Stay WELL with this Healthcare REIT

08/27/2019 5:00 am EST

Focus: REITS

Ned Piplovic

Assistant Editor, Eagle Financial Publications

Welltower (WELL) is a real estate investment trust that invests in healthcare infrastructure. The company offers infrastructure funding to leading senior housing operators, post-acute providers and health systems, notes income expert Ned Piplovic, editor of DividendInvestor.

The post-acute care segment provides rehabilitation centers that specialize in treating patients recovering from illness or surgery. The outpatient medical segment offers facilities for performing minor medical procedures that do not require a hospital environment.

These facilities are generally more conveniently located, easier to access and provide a higher level of customer service. The company changed its name from Health Care REIT to Welltower in September 2015 and also changed its ticker symbol in February 2018 from “HCN” to “WELL”.

As of June 2019, the company owned and operated a total of 1,434 facilities in 46 states and the District of Columbia. Additionally, Welltower also owned and operated 155 facilities in Canada and 121 facilities in the United Kingdom.

Prior to pausing its annual dividend hikes in 2016, the company advanced its dividend payout nearly 50% over 15 consecutive annual dividend hikes. This advancement is equivalent to an average annual growth rate of 2.7%.

Even with the additional dividend hikes misses — in 2002 and 2003 — Welltower still has enhanced its annual dividend amount nearly 70% since 1997 and still managed to maintain an average growth rate of 2.3% per year for the last 22 years. The current $0.89 quarterly dividend converts to a $3.48 annual distribution and a 4% forward dividend yield.

Welltower positioned itself to take advantage of the aging population and increasing healthcare expenditures in the United States, Canada and the United Kingdom.

Furthermore, with the weakening global economies and even concerns over the economic growth in the United States, Welltower’s business model might be an opportunity for investors to diversify their portfolios.

Central banks are reducing interest rates on fears of an economic downturn. In low interest rate environments, investors seek alternative opportunities to move their capital.

Traditionally, real estate, as well as the utilities sector, have offered these alternatives. Welltower combines the advantages of real estate investments with the expanding demand for housing and care facilities in the health care sector.

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