Motley Fool investors seeking passive income tend to first look for a solid real estate investment trust (REIT). It’s clear why. These companies own properties with pre-determined leases, that allow them to then dish out stable dividends. This is why you can find a high-yield REIT practically anywhere.
But what about returns? That’s where many REITs can find their downfall. But not this one. I invested in this high-yield REIT a few years back and have since made hundreds — not just from dividends, but in returns. And I’d buy even more today.
Let’s dig in.
NorthWest Healthcare
NorthWest Healthcare Property Units REIT (TSX:NWH.UN) is a healthcare property owner. It owns and operates properties within the healthcare industry, including offices, parking garages, and, of course, hospitals. Its portfolio spans the globe, with the company currently holding $9.2 billion in assets under management.
This comes from the company expanding at an astounding rate over the last few years. In March 2021, the company had $7.7 billion in assets under management. This comes from NorthWest acquiring huge healthcare properties, and even other global REITs. This was a 17.3% increase year over year.
And those assets are growing. Just this week, NorthWest announced a $765 million acquisition of 27 cure-focused healthcare properties in the United States. This will mark the very first U.S. acquisition for the REIT. The portfolio is 97% occupied, with an average lease of 10.7 years. That’s compared to the company’s already strong 14.5-year lease agreement average.
The high-yield
Now, I tell you all this to show one thing. This company has stability, and then some. Its global profile means the high-yield REIT can continue to pay out that high yield. In fact, hopefully, it can increase in the near future — especially with all this intense growth it’s been going through.
But I wouldn’t hold your breath. While NorthWest does offer a strong 5.75% dividend yield, that dividend remains fairly stagnant. In fact, it hasn’t changed at all really in the last decade. Still, at 5.75% it’s a solid high-yield REIT already.
The returns
And that’s why I’d like to turn your attention to the company’s returns. As we learned during the pandemic, healthcare properties were essential. These properties have since received investment both privately and publicly in order to support the ongoing pandemic. And when interest rates were low, NorthWest saw the opportunity to expand.
This led to an increase in share price that hasn’t gone away. Shares are already up 6% in the last year, but 52% in the last two years. Zoom out further, and shares are up 27% in the last five years, giving you a better picture of long-term performance.
Foolish takeaway
As for me, I purchased shares in the midst of the pandemic at around $11 per share. So, today, that’s given me returns of about 27%! I’m now all caught up to the last five years. Furthermore, I purchased 106 shares at that time. That’s given me total dividends of about $170 over the last two years from the high-yield REIT. Add in returns, and that’s about $400 as of writing. And I’m still looking forward to more — especially as it continues to trade at a valuable 7.09 times earnings
