Is This 10.04% Yield Stock Still a Buy After Solid Earnings?

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Image source: Getty Images

Written by Amy Legate-Wolfe at The Motley Fool Canada

It was a bit of a mixed response to earnings from NorthWest Healthcare Properties REIT (TSX:NWH.UN) recently. NorthWest stock reported its earnings on May 12, and it seemed like investors really didn’t know how to take it.

So, let’s look at what investors might consider if they’re interested in NorthWest stock — especially while it offers a 10.04% dividend yield.

What happened?

NorthWest stock originally dropped slightly when the market opened on May 12. However, it soon recovered, climbing back to its price at the market open. Yet since then, shares have been climbing higher and higher on May 15 when writing this article.

But again, it really has not been anything significant. Shares of NorthWest stock are still down 38% in the last year and 18% year to date. A little nudge of what amounted to about 2.5% wasn’t exactly exciting after earnings.

Still, the real estate investment trust (REIT) continues to offer one of the highest yields on the market. It currently sits at 10.04%, as of writing. Yet it’s important to note that the yield comes to $0.80 per share annually and hasn’t changed since coming on the market.

Based on earnings, that’s unlikely to change.

What were earnings?

Honestly, the earnings were stable. That’s the best way to describe them. There weren’t any large losses, and there weren’t any large gains. Occupancy remained the same at 97%, with a 13.6-year average lease agreement. These long-term agreements come from being in the healthcare sector, and it’s why many investors seek out the stock as a long-term hold in the first place.

Where there was movement, it was mainly positive. Revenue increased 29.5% year over year, with total assets under management up 13.7% to $10.8 billion. Where there were drops was net asset value down 1.4% and adjusted funds from operations from $0.21 to $0.17.

The biggest development was the large focus on the company’s joint venture in the United Kingdom. This venture is now expected to close by June 30, 2023, and there was a significant positive update on this front. Last quarter, the REIT’s non-core sales program expanded from $220 million to $340 million.

These higher funds will go on to bring down debt, with the REIT expecting to generate between $550 and $600 million in net proceeds in 2023.

Bottom line

We haven’t had any analysts come out with statement since the update last week. However, based on past performance and these stable results, as well as the joint venture progression, analyst targets are likely to remain the same or slightly higher.

And that’s positive, given the average potential target price sits at $10.83, with analysts believing the stock to be an outperformer this year. The market is going to turn, and NorthWest stock has already started to see a turn for the better. If you’re looking for a strong, solid dividend stock, I would certainly consider NorthWest stock — especially for a 10.04% dividend yield while it trades at such an incredibly high discount on the TSX today.

The post Is This 10.04% Yield Stock Still a Buy After Solid Earnings? appeared first on The Motley Fool Canada.

Should You Invest $1,000 In NorthWest Healthcare Properties?

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 April 2023... and NorthWest Healthcare Properties wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 4/18/23

More reading

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.