Real estate investment trusts (REITs) can be a great way to source a passive income over time. Sector rules state that at least 90% of annual rental profits be paid out to shareholders. That’s in exchange for helpful breaks on corporation tax.
But even by these standards, Primary Health Properties (LSE:PHP) is an extra special investment trust. This is because dividends here have risen every single year since the mid-1990s. Not even economic downturns, banking crashes, and pandemics have derailed its ultra-progressive dividend policy.
Yet Primary Health shares have slumped 15% in value from their highs of 109.5p for 2026. The good news is this has pumped the forward dividend yield up to 7.9%, one of the highest among the UK’s listed REITs.
The question is, is this FTSE 250 dividend champion now too cheap to miss?
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Growth opportunities
I hold Primary Health shares in my Self-Invested Personal Pension (SIPP). So you’ll probably already have an idea of where I’m leaning here.
So let’s get discuss the good things before dealing with the risks. For me, the main attraction is the trust’s focus on the ultra-defensive medical property segment.
This REIT owns 1,142 properties such as GP surgeries, diagnostics centres, and community hubs. As Primary Health itself notes, its portfolio enjoys “strong fundamental demographic characteristics, supported by a positive political backdrop and the need for greater investment in healthcare infrastructure to support the delivery of services in local communities.”
In other words, the trust is benefitting from:
- Growing demand for healthcare services as the UK population rapidly ages
- Government policy that prioritises primary healthcare facilities to cut costs and hospital waiting times
- Years of underinvestment that creates a significant opportunity for capacity growth and the creation of up-to-date facilities
Defensive star
I’m confident these factors could fuel healthy dividend growth for years to come. However, that’s not the only reason why I love this trust’s focus on healthcare.
Unlike REITs that operate in more cyclical sectors, Primary Health trust doesn’t have to worry when economic conditions worsen. That’s especially important today as the UK economy heads towards ‘stagflation’ (low growth and high inflation). Occupancy levels were an impressive 99% in 2025, underlining its resilience.
But as I say, there are risks of buying Primary Health shares. With the Middle East conflict dragging on, the Bank of England could hike rates in the near term to control inflation. This could supercharge the trust’s borrowing costs, and explains that recent share price decline.
A top REIT at low prices
But I’m confident inflationary pressures won’t harm the trust’s ability to keep paying large and growing dividends. In fact, with roughly 40% of its rental contracts linked to RPI, it’s well placed to weather a period of high inflation.
Along with having that near-8% dividend yield, Primary Health shares trade at a 7% discount to its net asset value (NAV) per share of 99p. Is it one of the best cheap dividend stocks for investors to consider today? I think the answer’s an emphatic yes.
