Dividend Stocks to Buy for Double-Digit Returns: Omega Healthcare Investors (OHI)
Dividend Yield: 7.3%
I’m the first to admit that I don’t have a clue what direction the stock market is going to go over the next year, let along the next decade or more. At the end of the day, you’re attempting to forecast human emotions, and it’s hard to handicap something so inherently irrational.
But demographic trends are another story.
By looking at a simple chart of Americans by age, you have a really good idea what demand for a lot of products will look like. And this brings me to my next double-digit return candidate, Omega Healthcare Investors Inc (NYSE:OHI). Omega is a triple-net REIT that owns skilled nursing and assisted living facilities.
I should make an important distinction here. Omega is not in the business of running old folks’ homes. It’s the landlord for companies running old folks’ homes. You might think this doesn’t matter, but I assure you it does. These businesses are highly dependent on Medicare and on private insurance companies. So changing reimbursement rates can have an outsized impact on profits. But even if the shekels get tight, they’re still going to pay their rent. Which is why I consider Omega a fantastic long-term holding.
At current prices, Omega yields 7.3%. And importantly, it raises its dividend 8%-9% per year. Between the high current yield and the dividend growth, I think it’s safe to say that Omega should easily deliver double-digit returns over time.