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Is 6.7%-Yielding Welltower Inc. A Buy Right Now?

Published Thu, 01 Mar 2018 12:51:10 -0500 on Seeking Alpha

Welltower Inc. (HCN) is no longer at the top of investors' shopping lists, which I think creates an interesting buying opportunity because the company continues to perform well. The fundamentals in the health care REIT sector are intact, and Welltower's dividend is covered by recurring cash flow. Thanks to the sell-off in the REIT's shares, an investment comes with an entry yield of 6.7 percent.
Welltower's shares have dropped ~18 percent year-to-date as investors moved money out of dividend-paying stocks. Surging bond yields and expectations of higher inflation in 2018 were the primary reason why income investors rotated out of stocks in February 2018. Meanwhile, Welltower's shares slumped to new 52-week lows in 2018 (@$51.85).
Investors have no love for REITs right now.

Source: StockCharts
Welltower - Fundamentals Are Intact Though the REIT's shares have dropped lately, the long-term fundamentals in the senior-focused health care market are intact. The U.S. population is aging rapidly, and the 85+ age cohort especially is growing at a fast clip. Obviously, the 85+ age cohort is the most attractive age demographic for health care REITs as people in this age group disproportionately require living assistance and medical services.

Source: Welltower Investor Presentation
In addition, the 85+ age cohort spends by far the most money on health care than any other age group.

Source: Welltower
Welltower is set to... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
HEALTH CARE REIT 52.22   41.1 1.27 3.48 6.40