The healthcare sector has not performed well over the past two years and is the worst performing sector so far in 2022, losing 53.48% year-to-date. However, two companies whose activities are in the field of health care deserve the attention of dividend investors.
Northwest Health Properties (TSX: NWH.UN), which is in the real estate sector, is the only real estate investment trust (REIT) in the cure sector. Savaria (TSX:SIS), which belongs to the industrial sector, offers mobility solutions mainly to the aging population.
Despite their below-average year-to-date performance, both stocks are reliable dividend payers if you want steady, monthly cash flow.
Global real estate investor
NorthWest Healthcare, a global real estate investor, rose to prominence in 2020 during the first year of COVID. Its real estate portfolio includes medical office buildings, hospitals, clinics and other health-related facilities. This $2.48 billion REIT develops partnerships with leading healthcare operators and focuses on tenants in healthcare, research, life sciences and education.
At $10.33 per share, the REIT is trading at a discount (-21.59% year-to-date). Nevertheless, the exaggerated dividend yield of 7.74% compensates for the drop in the share price. Since the dividend payment is monthly, 1,515 shares ($15,649.95) is enough to produce $100.94 of passive income per month.
In addition, given the weighted average lease term of 14.1 years for the 232 properties and the occupancy rate of 97%, the monthly payment should be maintained. Besides these two factors, the other key performance indicators of NorthWest are net income, net operating income (NOI) and funds from operations (FFO).
In the second quarter (Q2) of 2022, net profit decreased by 36.3% to $116.73 million compared to the same quarter in 2021. However, NOI and FFO increased by 27, 29% and 8.98% year over year to $88.88 million and $46.09 million, respectively. The total distribution to shareholders reached $48.03 million, an increase of 17.41% compared to Q2 2021.
According to management, the REIT’s strategic objectives have not changed. NorthWest’s continued investments in healthcare real estate globally are expected to provide sustainable and growing cash distributions.
In addition to building a diversified global portfolio, it will capitalize on growth opportunities within its existing portfolio and through accretive acquisitions in its target markets. Currently, the concentration is in North America, Australia, Brazil, New Zealand and Europe.
A world leader in accessibility
Savaria, based in Laval, has been in operation since 1979 and designs, manufactures, distributes and installs accessibility equipment. The $895.5 million company’s products and services help seniors and people with disabilities improve their mobility, comfort and independence.
In the first half of 2022, Savaria announced glowing financial results. Revenue, or revenue, increased 29.21% to $375.6 million from the same period in 2021. Its net income climbed 131% year over year. another to reach $13.47 million.
Savaria’s core business segments of Accessibility (7.5%), Adapted Vehicles (11.0%) and Patient Care (20.9%) posted impressive organic growth figures compared to the first half of 2021.
If you invest today, the stock price is $13.91 (-25.56% YTD), while the dividend yield is 3.74%. Some industry experts say Savaria has solid growth potential in a relatively young but rapidly growing market. Aging baby boomers will also drive demand for mobility products.
Healthcare is one of the complex sectors in the stock market as it branches out into various sectors or industries. NorthWest Healthcare Properties and Savaria stand out for their niche markets with solid fundamentals.