1 Dividend Stock Down 49% to Buy Right Now

This dividend stock is finally getting back on the straight and narrow after reporting a stronger bottom line, leading many to grab that dividend!

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 20, 2024 10:30 am EDT

| More on: NWH.UN

If you’re looking for growth and dividends, you have come to the right place. There is one dividend stock that has started to climb once more, and it could only be the beginning of its recovery. And it would be a big one, with shares still down 49% as of writing.

So, let’s get into the dividend stock to buy right now and whether its current 7.88% dividend yield is worth it and, what’s more, safe.

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NorthWest REIT

The dividend stock we’re looking at today is NorthWest Healthcare Properties REIT (TSX:NWH.UN). This dividend stock has been through its fair share of ups and downs over the last few years. It came on the market focusing on local healthcare real estate in Ontario. Yet since then, its expanded into an international operation, using cash for further acquisitions.

Yet after going public in 2010, NorthWest stock started perhaps expanding too much, too soon. NorthWest stock has since acquired companies in Germany, Brazil, and the Netherlands. It also acquired countries in Australia and New Zealand, but things have changed.

In the last year or more, NorthWest stock was forced to focus on strengthening its balance sheet. This included asset sales, debt refinancing and extensions, as well as a dividend cut. This sent shares down even further after several bad quarters.

Better than expected

However, after a really rough 2023, the dividend stock announced during its most recent fourth-quarter and full-year report that its plan is working. The dividend stock reported strong operating performance with positive revenue growth. Revenue was up 4.1% from the fourth quarter in 2023 compared to 2023 and 12.3% between 2022 and 2023.

What’s more, same-property net operating income (NOI) climbed 4% compared to last year’s fourth quarter. This showed healthcare properties are continuing to perform well and generate steady income. All while collecting 99% of rent from its 97% occupied portfolio.

As for the longer term, the company demonstrated it held a 13.3-year average lease expiration. Therefore, its tenants are locked in for over a decade, providing the dividend stock with a more stable income.

More growth could come

While this caused the share price to climb, there could certainly be more on the way. The big sale came from its Australia healthcare real estate investment trust (REIT). This allowed the dividend stock to become far more focused on strengthening its bottom line. However, top-line growth remains out of sight for now.

And that’s likely a good thing for 2024. Interest rates are still high, so any debt brought on would be at a high cost in terms of interest. Meanwhile, NorthWest stock will likely want to first win back investors. And that has to be through a dividend increase.

The dividend stock cut its dividend less than a year ago, so it’s unlikely to come back up until some long-term growth opportunities are on hand. Yet, at this price, the dividend looks quite high to me. A 7.88% yield is still higher than its five-year average of 7.96%. What’s more, with shares moving upwards after strengthening its balance sheet, it’s unlikely we’ll see another dividend cut in the near future.

Bottom line

So, at the very least, you could be in for some stable growth in the near term from NorthWest stock, with dividends coming out monthly. Longer term, as interest rates come down this dividend stock could be back on its acquisition path of bringing even more healthcare properties into the fold.