A full-scale recession is unlikely at this point, so we remain fully invested in high dividend stocks as well as several disruptive technology ideas, notes growth and income expert Mark Skousen, editor of Forecasts & Strategies.
Omega Healthcare Investors (OHI), the Maryland-based assisted living real estate investment trust (REIT), is trading at a 52-week high, up 35% so far this year, and still looks relatively cheap. OHI trades for just 11.3 times earnings (funds from operations).
Last month, Omega reported quarterly funds from operations (FFO) of 77 cents per share to beat analysts’ consensus expectations. OHI has beaten Street expectations four quarters in a row for both revenues and earnings. The company’s outlook is upbeat.
Earnings have jumped 74% in the past year. Health care real estate is booming, due to the baby boomer generation reaching retirement age. The 85-and-older crowd is expected to double in the next 20 years. Omega is well positioned to benefit from this aging trend.
The two main risks facing Omega Healthcare are rising interest rates (Omega has $4.6 billion in long-term debt) and future revenues linked to government reimbursements like Medicare and Medicaid. If these programs are ever cut, it could hurt their bottom line.
Omega pays a relatively high dividend of 66 cents per share, or 7.48% annualized yield, representing a sustainable 87% payout ratio. Last year, Omega Healthcare’s management decided to maintain its quarterly dividend at 66 cents per share, and ever since then, the stock price has soared.
I think the stock has more room to run. It still is far below its all-time high of nearly $44 a share back in January 2014. Keep buying.
Teladoc Health (TDOC) should benefit from aging populations across the world. Governments and private payers are looking at ways to help control health care costs.
And it has expanded rapidly into 125 countries and new virtual-care services. Its products include a wide range of options, from general medical and pediatric care to behavioral health, dermatology, lab testing and tobacco cessation.
In its most recently quarter, Teladoc reported a sharp 60% increase in sales over the past year, and significantly reduced its losses in the third quarter to 36 cents per share. It now has paid membership in the United States of 22.6 million, up 18% over the past year. Visits to Teladoc’s website grew 110% year over year.
Around 40% of the Fortune 500, the largest U.S. companies, are Teladoc customers. The company has teamed up with more than 35 top health plans and over 290 hospitals and health systems. It recently landed a partnership with CVS Health to offer telehealth services through the pharmacy retailer’s walk-in clinics.
The stock price initially rose on the news to over $70 a share but fell back down in sympathy with the overall decline in tech stocks. I still like its long-term outlook. I see no reason why Teladoc can’t be up to $100 by next year. As the Motley Fool says, Teladoc is likely to dominate the future so much that it qualifies as a “stock to buy and hold for the next 50 years.”
