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Skousen's "Sleep Well" Stocks

07/12/2016 7:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Long before it became popular, we built our formula for financial success on a simple but powerful methodology: invest in quality companies in growing sectors that pay high and rising dividends, asserts Mark Skousen, Forecasts & Strategies.

We call it “peace of mind” investing, or “sleep well at night” investing. Buying into these companies that also pay high and rising dividends has paid off. It has worked over the long run, and it’s working this year.

Our portfolio is beating the market, largely thanks to those dividends coming in. For example, last month, medical insurer UnitedHealth Group (UNH) boosted its dividend dramatically.

Shareholders will see their quarterly dividend rise 25%, from 50 cents per share to 63 cents per share. Counting dividends, we’re ahead 18% year to date. The stock yields 1.8% yield.

Despite setbacks with Obamacare-related state health insurance exchanges, giant health insurer UnitedHealth is on a roll, with earnings rising 25% to almost $45 billion in the first quarter, and net profit jumping 14% to over $1.6 billion.

Cash flow is also rising steadily. Its Optum health services and pharmaceutical division has been outstanding.

I also expect Omega Healthcare Investors (OHI) — which yields 7% — to increase its dividend when it reports earnings in early August. The skilled nursing home real estate investment trust has been increasing its dividend consistently.

The stock price is down slightly for the year, largely due to the fact that Omega relies heavily on Medicare, which is moving from pay-for services to bundled services.

The move will save the government a lot of money, but could hurt revenues for nursing homes like Omega in the next year or two.

Over the long haul, however, demand for nursing homes can only increase, which ultimately will benefit Omega Healthcare.

I my view, investors should continue to invest in the booming healthcare industry through UnitedHealth Group and Omega Healthcare Investors.

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By Mark Skousen, Editor of Forecasts & Strategies

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