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Passive-Income Alert: 2 Stocks That Pay a Juicy Dividend

Christopher Liew, CFA
·4 min read
warning or alert

The global pandemic is an eye opener, because it threatens income security and livelihoods. Besides health, financial dislocation was the worry of most. Canadians’ anxiety levels rose at the start of the second quarter of Q2 2020 following the drastic 2.2% increase in the unemployment rate to 7.8% in March 2020.

The sudden drop in employment was more extensive than any of the significant recessions experienced by Canadians since 1980. Fortunately, the federal government responded swiftly to alleviate financial hardships.

When people started receiving their pandemic money through various emergency benefit programs, they hoarded it instead of spending it. The result was a spike in the household savings rate to 27.8% in Q2 2020. In Q1 2020, Canadians only saved 7.6% of their disposable income.

Somehow, the health crisis motivated people to take care of their financial well-being. The need to earn passive income became vital as ever, because losing active income, whether employment or self-employment, is a strong possibility.

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Today, Canadians can catch up to create a passive-income stream. The TSX continues to build momentum in June, and the index likely to trend higher for the rest of 2021. If your finances allow, consider investing in Aura Minerals (TSX:ORA) and NorthWest Healthcare Properties (TSX:NWH.UN). Both stocks pay juicy dividends.

Solid growth and performance

Aura Minerals presented impressive financial results in Q1 2021 (quarter ended March 31, 2021). The $1.19 billion gold and copper producer from Miami, Florida, reported a 139% increase in net revenue to US$116 million versus Q1 2020. Likewise, Aura posted nearly US$14 in net income compared to the US$17.66 million net loss a year ago.

Rodrigo Barbosa, Aura’s CEO, said the record results in Q1 2021 continue the company’s solid growth and performance over the last three quarters. Moreover, he was pleased with the consistent results across Aura’s operations over the last nine months since resuming following COVID-19’s interruptions.

Now, management expects to achieve, if not exceed, its GEO (gold equivalent ounce) guidance for 2021. Aura targets a production growth of between 22% to 42% compared to 2020. The producing mines are in Brazil, Honduras, Mexico, and the United States.

Prominent REIT

Owners and operators of healthcare real estate infrastructure rose to prominence due to the pandemic. In the stock market, income investors took positions in NorthWest Healthcare. The $2.59 billion real estate investment trust (REIT) is the largest non-government owner and manager of medical office buildings and healthcare facilities in Canada.

Apart from the home country, some of the REIT’s 186 income-producing properties are in Australia, Brazil, Germany, and the Netherlands. NorthWest also acquired 10 hospitals in the U.K. as part of its expansion in Europe. Among its long-term real estate partners are leading healthcare operators.

The dividend stock is a winner given the revenue stability and high portfolio occupancy rate (97%). Also, the weighted average lease expiry is 14.3 years. But for NorthWest’s Hospital and Health Care Facility Assets internationally, the weighted average lease expiry is longer at 17.1 years. Thus, the payouts are safe and sustainable for years to come.

Juicy dividends

As of June 16, 2021, you won’t spend more than $20 per share to own Aura Minerals ($16.40) and NorthWest Healthcare ($13). The mining stock pays a 6.3% dividend, while the REIT offers 6.15%. This pair of generous dividend payers can provide higher passive-income streams compared to other income stocks.

The post Passive-Income Alert: 2 Stocks That Pay a Juicy Dividend appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.

2021