Published Thu, 12 Oct 2017 14:24:12 -0400 on Seeking Alpha
Omega Healthcare Investors (OHI) is the largest company providing skilled nursing care facilities. As the company offers a remarkably high dividend yield of 8.1%, most of its shareholders are holding the REIT for its dividend. Therefore, it is only natural that these investors wonder whether the dividend is safe or the poor performance of the stock signals that the dividend is at risk.
First of all, Omega Healthcare distributes a remarkably generous dividend. Even better, it has raised it for 20 consecutive quarters. In addition, given that the company expects to achieve funds from operations of about $3.42 per share this year, its dividend payout ratio currently stands at 75%. While this payout ratio is not low, it is quite reasonable for a REIT and certainly leaves room to the company to further grow its dividend in the near future.
On the other hand, the market does not offer such an exceptional yield for free, particularly in the current environment of almost record low interest rates and yields. Omega Healthcare has underperformed S&P (SPY) by 24% during the last 12 months. When there is such a dramatic underperformance, there is usually a good reason to justify it. Therefore, investors should make sure they thoroughly understand the reasons behind the high dividend yield of the stock and then determine whether they should stay away from it or the concerns of the market are overblown.
The main reason for the poor performance of the stock and its resultant high... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|OMEGA HEALTHCARE INVESTORS||31.97||16.9||1.89||2.60||8.08|
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