Nearly at the end of another week and I’ve noticed this apartment, that i thought would round things off properly. It’s today’s block of apartments and the property is very nicely presented, the individual living has certainly adored it and taken care of it there. If you bought it, you certainly wouldn’t need to do any work to it.
This property is on the marketplace for £180,000, which is very much like other similar properties accessible in the town centre, it has the added bonus of experiencing allocated car parking also, which is like gold dust! Similar properties to the have rented for around £800 – £850 pcm. Even though you base your calculations on the lower figure to play safe, you will be taking a look at a potential gross produce of 5.3% per calendar year.
A major reason behind this decision is that lots of of these specialties, such as skilled medical and senior casing, will probably take advantage of the aging populace in the U.S. The number below (taken from an HCP demonstration) shows the projected U.S. 65 years or old until 2050. This strong demographic pattern bodes well for health care REITs. Among the 12 health care REITs listed by NAREIT, 5 are on the Dividend Champions, Contenders, and Challengers list for having at least 5 consecutive many years of dividend growth. These REITs are HCP (HCP), Health Care REIT (HCN), National Health Investors (NHI), Omega Healthcare Investors (OHI), and Universal Health Realty Income Trust (UHT).
In the rest of the post I’ll compare some quantitative data from these REITs. Properties: The desk below shows the percentages of properties in different categories owned by each REIT. HCP seems to be the most diversified; HCN, NHI, and UHT are relatively less diversified, each having at least 50% of their properties within a category; OHI is minimal diversified, being focused entirely on skilled nursing almost. Dividends: The table below indicates the current dividend yield, the 5-year historic yield (from Morningstar), the payout ratio (based on funds from operations, FFO), the dividend growth streak in years, and the 5-year dividend growth rate (DGR).
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All 5 shares have produces near or above 5%, which is fantastic. However, in each case the existing yield is below the historic yield. Despite the fact that REITs are required to pay out a high proportion of their net income, it is worthwhile considering their payout ratios. HCP and OHI both have payout ratios below 80%, which gives more of a buffer against an operational decline weighed against the others.
HCP and UHT are both Dividend Champions, having increased their dividends for further than 25 consecutive years. Balance sheets: The desk below provides some information about debts and credit (taken from NAREIT) and Value Line safety rankings if available. NHI has the best personal debt ratios, whereas HCP has the best credit history. Long-term personal debt has increased within the last few years in every situations (not shown in the desk), likely due to low interest rates unusually. Predicated on P/FFO, one might consider OHI to be moderately undervalued; HCP and UHT to be undervalued to fairly respected slightly; HCN and NHI to be respected to slightly overvalued fairly.
Based on P/B, OHI actually shows up overvalued (as will NHI), whereas the others appear to be valued fairly. The DDM calculations give a little margin of safety to each stock; considering that none of the margins are higher than 10%, it might be conservative to guage all 5 stocks as respected by that measure fairly.
Summary: From the healthcare REITs briefly surveyed here, there are two that I consider to become more attractive investment opportunities than others: HCP and OHI. Regarding HCP, I love its long dividend growth background, low payout ratio, relatively high credit rating, reasonable valuation, and good property diversification; however, I dislike its weakened dividend development rate.