Monthly Dividend Stock In Focus: NorthWest Healthcare Properties Real Estate Investment Trust

Updated on April 19th, 2025 by Felix Martinez

NorthWest Healthcare Properties Real Estate Investment Trust (NWHUF) has three appealing investment characteristics:

#1: It is a REIT so it has a favorable tax structure and pays out the majority of its earnings as dividends.Related:  List of publicly traded REITs

#2: It is a high-yield stock based on its 7.3% dividend yield.Related: List of 5%+ yielding stocks

#3: It pays dividends monthly instead of quarterly.Related: List of monthly dividend stocks

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter like dividend yield and payout ratio) by clicking on the link below:

NorthWest Healthcare Properties Real Estate Investment Trust’s trifecta of favorable tax status as a REIT, a high dividend yield, and a monthly dividend makes it appealing to individual investors.

But there’s more to the company than just these factors. Keep reading this article to learn more about NorthWest Healthcare Properties Real Estate Investment Trust.

Business Overview

NorthWest Healthcare Properties Real Estate Investment Trust is an open-ended real estate investment trust with a portfolio of high-quality international healthcare real estate infrastructure comprised of interests in a portfolio of 186 income-producing properties and 16.1 million square feet of gross leasable area located throughout major markets in Canada, Brazil, Europe, Australia, and New Zealand.

Source: Investor Presentation

The REIT’s portfolio of medical office buildings, clinics, and hospitals is characterized by long-term indexed leases and stable occupancies. With a fully integrated and aligned senior management team, the REIT leverages over 200 professionals across nine offices in five countries to serve as a long-term real estate partner to leading healthcare operators.

NorthWest Healthcare Properties REIT has a high occupancy rate of 96.0% and a weighted average lease duration of about 12.9 years. The long lease duration offers great visibility into future cash flows. The REIT is also highly diversified geographically, and, more importantly, it is somewhat protected from high inflation thanks to contractual rent growth year after year.

Growth Prospects

The healthcare real estate market has many attractive characteristics. Firstly, it is one of the largest industries in the world, accounting for more than 10% of global GDP. Approximately $8 trillion is spent on global healthcare annually. Additionally, healthcare spending is growing at an annual rate of 4%-7%.

Source: Investor Presentation

Moreover, the healthcare industry benefits from favorable demographics, thanks to a growing and aging global population. As the 65+ group continues to grow, it is the group with the greatest spending power, and global healthcare spending is likely to continue growing at a rapid pace for the next several years.

Furthermore, NorthWest Healthcare Properties REIT has built a rapidly growing asset management platform. Thanks to this platform, the trust enjoys fast-growing management fees. While management fees somewhat cooled in the latest quarter, they are likely to remain a material growth driver in the upcoming years.

Overall, NorthWest Healthcare Properties REIT has ample room for future growth thanks to the secular growth of the healthcare industry. On the other hand, high interest rates are likely to take their toll on the trust’s bottom line in the upcoming quarters.

NorthWest Healthcare Properties REIT has reduced its FFO per unit by 6.5% annually on average over the past five years. However, given the above factors, we expect the REIT to grow its FFO per unit by about 2.0% per year on average over the next five years, roughly in line with its historical growth rate.

Dividend & Valuation Analysis

NorthWest Healthcare Properties REIT is currently offering a dividend yield of 7.3%. It is thus an interesting candidate for income-oriented investors, but the latter should be aware that the dividend may fluctuate significantly over time due to the fluctuations in exchange rates between the Canadian dollar and other foreign currencies, as well as the USD.

Moreover, the REIT has an elevated payout ratio of nearly 100%, which significantly reduces the safety margin of the dividend.

Regarding valuation, NorthWest Healthcare Properties REIT is currently trading at only 12.6 times its FFO per unit over the last 12 months. The low valuation has resulted primarily from the expected impact of higher interest expenses on the bottom line and the effect of high inflation on the valuation, as high inflation significantly reduces the present value of future cash flows.

Given the material debt load of the REIT, we assume a fair price-to-FFO ratio of 11.0 for the stock. Therefore, the current FFO multiple is higher than our assumed fair price-to-FFO ratio. If the stock trades at its fair valuation level in five years, it will result in a 1.4% annualized loss.

Taking into account the 2% annual FFO-per-unit growth, the 7.3% dividend, and a 1.4% annualized compression of valuation level, NorthWest Healthcare Properties REIT could offer a 7.9% average annual total return over the next five years. This is a modest expected return, especially for the investors who expect inflation to subside swiftly to its normal levels. Nevertheless, the stock is suitable only for investors who are comfortable with the risk associated with the trust’s substantial debt load.

Final Thoughts

NorthWest Healthcare Properties REIT has the advantage of operating assets in the global healthcare industry, which enjoys strong and reliable secular growth. Despite its high payout ratio of over 100%, the stock is offering an exceptionally high dividend yield of 7.3%. Hence, it is an attractive candidate for the portfolios of income-oriented investors, particularly given that the stock is expected to yield a return of 7.9% per year over the next five years.

On the other hand, investors should be aware of the risks associated with the REIT’s weak balance sheet. If high inflation persists for much longer than currently anticipated, high interest rates will greatly burden the REIT. Therefore, only the investors who are confident that inflation will soon revert to normal levels should consider purchasing this stock.

Moreover, NorthWest Healthcare Properties REIT is characterized by exceptionally low trading volume. This means that it is hard to establish or sell a large position in this stock.

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