Omega Healthcare: No Hassle REIT

09/18/2015 7:00 am EST

Focus: STOCKS

Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Investing directly in rental properties has many challenges; however, the stock market provides a 'no hassle' alternative through real estate investment trusts, explains Mark Skousen, editor of Forecasts & Strategies.

As a REIT investor, you have no property management duties. Rather, all you do is invest in these publicly traded trusts, sit back, and receive rental income from a diversified portfolio of commercial or residential properties.

Moreover, if their properties rise in value, you benefit from a rising stock price and capital gains over time.

Sometimes there are tax advantages; part of the quarterly distributions may be treated as long-term capital gains. And you have liquidity. You can sell your investment at any time. What’s not to like?

There are dozens of income-producing REITs to choose from, many of which pay an above-average yield of 5% or more and have adopted a rising dividend policy.

Omega Healthcare Investors (OHI), the country’s largest REIT in the skilled-nursing sector, is making a comeback.

It has grown rapidly through domestic acquisitions and also buying assisted-living facilities abroad. It also has extended its record of paying dividends for more than 13 years in a row.

Admittedly, the assisted-living sector is one of the riskiest sub-sectors in the healthcare space because of its reliance on government reimbursement.

But among skilled-nursing REITs, Omega is larger and more diversified than most and has a longer track record for increasing dividends.

Omega Healthcare currently pays a dividend of 55 cents per share every three months, for an average yield of 6.1%. It has increased its dividend 12 times in a row.

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