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A Whopping 10%+ Dividend Yield From Omega Healthcare

Published Mon, 16 Apr 2018 10:35:28 -0400 on Seeking Alpha

Image Source: Omega Healthcare, March 2018 Investor Presentation

Omega Healthcare (OHI) is a healthcare REIT not without challenges. Through risks related to the health of the skilled nursing facility (SNF) space to past due rent from a few of its troubled customers, the REIT will have its hands full in coming years as its equity navigates a higher interest-rate environment. Omega continues to showcase considerable coverage of its annualized dividends with adjusted funds from operations, however, and management has said it is committed to the dividend at current levels (see the third bullet point in image above). But how could this be? Current levels imply a dividend yield north of 10%, and if the dividend is sustainable, Omega could represent a huge mispricing on the market today. Are we missing something?
The market price of an equity always contains information. The price could reveal whether you are missing something in the story if you are too light with your future expectations, and the market price could tell you if are overlooking risks. In today's marketplace, unlike that of the first-half of the 20th century, throngs of investors are poring over the same company's fundamentals and the transfer of information is almost immediate from the source to the share price, even if it may take some time for the share price to come to reflect a company's "true" intrinsic value. The price-to-fair-value mismatch is something that we pay close attention... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
OMEGA HEALTHCARE INVESTORS 37.43   26.7 1.40 2.64 7.15


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