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HCP, Inc. (HCP), Health Care REIT, Inc. (HCN): Will This Obamacare Play Keep Paying Big Dividends?

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Thousands of stocks trade publicly, but only a few dozen have the mark of dividend excellence that comes with qualifying as a Dividend Aristocrat. For those rare companies that have managed not only to pay but to raise their dividends each and every year for at least a quarter century, the status of being a Dividend Aristocrat confers the prestige of giving shareholders a reliable stream of income.

HCP, Inc. (NYSE:HCP)

Among Dividend Aristocrats, HCP, Inc. (NYSE:HCP) is somewhat of an unusual offering. As a real-estate investment trust, HCP, Inc. (NYSE:HCP) is required to pay out the vast majority of its income as dividends in order to retain its favorable tax status. But by investing largely in senior housing, nursing homes, and professional medical office buildings and related health-care real estate, HCP, Inc. (NYSE:HCP) gives investors exposure to trends like the ongoing implementation of Obamacare and its potential impact on the entire health-care system. Let’s take a closer look at HCP, Inc. (NYSE:HCP) to see whether its dividend growth is likely to continue.

Dividend stats on HCP

Current Quarterly Dividend Per Share $0.525
Current Yield 5.1%
Number of Consecutive Years With Dividend Increases 28 years
Payout Ratio 104%
Last Increase January 2013

Source: Yahoo! Finance. Last increase refers to ex-dividend date.

Why HCP has been a strong dividend pick
HCP, Inc. (NYSE:HCP) is one of the biggest health-care specialized real-estate investment trusts in the country. Like most of its real-estate peers, HCP, Inc. (NYSE:HCP) got crushed during the financial crisis, but it nevertheless found ways to keep its dividend growth going. One reason why the REIT has done so well is that its focus area is somewhat less sensitive to economic conditions than most real estate, as the continual need for medical services and for places for retirees to live helps support consistent demand for HCP’s properties. Moreover, with demographic trends in its favor, HCP can expect solid growth prospects as greater proportions of the baby-boom generation reach retirement age and start to take greater advantage of its facilities, and once senior-citizen residents get comfortable in their surroundings, they’re somewhat less likely to change locations compared to younger people still in their careers making moves for work or personal reasons.

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