Dividend stocks that make me a passive income could help me beat rising inflation levels. One dividend stock I like the look of for my holdings is Primary Healthcare Properties (LSE:PHP). Here’s why.
Real estate investment trust (REIT)
PHP is a REIT. It specialises in owning, developing, and renting out modern primary healthcare facilities in the UK and Ireland. An example of a primary healthcare facility is a GP surgery.
A REIT is set up in a specific way to make money from income-producing real estate. As an investor, I can access the property market through investing in a REIT but don’t have to buy or manage the property in question. REITs can be an excellent dividend stock to help make a passive income. This is because they must return a large chunk of profit as dividends to investors. In fact, I already own other REITs as part of my holdings.
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PHP shares are currently trading for 152p. At this time last year, the shares were trading for 148p, which is a 2% rise. More recently, however, the shares have rallied 16% from 131p in February to current levels. Global markets dropped when the tragic events in Ukraine began to unfold.
A dividend stock I’d buy for my holdings
PHP’s dividend yield currently stands at over 4%. The FTSE 100 average yield is 3%-4%. PHP’s yield is better than this and I only expect it to grow, especially as performance has continued to grow.
At current levels, PHP shares look reasonably priced to me. The shares sport a price-to-earnings ratio of just 15, as I write.
PHP’s performance has been excellent, recently and historically. I do understand that past performance is not a guarantee of the future, however. Last month, PHP released its annual report for the year ended 31 December 2021. The results made for excellent reading. Net rental income increased for the fourth year running and PHP’s dividend also increased for the fourth year running. PHP’s portfolio increased in size and value too. With performance growing, I expect PHP could be a lucrative dividend stock for the foreseeable future.
Finally, PHP likes to acquire other businesses to grow and supplement its offering. I like businesses that do this as it often means they have ambitious targets for growth and earnings. This could lead to further earnings and more dividends for me.
Risks and my verdict
No dividend stock, no matter how good it looks on paper, is immune to risks. PHP is no different. Currently, PHP is thriving and primary healthcare properties are in high demand. PHP’s progress could come under threat from the rise in virtual healthcare facilities. These disruptors offer people access to doctors and healthcare facilities through the use of mobile and tablet devices. There is no need for properties or facilities that PHP offers. If the virtual healthcare trend takes off, PHP could see its property uptake and performance affected.
Overall, I think PHP is a dividend stock that will help me beat inflation and make me a handsome passive income. It has a good track record of performance as well as showing signs of growing its business organically as well as through acquisitions. I will be adding the shares to my holdings.
