20 Healthcare REITs Yielding Over 4%

The key takeaway here is that healthcare real estate may become increasingly owned by REITs, and this creates a lot of opportunity for healthcare REITs to grow. There is a long runway for growth before the space even begins to approach saturation, especially compared to multi-family housing, malls, and hotels.

Company Specific Opportunities:

The following table provides additional data points for the 20+ healthcare REITs shown in our earlier performance chart.

As the table shows, 3-month performance has been poor, and dividend yields appear attractive, but it’s worth digging deeper into the fundamentals, and we’ve elected to do so in this article for the following three companies.

Welltower Inc (NYSE:HCN) (5.2% Yield):

Welltower Inc (NYSE:HCN) is one of the more blue chip opportunities in the healthcare REIT space, and its price has recently declined, and its valuation has become significantly more attractive. Besides being the largest healthcare REIT, it pays a big, growing dividend. It’s also well-diversified across senior housing (triple-net and operating), outpatient medical, and long-term post-acute. The “post-acute” is somewhat risky considering other healthcare REITs (such as HCP and Ventas) have been shedding “skilled nursing” exposure because they don’t want to deal with the regulatory reimbursement risks. However, we like that Welltower has some exposure to the upside in that segment.

We don’t currently own shares of Welltower Inc (NYSE:HCN), but we wrote about its attractiveness last August (see: Welltower’s Big Dividend: Weighing the Risks Ahead). Since that time its business has remained strong, and its price to FFO ratio has dropped to a compelling 15.2x. We also like that Welltower rents properties under group leases, rather than separate per property leases, because this makes it harder for tenants to drop underperforming properties.