Micro Blog #18: My Q4' 2017 REIT Dividend Update For OHI, WPC, and O

In this post, I will give you a brief dividend related highlights on three of my REIT holdings OHI, WPC, and O based on the latest earnings report.

Omega Healtcare (OHI)
  • Mgmt. is proud of their unprecedented streak of 22 straight quarterly dividend increases.
  • They are also confident in the payout percentage coverage and the sustainability of current dividend of $0.66/share per quarter.
  • Mgmt. does not see 2018 as a growth year and do not expect to increase the dividend.
My Notes: Dividend is frozen for rest of the year. Company is facing some major headwinds with two of their operators Orianna and Signature. Dividend is barely covered for now, any further deterioration to AFFO or FAD can put dividend in jeopardy. I have trimmed my OHI position to half when the issue first came to public few months ago, I will continue to monitor and hold my current position till next earnings report.

W.P. Carey (WPC)
  • Mgmt. announced completion of 20th year of rising dividends.
  • Maintaining conservative payout ratio of 76%.
My Notes: Mgmt. is proud of their 20th year of rising dividends and conservative payout ratio. Other than that there was no other mention of dividend. I think it's a positive sign that company is moving along and doing well and mgmt. saw no need to harp on dividend sustainability.

Realty Income (O)
  • Increased dividend by 4% this year, have increased dividend since 1994.
  • Mgmt. proud to be one of the only five REITs in S&P High Yield Dividend Aristocrats Index.
  • 2017 payout ratio of 82.6% was the lowest ratio since 2007.
My Notes: Mgmt. overall pleased with the company's performance and remain optimistic for 2018. They are very proud of their dividend history and aristocrat status, which is always good to hear for a dividend investor. There was no other mention of dividend in the ER. It looks like business as usual.

Disclaimer: The quarterly highlights are based on each company's latest earnings report transcripts or press releases. I do not take responsibility for the accuracy of the information presented in this article, please do your own due diligence before investing in any of the stocks mentioned here.  

Comments

  1. Nice summary Mr. ATM. I have looked at OHI, but never purchased and glad I didn't. It is interesting your comments are so different than managements. This REIT sector seems to be struggling even though all the health care trends run in their favor. If you could only own one REIT in this sector, which one would you choose?

    I have a small position in WPC. I bought them hoping they could replicate the success of O, which is a larger position of mine as you probably know. Tom

    ReplyDelete
    Replies
    1. Hi Tom,

      Well management always tries to put a positive spin, so I try to focus on dividend health and try to determine for myself whether dividend is at risk or not.

      Many of these healthcare REITs are struggling because govt. is tightening up regulations and oversights on payments to medicare/medicaid. SNF (Skilled Nursing Facilities) are specially hit hard due to their mostly govt. payed model.

      I own OHI, VTR, and HCN, in the healthcare REIT sector and only follow them.

      OHI is mostly SNF, where VTR has spun-off its SNF facilities by selling or spinning-off those troubled assets. I'm still holding VTR as now they seem to have less risky assets.

      HCN (Wlltower) on the other hand, is focusing on private pay and senior housing. It also has diversified its portfolio outside of US to Canada and UK. They have frozen their dividend for this year, but I think that is simply management being prudent. It doesn't seem dividend is at risk.

      So, to answer your question, if I were to pick one of these REITs, I would pick WellTower which is trading near its 5-yr lows. BTW, they just announced they are changing their ticker to WELL on Feb. 28.

      Delete
  2. Thanks for your thoughts. I have smallish positions in both VTR and HCN and plan to hold for the forseeable future. I owned both the during the times I looked at OHI and mainly passed because I didn't want a 3rd stock in the same REIT subsector for diversification purposes. Tom

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