1 Under-$10 Dividend Stock to Buy for Monthly Passive Income
Written by Sneha Nahata at The Motley Fool Canada
Investors looking to create a steady passive-income stream can rely on dividend-paying stocks. While equity remains volatile, stocks that have a long history of dividend payments and are backed by fundamentally strong businesses can be easily relied upon for earning worry-free income.
Thankfully, the TSX has several high-quality stocks that have consistently paid and raised dividends for a very long period. This makes them a compelling investment to earn regular passive income. However, I’ll focus here on a stock offering monthly payouts. But before I discuss the stock, investors must note that dividends are paid out of profits and are never guaranteed. This implies that one must focus on diversifying their portfolio and should not invest all their money in one or two stocks.
With this backdrop, let’s delve into a top Canadian dividend-paying stock that pays monthly cash. By investing in this stock, one can supplement the monthly income. Further, this stock trades incredibly cheap, under $10, providing an exceptional entry point.
One under-$10 dividend stock for monthly passive income
While several Canadian stocks pay dependable dividends, passive-income investors could consider investing in a REIT (real estate investment trust). REITS are important income investments, as they distribute most of their earnings via dividends. Moreover, within the REITs, NorthWest Healthcare Properties (TSX:NWH.UN) looks highly attractive near the current levels.
It offers a monthly dividend of $0.067 per share. This translates into a high yield of 12.5% (based on its closing price of $6.40 on August 24). Besides its lucrative yield, let’s look at factors that make this REIT a dependable passive-income stock.
Why is NorthWest Healthcare a reliable passive-income stock?
The REIT has a defensive portfolio of high-quality international healthcare real estate infrastructure. While its assets are geographically diversified across Canada, the U.S., Australia, Europe, and Brazil, it benefits from top-class tenants, including large hospital operators and healthcare practitioners. Moreover, these tenants are supported by direct or indirect government funding.
Thanks to its defensive healthcare-focused assets, NorthWest consistently generates solid cash flows, which supports its payouts.
Impressively, NorthWest Healthcare owns 231 properties, with a high occupancy level of about 96%. Further, the REIT sports a long average lease expiry term of close to 14 years. Overall, its high occupancy and long lease expiry term add stability and visibility to its future cash flows. In addition, about 83% of its leases are subject to indexation, enabling it to generate solid same-property net operating income.
NorthWest stock has corrected quite a lot on a year-to-date basis due to its elevated debt and higher interest expenses. Nonetheless, it focuses on reducing debt and has implemented a hedging program, enabling it to lower interest expenses.
Bottom line
While NorthWest Healthcare is under pressure due to a temporary increase in debt, its high-quality portfolio, solid tenant base, and high occupancy rate augur well for future growth and dividend payouts.
Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency |
NorthWest Healthcare | $6.4 | 1,562 | $0.067 | $104.65 | Monthly |
The table above shows that an investment of $10K in NorthWest Healthcare stock near the current levels could help you buy about 1,562 shares, which will generate $104.65 in passive income per month.
The post 1 Under-$10 Dividend Stock to Buy for Monthly Passive Income appeared first on The Motley Fool Canada.
Should You Invest $1,000 In NorthWest Healthcare Properties?
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Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.
2023