A Trio of Healthy REITs

05/28/2015 9:00 am EST

Focus: REITS

Richard Stavros

Analyst, Global Income Edge, Utility Forecaster and Personal Finance

Now is a particularly good time to buy real estate investment trusts, suggests Richard Stavros, editor of Global Income Edge, a newsletter which recently introduced a new REIT portfolio.

We carefully screened the REIT universe to come up with strong candidates based on diversification, size, occupancy rates, growth, market valuation, and dividend and earnings history.

Included in our portfolio are three healthcare holdings. We believe healthcare REITs are the best investment within the REIT category right now and for the foreseeable future.

The graying of America represents the best bankable demographic trend in the income-investing world.

The elderly population in 2030 will be twice as large as in 2000, increasing from 35 million to 72 million and constituting nearly 20% of the total US population, according to an analysis by Galliard Capital Management.

Omega Healthcare Investors (OHI) provides financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities in the United States. 

OHI is one of the most solid healthcare REITs, having delivered consistent annual growth in dividend, revenues, and funds from operations for five straight years. OHI yields 3.7% and is a buy up to $45.

HCP (HCP) is the number-three best buy for our Conservative Portfolio and a member of Standard & Poor’s 500 Dividend Aristocrats for steadily increasing its dividend for 29 years.

The premier healthcare REIT, HCP owns or holds interests in $22 billion worth of healthcare-related properties.

Senior Housing Properties Trust (SNH) owns independent living and assisted living communities, nursing homes, wellness centers, and medical office, clinic, and biotech laboratory buildings throughout the United States.

Most of SNH’s tenants are triple net leased, which reduces management costs and makes the trust’s cash flow steadier.

With triple net leasing, each tenant pays rent and is responsible for all taxes and insurance as well as operating and maintenance costs. Its current yield: 7.13%. SNH is a buy up to $30.

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