Welltower Inc (HCN): A High-Yield Medical REIT Blue Chip

Here is a look at Welltower’s Net Operating Income (NOI) by business segment. Seniors housing is the biggest contributor:

The way Welltower makes money is by owning a high-quality portfolio of medical properties and renting them out, under long-term contracts, to a diverse group of partners, such as Brookdale Senior Living, Inc. (NYSE:BKD) and Genesis Healthcare Inc (NYSE:GEN), who are the ones actually caring for patients.

Here is a look at some of Welltower’s biggest tenants:

This diversified tenant base is key to Welltower’s ability to generate secure cash flows, which is what has allowed the consistent growth of Welltower’s generous dividend over the past half century.

Business Analysis

As America’s largest medical REIT, you might expect Welltower’s growth to be rather slow. However, thanks to its world class management team, led by Thomas Derosa, who has extensive experience in: healthcare, real estate, and capital markets, the company has been able to continue recording far better growth than its major rivals, such as fellow medical REIT titan Ventas, Inc. (NYSE:VTR).

In fact, in the first half of 2016, the company was able to achieve extremely strong growth in revenue and funds available for distributions, or FAD per share. The growth was driven by strong results from all business segments, but especially senior housing.

Source: Welltower Earnings Release