One penny stock I’m planning to add to my holdings imminently is Asura (LSE: AGR). Here’s why.
Healthcare properties
Assura is a real estate investment trust (REIT). This basically means it is set up as a property investment business and one of the stipulations of a business like this is that it must return 90% of its profits to shareholders in the form of dividends. It designs, builds, invests in, and manages GP surgeries and other primary care facilities.
It is worth noting that a penny stock is one that trades for less than £1. As I write, Assura shares are trading for 44p. At this time last year, the shares were trading for 67p, which is a 34% decrease over a 12-month period. The drop in share price can be attributed to market volatility caused by soaring inflation and interest rates.
Why I like Assura shares
As a dividend investor, I’m buoyed by a dividend yield of 7.3%, which is well above-average for a penny stock. Although I do understand that dividends are never guaranteed, I believe Assura’s dividend is only set to increase in the years to come.
My belief in Assura’s growth stems from the market it operates in. The demand for healthcare properties is only increasing. This is for a few reasons. Firstly, an ageing population in the UK indicates that healthcare and primary health facilities are increasing in demand. Next, the NHS is under huge strain at the moment due to an expanding population too.
According to the Office for National Statistics, the number of patients compared to GPs and healthcare practitioners is only rising and has been for the past few years. Taking all of this into consideration, Assura could continue to see demand for its properties increase, and translate this into future earnings and shareholder returns.
Finally, I can see Assura has a good record of performance in recent years. It has grown revenue and profit for the past four years. Based on the state of the current healthcare sector, as mentioned above, Assura could continue this trend, in my opinion. However, I do understand that past performance is not a guarantee of the future.
A penny stock I’m buying
Despite my decision to buy Assura shares, there are a couple of risks to note. Firstly, with inflation and costs high, the design and build of properties is something to keep an eye on as this increased cost can take a bite out of profits and returns. Next, the continued exodus of NHS staff is also a risk to consider. Having lots of primary healthcare properties would be no good without the correctly qualified staff to run them. Empty properties represent a loss in rent, which adversely impacts performance and levels of return.
To conclude, I believe Assura is a great penny stock that would boost my passive income now and I’m excited by its future growth prospects too. I’ll be adding some shares to my holdings imminently.
