Healthcare stocks (XLV) have gained 14.5% over the last year, thereby keeping pace with the overall market as measured by the S&P 500 (SPY) which gained 15.0% over the same time period. However, there are a variety of reasons why healthcare REITs have significantly underperformed, many of them delivering negative returns, as shown in the following table.
The 3-month total return for most healthcare REITs has been ugly. The group has pulled back as interest rate expectations have increased and investors have been selling “safe-haven” stocks in general. However, two mega-trends underlying the healthcare REIT group remain intact. And in addition to reviewing these mega-trends, this article provides high-level data for more than 20 big-dividend healthcare REITs, and then highlights three specific opportunities that we believe are worth considering.
Big-dividend REITs have underperformed the rest of the market, particularly since the election, as interest rate expectations have increased, and investors have sold “safe-haven” stocks in favor of more aggressive-growth sectors. In our view, this has created some attractive investment opportunities. This article provides data on 60 Industrial and Retail REITS yielding over 4%, and also highlights a few of our favorites.
The recent pullback in big-dividend REITs may have created the buying opportunity that many income-focused investors have been waiting for. Specifically, REITs have declined 10% since August 1st (as measured by the Vanguard REIT ETF, VNQ) whereas the overall market is down only 1% (as measured by the S&P 500). Rather than buying the Vanguard REIT ETF, we have compiled a top 10 list of attractive big-dividend REITs that we believe are worth considering.
Annaly may have the financial wherewithal to maintain its big dividend (11%) for more than the next few quarters, but its asset value and share price are in peril, and so is the company’s long-term dividend sustainability. The recent Hatteras acquisition is an ominous reminder of the atrocious yield curve and Annaly’s shrinking balance sheet. The upcoming REIT sector creation and approaching Fed interest rate hike may put a damper on this year’s dividend-stock hype.
HCP Inc. is an attractive big-dividend (6.0%) healthcare REIT that has been plagued by ongoing challenges with its largest tenant, HCR ManorCare. This week we received new information on HCP’s plans to spinoff HCR ManorCare into a separate REIT (Quality Care Properties). We continue to believe the spinoff is a smart decision that will unlock value by giving HCP shareholders exactly what they want, while simultaneously buying time and options for HCR ManorCare.
With central banks around the world holding interest rates artificially low, income-hungry investors are often drawn to the big dividends and low volatility provided by many real estate investment trusts (REITs). For some perspective, the following table shows how the volatility of big dividend REITs compares to the volatility of other high yield investments.
This past Friday (6/10) was not a good day for high yield stocks as the market was in a risk-off mood. This article includes a table highlighting 50 stocks, yielding over 5%, that experienced large 1-day price declines on Friday. And of the 50, we believe five currently offer particularly attractive investment opportunities for income-seeking investors. Here are the five...
Artificially low interest rates by central banks around the world continue to make it challenging to find attractive yield. With that in mind, we have provided detailed analysis (and reports) for twenty big yield investments that we believe are worth considering. The list includes common stocks, preferred stocks, REITs, MLPs and BDCs, and we’ve broken it down into two groups: (1) Big yield investments with low volatility, and (2) Big yield investments with higher volatility and higher price appreciation potential.
We like HCP’s big dividend (7.0%), risk profile, and long-term prospects. We also believe its recent decision to spinoff its riskier HCR ManorCare assets is a smart one because it will help HCP maintain its dividend aristocrat status and it will also attract a wider overall investor base. If you are a long-term income-focused investor, HCP is worth a closer look.