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High-Quality Healthcare REIT Yields 6.1% With Good Dividend Coverage And Sensible Valuation

Published Wed, 13 Jun 2018 08:18:25 -0400 on Seeking Alpha

HCP, Inc. (HCP) is a top-notch healthcare REIT that will benefit immensely from an aging U.S. population and rising healthcare costs going forward. The healthcare REIT has a strong, diversified real estate portfolio from which it generates stable cash flow. Shares sell for a sensible AFFO multiple, and HCP has a high margin of dividend safety thanks to its conservative AFFO payout ratio. An investment in HCP yields 6.1 percent.
HCP - Business Drivers And Portfolio Overview HCP benefits from major demographic shifts and changing consumer preferences in the healthcare sector.
The U.S. population is aging rapidly, and the share of elderly citizens as percentage of the U.S. population is projected to rise dramatically over the next several decades. In addition, today's patients desire more outpatient medical solutions and less inpatient admissions.

Source: HCP Investor Presentation
HCP benefits from these trends through its portfolio of medical office and life science buildings, senior housing properties, hospitals, and other senior-focused healthcare facilities. The healthcare REIT has also repositioned itself strategically in the past, and no longer bets on skilled nursing facilities (a sector that has been hurt by operator problems, low occupancy rates and poor cash flow growth).
Medical office and life science facilities now account for more than half of HCP's pro-forma portfolio income (52 percent), followed by senior housing properties (38 percent)... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
HCP 31.83   14.1 2.26 1.48 4.72


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