Dividend stocks are great during a downturn, it’s true. But what about when a downturn is over? You still want a stock that’s going to perform, and perform well. That makes now the best time to buy a dividend stock that has solid performance outlined for the future, as well as a high yield you can lock up.
That’s why today I’m going to focus on NorthWest Healthcare Properties REIT (TSX:NWH.UN) and its massive 10.8% dividend yield. One that should drop quite soon.
Why NorthWest REIT
Before I get into why the dividend yield is going to drop in the near future, let’s first look at why investing in NorthWest stock is a good choice to begin with. The stock has a solid growth strategy that comes down to one thing: healthcare properties.
Healthcare properties have to be one of the most stable investments a real estate investment trust (REIT) can make. These are needed no matter what happens in the economy. Because of this NorthWest stock has chosen a stable investment strategy with very little downside.
That doesn’t mean there is no downside, however. In a high interest rate and inflationary environment, it can be difficult for the company to keep up in terms of earnings and growth. Higher costs mean less opportunity for further acquisitions.
However, as long as management stays on course as it has been for the last several years, it should have no problem recovering. So while shares are down for now, I would recommend it as a strong opportunity for growth and income.
What kind of growth?
When it comes to earnings, NorthWest stock hasn’t been all that impressive in the last few quarters. Earnings have fallen short of estimate expectations, with the last two quarters seeing underperformance. A recovery is therefore taking longer than anticipated, leaving investors to question investing in the stock in the near term.
However, in the long term it’s a different story. NorthWest stock is making progress in bringing down debt, and also continues to increase its assets under management. This has led analysts to either increase or maintain stable forecasts over the company’s near-term potential upside.
So then there’s share growth to consider. NorthWest stock is down an incredible 43% in the last year and 22% year to date. But that’s exactly why you should be buying it today.
Get in on the dividend!
As I said, the dividend yield is about to drop. That happens when shares start to increase, which could certainly happen come the company’s next earnings report. That report is due out in August, and I suspect as the market improves there will be an improvement in share price as well before that time.
Another reason the yield is likely to drop is because it’s unlikely NorthWest stock is going to raise its dividend any time soon. It has remained at $0.80 per share for years now, so I would get as much of it as you can before shares rise any higher. Grab it now, and you could see this dividend stock turn into a growth stock before your very eyes.
Before you consider NorthWest Healthcare Properties, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in May 2023… and NorthWest Healthcare Properties wasn’t on the list.
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See the 5 Stocks
* Returns as of 5/24/23
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Fool contributor Amy Legate-Wolfe has positions in NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.