High Dividend Stocks — Health Care REIT (HCN)
Market Cap: $17.0 billion
Dividend Yield: 5.5%
Sector: Real estate
Dividend investors love real estate investment trusts (REITs). These companies are a special class of business required to pay out most of the earnings as dividends in exchange for certain tax benefits.
But while real estate broadly may be a bit risky after the mortgage meltdown, Health Care REIT (HCN) has a focus that keeps it rock solid. As the name implies, Health Care REIT focuses only on healthcare-related properties including senior housing, long-term care and medical office facilities.
What with an aging Baby Boomer population and the push of Obamacare, the tenants in HCN properties have no shortage of “customers” these days — and that means reliable leases, reliable revenue and reliable dividends to investors as a result.
Health Care REIT has underperformed lately after a big acquisition spree (led by the $845 million buyout of Sunrise) increased costs, pinching profits. In fact, last year, the company paid out more dividends than what it earned in after-tax profits.
But long-term, the buyouts will serve HCN well as it increases market share and gets scale with these new properties. It remains one of the highest-yielding dividend stocks in the S&P 500 and will be a stable income investment for years to come.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.