Written by Rajiv Nanjapla at The Motley Fool Canada
Yesterday, the S&P/TSX Composite Index fell around 1.2%, as investors are skeptical about the health of the regional banks in the United States. On Monday, First Republic Bank stated that its customers had withdrawn around US$100 billion in March amid the banking crisis. Several economists are projecting a recession this year. So, given the uncertain outlook, investors could invest in the following monthly paying dividend stocks to earn a stable passive income, irrespective of the market movements.
NorthWest Healthcare Properties REIT
REITs (real estate investment trusts) are some of the top picks for income-seeking investors, as these companies should distribute around 90% of their cash flows to their investors. However, the rising interest rates and uncertain economic outlook have led to a selloff in these stocks, including NorthWest Healthcare Properties REIT (TSX:NWH.UN). Amid the weakness, the company has lost close to 40% of its stock value compared to its 52-week high.
Meanwhile, I believe the steep pullback has created an excellent buying opportunity, given its defensive healthcare portfolio, long-term lease agreement, inflation-indexed rent, and government-backed tenants. The company has planned to sell around $220 million worth of non-core assets and lower its stake in its United Kingdom and United States joint ventures.
Meanwhile, the company’s management expects these initiatives to deliver net proceeds of $425-$500 million, thus strengthening its balance sheet. So, I believe NorthWest Healthcare’s monthly payouts are safe.
Amid the steep correction, the company’s forward yield has increased to an attractive 9.8 while its price-to-book multiple stands at 0.8. So, considering all these initiatives, I believe NorthWest Healthcare would be an ideal buy to boost your passive income.
TransAlta Renewables (TSX:RNW) is another excellent monthly paying dividend stock that you should add to your portfolio to boost your passive income. The company, which operates 48 power-producing facilities with a total capacity of three gigawatts, sells most of the power through long-term PPAs (power-purchase agreements). These long-term agreements shield its financials from price and volume fluctuations, thus delivering stability to its financials.
Meanwhile, TransAlta Renewables has received contract extensions for its Sarnia cogeneration and Kent Hills facilities. Also, the company added that its rehabilitation efforts at Kent Hills were progressing well and expects to put the facility into service later this year. Also, the company expects to put several assets into service in Australia this year. These growth initiatives could boost its cash flows, thus allowing the company to pay dividends at a healthier rate. Meanwhile, its forward yield currently stands at a healthy 7.5%.
With a forward yield of 7.4%, Extendicare (TSX:EXE) is my final pick. The company, which operates 103 long-term-care (LTC) homes and retirement communities, reported a mixed fourth-quarter performance last month. Its average LTC occupancy rate improved by 100% basis points, while home healthcare average average daily volume increased by 2%. The revenue from its managed services segment also increased by 24%.
Supported by these factors, the company’s overall revenue grew by 1.4%. However, its net operating income declined by 44% amid an increase in unfunded COVID-19 expenses and higher operating costs across all its segments.
Meanwhile, the sale of retirement operations has allowed Extendicare to focus on advancing its LTC redevelopment program. It is also working on completing its transaction with Revera and Axium, which could strengthen its position in LTC. Given its improving operating metrics and healthy growth prospects, I expect the company to continue paying dividends at a healthy rate.
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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.