NorthWest Healthcare stock trades at a 6% discount in September 2025. If we adjust for dividends, cumulative returns could be closer to 13%.
