Dividend stocks are a great way to boost passive income. I reckon Primary Health Properties (LSE: PHP) is a top stock to help achieve just that.
I already own some shares and I’m considering buying more. Here’s why!
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Properties for healthcare
Primary is set up as a real estate investment trust (REIT). This basically means it is a business set up to own, operate, finance and even manage income-generating property. Primary specialises in healthcare facilities, such as doctors surgeries.
The reason I’m a fan of REITs as dividend stocks is because they must return 90% of profits to shareholders like me.
As I write, Primary shares are trading for 95p. At this time last year, they were trading for 118p, which is a 18% drop over a 12-month period. Although my initial investment is down on paper, I’m not bothered by short-term performance as I can see longer-term rewards.
Dividend stocks carry rewards… and risks
As I own and am bullish on the shares, let’s start with the negatives. I believe that rising interest rates have pushed down shares as the businesses assets have fallen in value. There’s no end in sight for higher rates yet, but the more the shares go down, I see it as an opportunity to load up on shares.
Next, government changes or reforms could impact Primary’s performance and returns. After all, Primary leases its buildings to the NHS, which means rent is funded by the government. If anything were to change, performance, payout and sentiment could be dented.
Onto the positives then. Personally, I’m of the belief that Primary has defensive qualities, and can benefit from the ageing, and rising population in the UK. Healthcare is essential for everybody and as the population grows and gets older, this will place increased demand on healthcare facilities. This should help boost Primary’s market presence, performance and payouts.
Next, although I understand past performance is not a guarantee of the future, Primary has an enviable track record. I can see it has grown revenue and profit for the past three years. Based on the factors I mentioned above, I think this trend could continue.
Finally, as with all dividend stocks I consider, and own, I want to understand my level of return. A dividend yield of 7% is well above the FTSE 100 average of 3.8%. However, I’m conscious dividends are never guaranteed.
Final thoughts
Current macroeconomic volatility can be unnerving. However, this isn’t the case for me when it comes to Primary shares. The share price has suffered a little bit, but this throws up a buying opportunity for me. I’m prepared for a bit of short-term pain for long-term gain.
I’m more interested and buoyed by the fact that Primary is in a great position to benefit from the rising and ageing population in the UK as well as the current passive income opportunity.
I’ll be looking to add more Primary shares to my holdings the next time I have some spare cash to invest. There are a number of REITs out there that are excellent income stocks, in my opinion. I hold positions in a few others too that I’m considering adding to as well.
