Passive income doesn’t get much more dependable than Primary Health Properties (LSE: PHP). In a week where the NHS announced rewards for walking as an exercise, the firm declared its 30th consecutive year of dividend growth.

That’s a record no other UK real estate investment trust (REIT) can match. And with a 7.4% dividend yield, it might be worth a look for income-seeking investors.

The record and the cover

The first quarterly dividend of 1.825p puts PHP on an annualised 7.3p, up from 7.1p in 2025. With the stock just below 94p, that’s a 7.4% yield.

There is however, a caveat. Cover’s thin – the firm distributes roughly 100% of its adjusted earnings, which means if those fall, it’s going to be hard to maintain returns.

REITs often have high payout ratios. It’s due to the requirement to return 90% of their taxable income as dividends, which comes in exchange for tax advantages.

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The big question for investors then, is whether those earnings can be maintained. I can see good reasons for thinking they can.

Around 90% of the firm’s rental income comes from government bodies in the UK and Ireland. And long leases with low vacancy periods are a strong sign of durable returns.

Key metrics

Primary Health Properties owns around 900 modern primary care buildings across the UK and Ireland. These are things like GP surgeries, health centres and diagnostics hubs. 

They’re purpose-built facilities the NHS can’t easily leave, which is why occupancy is strong. And a recent merger roughly doubled the size of the portfolio.

In these situations, it’s always worth looking closely at what’s going on. Some of the key metrics are the following:

• Organic contracted rent roll growth of 3.4% annualised, up from 3.2% in 2025.
• £7.8m of the £9m post-acquisition cost synergy targets already delivered.
• Leverage heading back into the 40%-50% loan-to-value target range.
• EPRA net tangible assets of 99p per share.

The loan-to-value is higher than most UK REITs, which implies a highly leveraged balance sheet. And the stock’s currently trading close to the value of its net tangible assets, so cheaper alternatives are available.

Both of those are important. But the question for investors is whether the unusually reliable nature of the firm’s tenants and the high predictability of its future income mean it’s worth it.

So is it worth it?

Even within the REIT sector – which is mostly associated with passive income – different investors focus on different things. Some prioritise long-term security over growth, while others are the opposite.

A number of UK REITs look interesting to me from a turnaround perspective. If things go right for them, they could generate huge returns – but there’s a lot that can go wrong on the way.

Primary Health Properties is right down the other end of the spectrum. High occupancy rates, long leases, and stable tenants make the stock well worth a look for investors primarily on the hunt for reliable passive income.

At today’s prices, a £10,000 investment in Primary Health Properties could return £740 a year. And I’m not ruling out the possibility of that going higher.

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Stephen Wright does not own shares in any of the companies mentioned.