Dividends Under $60: Don’t Miss This 7.1% High-Yield Stock

There are plenty of dividend stocks in this market, but very few are trading at bargain-basement prices and offer solid yields and upside potential. Healthpeak Properties (NYSE:DOC) is one of them. DOC stock is a great recovery bet as it is down almost 54% from its 2021 peak, but could bottom out very soon. And you’re rewarded with a 7.16% dividend yield for holding it.

The stock is mostly down due to higher interest rates, plus fears pertaining to real estate investment trusts. There has also been a recent merger last year, and its ripple effects have caused some near-term volatility.

Why Healthpeak Properties Is a Good Buy Now

Most of the cons related to this stock have already been priced in. In fact, many investors now see the stock trading at a big discount. In the long run, it could deliver triple-digit gains if DOC stock sees a full recovery.

Investors have cashed out of REITs due to continuing fears of a possible recession. However, you should keep in mind that Healthpeak is more shielded than your typical REIT. Most of its money comes from renting out labs, medical, and senior-care properties. These are more recession-resistant than offices, retail, and hotels. Plus, REITs have learned a lot from the Great Recession, and stricter regulations nowadays make it less likely they’ll see a big hit. Real estate has been surprisingly resilient.

Tailwinds Are In Sight

Interest rate cuts starting in September are being priced in. This company’s net interest loss was $280.4 million in FY 2024, vs. a net income of $243.1 million. The earnings are still enough to cover dividends, with a 67% payout ratio. As interest rates go down, there will be much more room to expand these dividends and restart growth.

Rate cuts should immediately cause the stock to trade at a higher price, barring dividends. It will relieve both earnings and make the dividend yield more competitive compared to Treasuries. Plus, REIT stocks in general will become more attractive due to increased demand for real estate.

54.5% of its adjusted net operating income (NOI) comes from the Outpatient Medical segment, which grew 5% in Q1. The Lab segment grew 7.7% and constitutes 34.7% of NOI. The Continuing Care Retirement Community (CCRC) constitutes 10.8%. This CCRC segment could drive even more growth. The management has already pointed out that it is offsetting weakness elsewhere with strong growth. “Our senior housing portfolio had another strong quarter of occupancy and rental rate growth, driving positive 16% same-store growth,” according to its CEO, Brinker.

The long-term growth here is quite underestimated. The healthcare sector is seeing significant demand from an aging population, and the trends are only expected to accelerate. The 80-plus population is expected to nearly double in the next decade.

Healthpeak Properties Is Insulated From Tariffs

Healthcare is one of the few sectors that can weather the tariff storm. Even if tariff rates are at 30% and can rise to over 40% for many countries, healthcare providers still retain the pricing power and flexibility to pass those costs on due to the essential nature of these businesses.

Plus, Healthpeak makes 100% of its revenue from the United States. That in itself is a big positive in the current environment.

The company did note that its segment with biotech customers has seen some volatility due to comments made earlier by President Donald Trump and uncertainty regarding tariffs. However, Healthpeak is still out of the direct line of fire. And while biotech companies have seen some jitters, they are starting to stabilize.

Comments about bringing drug prices down and the executive order pertaining to it are unlikely to crush biotech companies. Similar efforts were made in 2020 and were quickly blocked by courts. It’s also very difficult to enforce, so there haven’t been drastic price cuts.

DOC Stock Has Solid Upside Potential

I see DOC stock staging a sustained rally as rate cuts kick in. It trades at prices not seen in over a decade. The forward price-to-FFO is at just 9.2 times, well below historical multiples around 15x.

The average one-year price target is at $21.85, implying 28.15% upside potential. The highest price target goes to $25, and even the lowest price target at $18 gives you decent upside if you include the dividends. A Morningstar analysis calculated its net asset value (NAV) to be around $26 per share.

Price targets have recently trended lower due to the Federal Reserve’s “higher for longer” posture. A post-pandemic construction boom created a temporary supply overhang in key lab markets just as venture funding to biotech slowed. That said, I expect lower interest rates to significantly ramp up biotech investments and demand from that sector.

All segments are already growing at acceptable rates, and interest rates are holding back a recovery. I’d buy and hold DOC stock and collect those dividends, and wait for those inevitable rate cuts.

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