Prior to the jump, it had barely made any gains in the past five years, so I had to find out what was going on — and will it keep going? Let’s take a look.

Real estate investment trusts

REITs are publicly traded companies that own, manage and develop income-generating property portfolios. These can include a wide variety of properties such as offices, retail spaces, warehouses and residential buildings. 

They operate under favourable rules that offer corporation tax exemptions on rental income. In return, they must distribute at least 90% of rental profits to shareholders as dividends. Naturally, this makes them a popular option among income investors.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

They’re also a great way to gain exposure to real estate without the need to own physical property. On the downside, higher borrowing costs put pressure on REIT valuations, as property values typically fall when interest rates rise.

Evaluating Care REIT

Formerly Impact Healthcare REIT, Care REIT specialises in acquiring, renovating and managing high-quality healthcare facilities such as care homes. 

It leases these properties on long-term, full repairing and insuring leases to established healthcare operators, aiming to provide shareholders with sustainable returns through dividends and potential capital growth.

In March, the stock experienced a significant 33% surge following the announcement of a £448m takeover deal by American care home provider CareTrust. The offer, priced at 108p per share, represented a 32.8% premium over Care REIT’s prior closing price, reflecting investor optimism about the acquisition’s potential benefits.

Unfortunately, the deal means one more promising UK company will be assimilated into a US conglomerate. So investors hoping to benefit from the company would need to consider the NYSE-listed CareTrust — or look at other REITs.

Fortunately, there’s a similar healthcare-focused REIT on the FTSE 250 I’m optimistic about.

Primary Health Properties

Primary Health Properties (LSE: PHP) specialises in the healthcare sector, primarily via GP surgeries, medical centres and pharmacies. The company benefits from long-term, government-backed leases, providing reliable rental income. 

Its portfolio spans both the UK and Ireland, with a focus on modern, purpose-built facilities that support community healthcare services.

As a REIT, its key attraction is the consistently high dividend yield, currently around 7.3%.  It has also maintained 26 consecutive years of dividend growth, making it a great addition to a passive income portfolio.

But as always, there are some risks to consider. Rising interest rates are my main concern as they could ramp up borrowing costs, squeezing the company’s margins. Additionally, while government-backed leases offer security, funding cuts to healthcare could impact future rental growth.

Anybody watching the stock will know it has faced price weakness over the past two years, reflecting investor concerns about how inflation impacts the property sector.

Despite all this, I think PHP makes a solid defensive investment, offering exposure to an essential sector with stable, inflation-linked income. For investors seeking long-term dividends with lower volatility, its an appealing option to consider.

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It’s real estate investment trust (REIT) in a sector that I think looks highly promising and there’s a lot to like about the underlying business. As a result, I’m adding it to my list of stocks to keep an eye on.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Care homes

Despite a brief interruption during the pandemic, people in the UK tend to be living longer. As a result, I expect long-term demand for care homes to be strong. 

Care REIT isn’t the largest operator in the sector – that’s Target Healthcare REIT. But it owns a portfolio of 140 properties (mostly care homes) that it leases to providers. 

The majority of its tenants are local authorities, which make up around 58% of its income. The rest are a mixture of private organisations (31%), and the NHS (11%).

All of this looks encouraging and in its most recent update, Care REIT stated its NAV to be 118.74p per share. So with the stock trading at around 81p, I’m interested in a closer look.

Key metrics

There are several key metrics I look at in a REIT. On the operational side, I’m interested first and foremost in the company’s ability to attract tenants and collect rental income from them.

Care REIT’s occupancy level is around 89%. That’s good, rather than great, but the thing that really stands out to me is the amount of time left on its current leases.

The average lease expires 20 years from now, which is exceptionally long. And with rent increases linked to inflation, this could be a sign of a long-term passive income opportunity. 

The other metric I look at is rent collection. While local authority budgets might be under pressure, Care REIT regularly collects 100% of its expected rent – can’t say fairer than that.

Financing

REITs have to distribute 90% of their rental income to investors as dividends. This makes them interesting passive income opportunities, but it can also create complications. 

Being unable to retain earnings means REITs often have a lot of debt on their balance sheets. And investors need to pay attention to how the company manages this. 

At the moment, Care REIT has an average cost of debt of around 4.68%. And a lot of it doesn’t expire until 2035, giving the company a lot of time to plan and prepare.

Around 30%, however, is set to mature in 2026. So if rates don’t come down, the firm might find itself paying out more in interest costs, which could cut into profits – and dividends. 

On my radar

The question for investors is whether a 32% discount to NAV and an 8.5% dividend yield is enough to offset this risk. I think it might well be. 

If Care REIT pays off its 2026 debt by issuing equity, that would increase the share count by 22%. Other things being equal, that would bring the dividend yield down to 6.8%.

While the debt issue shouldn’t be discounted, I also see shares in Care REIT as good value at the moment. It’s going on my list of stocks to keep an eye on next time I’m looking to invest.

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It’s not just blue-chip UK stocks that are currently tearing higher. Shares of all types and sizes are gaining value as market confidence in the British economy improves, bolstering demand for domestic assets.

Yet the London stock market’s still a great place to pick up bargains. Here are three whose low price-to-earnings (P/E) ratios and enormous dividend yields make them, in my opinion, worth a very close look.

The copper miner

A sinking red metal price has pulled Central Asia Metals (LSE:CAML) shares sharply lower since last spring. The danger isn’t over, either, as China’s economy splutters and the threat of new trade tariffs grows.

Yet I think copper stocks like this could rebound strongly over the long term. Demand for the versatile metal — as well as lead and zinc, which Central Asia Metals also produces — is still tipped to rocket in the coming decades, reflecting its important role in fast-growing industries like renewable energy, consumer electronics, and artificial intelligence (AI).

Central Asia’s near-29% stake in Scottish explorer Aberdeen Minerals also gives it exposure to the nickel and cobalt markets. Its investment last year provides added scope for to capitalise on the energy transition.

Today Central Asia Metals trades on a forward P/E ratio of 7.3 times with a 10% dividend yield.

The greetings giant

Times are tough for the UK retail sector. Rising inflation and weak consumer appetite is hampering revenues, while labour and energy costs are creeping higher.

But I believe Card Factory (LSE:CARD), whose forward P/E ratio is 6.2 times and dividend yield is 6.1%, is an attractive dip buy to consider.

The firm’s focus on the low-cost end of the greetings card market helps revenues remain stable in good times and bad. Like-for-like sales rose 3.7% during the 11 months to December. The company is also making strong progress in cutting costs to support earnings.

With Card Factory’s store rollout programme continuing, and the business entering the US market last year, I think long-term earnings could grow strongly.

The care provider

Rising UK inflation could also cause turbulence at Care REIT (LSE:CRT). As a real estate investment trust (REIT), its earnings are highly sensitive to movements in interest rates.

Yet I believe the uncertain rate outlook is more than baked into the trust’s low forward P/E ratio of 5.5 times.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

With the business also sporting an 8.8% dividend yield, it’s a bargain share I myself am considering buying. That large yield partly reflects REIT rules, which stipulate 90% or more of annual rental profits be distributed to shareholders.

As a major care home provider, Care REIT has considerable long-term growth potential as Britain’s elderly population steadily rises. Average weekly fees here leapt 6.5% over the course of 2024, and could continue to increase strongly as demand ramps up.

The post P/Es below 8 and dividend yields above 6%! 3 bargain UK shares to consider appeared first on The Motley Fool UK.

Buying shares with stong earnings visibility and robust balance sheets can also deliver a strong (and rising) dividend income over time. With this in mind, here are two top dividend shares for investors to consider.

A £20,000 lump sum invested equally across them could — if broker forecasts are correct — provide a £1,600 passive income this calendar year alone.

Remember, however, that this is just an illustration, and that having a diversified portfolio of stocks is important to mitigate risk.

Primary Health Properties

Dividend yield: 7.5%

In return for exclusions on corporation tax, real estate investment trusts (REITs) pay at least 90% of their rental profits out in dividends.

This doesn’t guarantee a decent dividend every year. But unless a catastrophe comes along, it means investors can expect a reliable passive income.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

UK share pickers have around 50 to choose from today. Primary Health Properties (LSE:PHP) is one of my favourites because of its focus on the rock-solid medical property sector.

Whatever economic or political crises may come along, our demand for healthcare services remains largely undimmed. So Primary Health — which specialises in ‘first-contact’ medical facilities like GP surgeries, dentists, and NHS walk-in centres — remains stable every year.

What’s more, around 90% of the company’s rent roll is either directly or indirectly backed by government bodies, providing an added boost to profits visibility.

These qualities provide Primary Health with the financial resources and the confidence to provide a large and growing dividend every year. Indeed, City analysts are expecting the annual payout to have risen again in 2024, representing a remarkable 28th straight year of growth.

In the near term, this property stock’s share price may remain under pressure if interest rates fail to fall substantially from current levels. Higher rates adversely impact borrowing costs and depress net asset values (NAVs), weighing on overall profitability.

But on a long-term basis, I expect it to rise in value as demographic changes increase demand for new healthcare facilities, providing an opportunity for growth.

Care REIT

Dividend yield: 8.5%

Like Primary Health, Care REIT (LSE:CRT) has terrific growth potential in the coming decades. As Britain’s population rapidly ages, demand for care home beds should naturally follow suit.

It’s estimated the number of over-75s in the UK will roughly double over the next half a century.

I’m confident this will provide the foundation for strong and sustained share price and dividend growth at businesses like Care REIT.

Having been in existence for less than a decade, the trust doesn’t have the near-30-year dividend pedigree of Primary Health. But it’s still proven a reliable dividend grower, with shareholder payouts having risen every year since its creation in 2016.

This record is due to Care REIT’s focus on the ultra-defensive residential care sector. But this is not all. Its tenants are tied down on ultra-long rental contracts (the weighted average unexpired lease term was 20.1 years as of September). In addition, 100% of the firm’s leases are inflation linked, allowing it to offset the impact of rising costs on annual earnings.

Despite interest rate sensitivity and labour shortages impacting the care industry, I think this is another top dividend share to consider.

The post Fancy a £1,600 passive income in 2025? Consider these 2 top dividend shares with a £20k lump sum appeared first on The Motley Fool UK.

Here I’m exploring some of the best income stocks for investors to consider buying in the New Year. Here are two of my favourites:

Despite the UK’s great reputation for passive income, dividends are never, ever guaranteed. What’s more, broker forecasts can fail to match reality if earnings disappoint.

That said, if current estimates are correct, a £20,000 lump sum invested equally in these stocks will provide an £1,800 second income in 2025.

I’m confident that they’ll meet current dividend forecasts. And that’s not all. I’m expecting them to steadily grow their dividends over time too.

Take care

Britain’s elderly population is booming. According to Office for National Statistics data, the number of people aged 85 years and over will almost double between 2020 and 2045, to 3.1m.

This provides an enormous opportunity for care home operators like Care REIT. By extension, it also means investors can expect a large and growing dividend income over time.

You see, real estate investment trusts (REITs) have to pay at least 90% of annual rental earnings out to shareholders. So when times are good, they can deliver impressive passive income streams.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

At nearly 9%, the dividend yield on Care REIT shares sail past the FTSE 100 average of 3.6%. But this isn’t the only reason it’s grabbed my attention as a keen value-seeker.

At 79.9p per share, the trust also trades at a 30.8% discount to its estimated net asset value (NAV) per share. This reflects the impact that higher interest rates have had on asset values more recently.

There’s no guarantee that the Bank of England will keep reducing base rates from here. But a broad drop in inflation suggests they could, which in turn could see Care REIT shares rally to narrow this discount.

Renewables giant

My final selection is The Renewables Infrastructure Group. Like the aforementioned REIT, it trades significantly below its NAV per share.

In fact, at 83.4p per share, its discount is almost identical, at 30.5%.

The group also has substantial structural opportunities, in this case growing demand for clean energy. While renewables policy in the US could be less favourable under the returning President-elect Trump, TRIG’s focus on the British Isles and Mainland Europe gives it protection from this threat.

I also like the company’s diversification across wind, solar, and battery assets, which allows it to generate power across the seasons. Finally, the fact that two-thirds of predicted revenues over the next decade have a fixed price per megawatt hour provides earnings (and therefore dividends) with extra visibility.

Keeping wind turbines and solar panels working can be an expensive, earnings-sapping business. And especially so as the number of extreme weather events rises. However, I still believe TRIG could be an excellent dividend stock to consider for 2025 and beyond.

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Here are three great passive income stocks I think share pickers should consider today.

As you can see, their dividend yields for next year smash the Footsie’s 3.5% forward average to smithereens. I’m confident that these companies can pay a large and growing dividend for years to come too.

ITV

ITV’s had a tough few years due to evaporating advertising sales. But with marketing budgets improving, now could be the time to consider buying the broadcasting giant.

Taking a longer term view, there are other reasons why I like ITV shares. The company’s bet big on the fast-growing streaming sector, and it’s paying off handsomely. Third-quarter financials showed streaming hours at its ITVX platform soar another 14%.

Remember though, that high competition from the likes of Netflix poses a threat to future growth.

I also like the huge investment ITV’s made to create a world-leading production arm. Organic revenues at ITV Studios are tipped to rise, on average, by an industry-topping 5% through to 2026.

For 2025, the predicted dividend is covered two times over by expected dividends. This is bang on the widely-regarded safety benchmark.

Inchcape

As a major car distributor, Inchcape’s profits are vulnerable during economic downturns. Sales of big-ticket items are usually the first thing to go when people feel the pinch.

Yet despite these threats, dividends over the next few years look secure, in my book. For 2025, the predicted dividend is covered 2.4 times by expected earnings, providing a wide margin for error.

With operations in 40 countries, the firm enjoys broad geographic distribution that helps reduce risk of profits and dividend turbulence.

Speaking of distribution, I like the Inchcape’s decision to sell its UK retail operations earlier this year and become a pure-play distributor.

Doubling down here — which the firm has described as “higher-margin, more capital‐light, higher return, more cash-generative, compared to retail-only businesses” — bodes well, in my opinion. Improved cash flows could certainly give dividend growth a big boost.

Care REIT

Care REIT — which was until last month known as Impact Healthcare REIT — also enjoys healthy dividend cover, at 2.1 times.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

This adds extra strength to an already-robust dividend stock. As an operator of care and residential homes, it operates in a defensive sector where rent collection’s broadly unaffected by broader economic conditions.

That’s not all. All of its contracts are 100% inflation linked, protecting profits from rising costs. And Care REIT has its tenants locked down on ultra-long contracts (the weighted average unexpired lease term is above 20 years).

Real estate investment trusts (REITs) like this must pay at least 90% of profits from their rental operations out in the form of dividends. While earnings are being dented by higher interest rates, I think it’s worth serious consideration from dividend investors.

The post Forget the FTSE 100! Here are 3 dividend shares to consider for a great passive income appeared first on The Motley Fool UK.

What’s more, UK blue-chip shares have market leading positions, strong balance sheets, and multiple revenue streams. And so they can deliver a solid passive income whatever the weather.

However, the index’s superiority for dividends has eroded in recent years. And it’s possible that buying small caps for a second income might be a better idea. Here’s why.

Better yields

According to Octopus Investments, investors can acquire a better dividend yield by casting their net outside the FTSE 100 and FTSE 250 indexes.

According to the investment giant, the yield on UK small-cap shares for this year sits just below the Footsie average just shy of 4%. However, for 2025, the yield improves to 4.33%.

This beats the averages of 3.97% and 3.88% for the FTSE 100 and FTSE 250* respectively.

Superior cover

Of course there’s more to sensible dividend investing than just thinking about yield. Dividend yields matter for little if brokers’ payout projections are built on sand.

Yet based on dividend cover, dividend forecasts for small-cap shares actually look more robust than those of the broader FTSE 100 and FTSE 250. Dividend cover measures how many times predicted payouts are covered by expected earnings.

Dividend cover for British small caps is above three times for 2024, and moves above 3.5 times for next year, according to Octopus. Both figures comfortably surpass the widely regarded safety benchmark of two times.

A top small-cap stock

Interesting data, I’m sure you agree. But I for one don’t believe investors should simply consider buying small-cap shares for dividends. Payouts at businesses like these can be more vulnerable during economic downturns.

They can also experience extreme share price weakness on the basis of company-specific news, or adverse industry or economic conditions. As always, creating a diversified portfolio can be the best way to go.

One small-cap dividend share attracting my attention today is Impact Healthcare REIT (LSE:IHR). At 7.8% and 8.2% for 2024 and 2025, respectively, its dividend yields are truly gigantic.

Like any property stock, the company is vulnerable to changes in interest rates. Higher rates impact net asset values (NAVs) and push borrowing costs skywards.

But on balance, I think Impact — which owns and lets out residential care homes — is a rock-solid dividend stock to consider. Not only does it operate in a highly defensive market. The business also has its tenants locked down on long rental agreements (its weighted average unexpired lease term is above 20 years).

Under real estate investment trust (REIT) rules, it is also obliged to pay at least 90% of annual rental profits out in dividends. This can make it a reliable and generous dividend supplier over time.

* Figures refer to the FTSE 250, excluding information technology stocks.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

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Here’s why I’d be willing to buy some shares when I next have some investable funds, despite credible challenges to the payouts. And it is always worth remembering that dividends are never guaranteed.

Healthcare properties

Impact Healthcare is set up as a real estate investment trust (REIT), meaning it must return 90% of profits to shareholders. The firm specialises in care homes, and ties its tenants down to long-term, inflation linked contracts.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

At present, Impact owns and operates 138 care homes across the UK. Its potential to grow earnings and returns is exciting for me as the UK population soars and will require care in the years to come.

From a fundamental view, the shares offer a dividend yield of 7.9%. For context, the FTSE 100 average is closer to 3.5%. Furthermore, the shares look good value for money on a forward price-to-earnings ratio of 8.5.

Moving to the bear case, issues in the commercial property sector have occurred due to higher interest rates. These have hurt net asset values (NAVs). However, the bigger challenge Impact faces is potential staff shortages in the care sector. It’s all well and good growing its portfolio and owning many care homes, but they can’t operate without qualified staff. I’ll keep an eye on this, but I believe it won’t be a deal breaker when it comes to shareholder value in the longer term.

Cheers to that!

Premium alcoholic drinks giant Diageo really doesn’t need much of an introduction, in my view at least. As the owner of some of the world’s favourite tipples, with a vast presence, immense brand power, and fantastic track record, I reckon the shares are a no-brainer buy for my portfolio.

Diageo has been coming to terms with economic turbulence in recent months, and this has been reflected in its share price fall, with performance being impacted too. High inflation and interest rates have left many consumers struggling with higher essential bills. Luxuries like premium alcohol aren’t atop the priority list of most, and sales have been falling, especially in the Caribbean and Latin America, two key growth markets.

I reckon these short-term challenges may distort the view of what looks to me like an excellent stock. Firstly, there’s no denying Diageo’s brand power, and there aren’t many firms in its industry that can boast a presence of selling products in 180 countries globally. Plus, as interest rates come down, I reckon spending will increase once more. This could help boost earnings and returns.

The beauty of the recent dip is it has allowed investors like me to gain a better entry point. At present, Diageo shares trade on a price-to-earnings ratio of 16. This is lower than its recent average.

Now for the cherry on top. A dividend yield of 3.8% may not sound mammoth. However, as a Foolish investor, I’m more concerned about consistent payouts. Well, Diageo is nothing if not consistent. The firm has paid a dividend for close to 40 years in a row. It has also increased it for many of those, giving it the deserved moniker of Dividend Aristocrat. However, I do understand that the past isn’t a guarantee of the future.

The post These 2 dividend stocks look like no-brainer buys despite challenges ahead appeared first on The Motley Fool UK.

In the table below are some of my favourites this August.

Dividend yields on these shares exceed the FTSE 100‘s 3.5% average. These businesses also trade on a low price-to-earnings (P/E) ratio, or price-to-earnings growth (PEG) ratio, or both.

A reminder that a PEG ratio below 1 indicates that a share is undervalued.

Here’s why I think investors should consider buying these passive income heroes today.

HSBC

HSBC’s enormous 9%+ dividend yield for 2024 sails above levels seen in recent years. This is thanks to the scheduled payment of special dividends, following on from recent asset sales in Canada.

Dividends are tipped to fall back to more typical levels after this year. However, the bank still carries enormous yields for the next few years. For 2025, for instance, this clocks in at 7.1%.

HSBC’s low earnings multiples reflect the danger it faces as China’s economy toils. Trouble here poses a problem for the bank’s entire Asian territory.

But as a long-term investor, I think HSBC shares are a brilliant bargain right now. Profits here should rise sharply in the years ahead as booming wealth and population levels turbocharge financial services demand.

Impact Healthcare

Impact Healthcare’s another dependable dividend provider year after year. The rents it receives are inflation linked, and its tenants are tied down on contracts of 20-35 years. On top of this, its classification as a real estate investment trust (REIT) means it must pay at least 90% of annual rental profits out in the form of dividends.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Impact Healthcare owns and operates 138 care homes across the UK. And it has a tremendous opportunity, in my opinion, to grow earnings and dividends as Britain’s elderly population soars.

I think it’s a great potential buy, although staff shortages in the housing sector could hamper profits growth.

WPP

Advertising agencies like WPP are struggling due to a recent trimming of corporate marketing budgets. This may remain a problem going forward if global interest rates remain around current levels.

Latest financials showed like-for-like revenues down 1.6% in the first quarter. However, with a potential industry recovery around the corner, I think grabbing a slice of this particular FTSE 100 stock could be a great idea.

I think its share price could soar from current levels, as digital advertising — a segment in which WPP is investing heavily — looks poised for substantial long-term growth.

I’m also encouraged by its sharpening focus on artificial intelligence (AI). Other things I like include its excellent relationship with global blue-chip companies and its huge exposure to both developing and emerging markets.

The post 3 of my favourite, cheap, high-yield dividend stocks this August! appeared first on The Motley Fool UK.

Although dividends are never guaranteed, there are plenty of stocks out there that offer an enticing yield, good prospects of payouts and growth, as well as defensive abilities.

Take Impact Healthcare REIT (LSE: IHR) as a good example. If I had £12,500 spare today, I could buy enough shares to help me earn £1K of additional income. This is based on its current yield of 8%.

Let me explain the investment case behind this particular stock.

Healthcare provisions

Impact is set up as a real estate investment trust (REIT). This means its a business set up to make money from property assets it rents out. In Impact’s case, it provides healthcare provisions, such as GP surgeries, to the NHS, as well as private healthcare firms.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

The beauty of REITs is that these type of trusts must return 90% of profits to shareholders.

Despite a murky economic picture, Impact shares haven’t fared too badly in the past 12-month period. They’re down 1%, from 88p at this time last year, to current levels of 87p.

Pros and cons

I’m a fan of Impact shares, however, there are pitfalls I must mention that could dent earnings and returns.

Firstly, growth is trickier than ever for REITs as they use debt to fund this. Servicing debt is harder at the moment, as interest rates are much higher. Some REITs may be waiting for interest rate cuts, and favourable loan rates, to begin thinking of growth once more.

Next, despite the defensive ability of healthcare, current issues within the NHS present a challenge. These include strikes, accusations of poor working conditions, and the fact that many professionals are leaving the workforce, or country. Impact could have many facilities to rent out, but if there are inadequate staff available, take up of such buildings may be hurt.

From a bullish view, a dividend yield of 8% is attractive, as mentioned earlier. For context, the FTSE 100 average is 3.9%, and the FTSE 250 average is closer to 3.3%.

Next, the shares look good value for money right now on a price-to-earnings ratio of just eight.

Finally, healthcare is an essential for all, no matter the economic outlook. As the UK’s population is rising rapidly, and ageing, I reckon there are plenty of opportunities for Impact to grow. This includes its presence, earnings, and dividends in the future.

Final thoughts

As I said earlier, dividends are only ever paid at the discretion of the business. They can be cut and cancelled to conserve cash. So, it’s important for me to consider buying shares that possess good fundamentals, as well as bright future prospects.

I believe Impact Healthcare REIT ticks all the boxes for me at present. As soon as I have some investable funds, I’d be willing to buy some shares.

The post I’d invest £12,500 in this 1 stock to bag £1K of passive income! appeared first on The Motley Fool UK.