REITs are required by law to pay out 90% or more of their earnings as dividends.
This makes it difficult to pay rising dividends every year. There’s very little margin for error because the payout ratio is so high.
If earnings fall (and every business has setbacks eventually), then there’s a good chance dividends will fall as well for a REIT.
That’s why you wouldn’t expect there to be any REITs in the Dividend Aristocrats Index…
The Dividend Aristocrats Index is composed of only businesses with 25+ consecutive years of Dividend Increases. You can see all 50 Dividend Aristocrats here.
Amazingly, 1 REIT qualifies to be a Dividend Aristocrat: HCP.
HCP, Inc. (NYSE:HCP) is one of a kind. It is the only REIT that is also a Dividend Aristocrat. The company has paid increasing dividends… For 31 consecutive years (1).
In addition to a long dividend history, HCP also has a high current dividend yield of 6.4%; the highest of any Dividend Aristocrat.
The stock outperformed the market for much of the last decade, before struggling in the last few years. Performance versus the S&P 500 (including dividends in both cases) is shown below.
This article explores the investment prospects and operations of HCP in detail.
HCP, Inc. (NYSE:HCP) is more stable than most REITs because it operates in the health care industry. The company operates in 3 primary segments:
– Senior Housing
– Life Sciences
– Medical Offices