When the market pulls back and the capital gains become difficult to come by, one consolation we have comes in the form of income.
That’s why today, I want to highlight a stock paying a nearly 9% yield (more than double that of 10-year Treasuries, even though they’re at the highest levels in 16 years).
Most importantly, this is not a stock that has been beaten down this year – which would contribute to an outsized dividend yield, though for the wrong reasons.
No, today’s stock is up nearly 10% for the year – below the market, sure – but a sign of stability that you want to see in income-focused stocks.
On a side note, the financial news has been talking about a competitor of this stock that was recently forced to cut its dividend – another sign that this stock is performing well compared to its peers.
Omega Healthcare Investors, Inc. (OHI)
Omega Healthcare is a REIT that owns and operates nursing and assisted living facilities in 42 U.S. states and the UK. Those facilities have nearly 90,000 beds and its real estate portfolio is worth over $10 billion.
On a macro level, the rapidly aging population of the developed world provides secular headwinds for its business model. On a micro level, the REIT has been able to steadily grow its dividend over the couple decades. And although its dividend per share has remained at the same level since 2019, that yield of 8.9% is still extremely attractive.
Plus, despite challenges being faced by healthcare REITs over the past few years (Medical Properties Trust REIT was just forced to cut its dividend in half), Omega Healthcare’s dividends only make up about 90% of its adjusted cash flow – making it well-covered and sustainable. Plus, as evidenced by the last few years, Omega Healthcare has been conservative with raising its dividends, meaning it’s unlikely to see price-destroying dividend cuts in the future.
In short, if you’re looking for a healthy income in the middle of this pullback, Omega Healthcare might be a REIT worth looking at.
To your wealth,
Felix @ Ace of Investing
