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Major Well being Properties (LSE: PHP) has offered very good passive revenue by means of 28 consecutive years of dividend rises, and we’re taking a look at a 7% dividend yield forecast for 2026. And that ought to rise to 7.3% by 2027 to mark 31 years of will increase, if present forecasts are correct.
What’s extra, taking a look at earnings forecasts for the subsequent few years, I see an honest probability for share worth progress from this actual property funding belief (REIT), too.
Please observe that tax therapy depends upon the person circumstances of every shopper and could also be topic to alter in future. The content material on this article is offered for data functions solely. It’s not meant to be, neither does it represent, any type of tax recommendation.
Actual property weak spot
The above chart exhibits the share worth hasn’t had an incredible 5 years. However that appears largely as a result of downturn in actual property sentiment amongst traders. With rates of interest excessive and mortgages costly, all the things from builders to brickmakers have suffered. Has the market overreacted? I believe so, and with share costs depressed, I charge 2026 as a good time to think about shopping for.
Within the case of Major Well being Properties, we’re taking a look at medical centres and associated well being institutions. They’re leased on long-term contracts, with the NHS a serious shopper. As a part of that, a lot of its rental revenue is tied to inflation. And with most of its rents backed by authorities, I discover it onerous to think about a extra defensive passive revenue funding.
Regular dividends
The belief’s shopper base additionally helps with one other factor. REIT guidelines imply Major Well being has to pay not less than 90% of its rental income in dividends. In every other industrial rental enterprise, that might put the dividend at critical danger. Simply take into consideration retail centres and workplace buildings hit by financial downturns.
This doesn’t assure the annual payout — no dividend ever will be assured. Something depending on the NHS is all the time on the mercy of political change. Weak property costs, coupled with excessive mortgage curiosity, will also be a little bit of a burden. And property is one thing that might hold some traders away for a while.
Fears overdone
However I reckon fears associated to property valuations are overblown. At 30 June 2025, the corporate had a loan-to-value ratio of 48.6%. And its common price of debt was a reasonably modest 3.4%. Web financing prices within the half got here to £25.7m, which nonetheless left a really wholesome £61.9m revenue earlier than tax.
On the time, CEO Mark Davies spoke of “a pivotal time for our sector“. He added: “The bettering rental progress outlook and a stabilisation of our property yields at 5.25% sign that we’ve moved by means of a key inflexion level within the property cycle with a really encouraging outlook forward.“
Acquisition success
I’m additionally optimistic in regards to the long-term success of Major Well being’s acquisition of Assura. In October, the Competitors and Markets Authority concluded there are not any competitors considerations. It means the 2 companies will be totally built-in. And that might save not less than £9m in price efficiencies.
All in all, I believe the present valuation of Major Well being Properties — with a forecast price-to-earnings (P/E) ratio of below 10 — is sufficient to offset the property-related danger. And it may very well be among the best for passive revenue traders to think about in 2026.
