Published Fri, 25 Dec 2020 05:22:04 -0500 on Seeking Alpha
Seeking AlphaREITsOmega Healthcare Investors Is A Shot In The Arm Your Dividend Portfolio NeedsDec. 25, 2020 5:22 AM ET|| About: Omega Healthcare Investors, Inc. (OHI)by: Volatility SurferVolatility Surfer Long/Short Equity, Momentum, portfolio strategy, Hedge Fund ManagerSummaryOmega is the largest owner of skilled nursing facilities in the US.
The CARES act will ensure that SNF operators will remain in business.
Omega's diverse operator base is critical to its overall portfolio.
The current operating does not pose a risk to Omega's dividend.
Omega Healthcare Investors (OHI) is a REIT focused on skilled nursing facilities (SNFs). Not only is the company the largest operator of SNFs in the US, but its scale and operational excellence has allowed it to gain an investment grade credit rating. Omega's portfolio includes 957 properties across 40 American states and 69 healthcare operating companies in the United Kingdom. Over the past 17 years, Omega has been a consistent dividend payer. The ability to consistently pay dividends speaks volumes about the strength and resilience of its underlying business. Omega's portfolio primarily consists of triple net leases, which means that the operator is responsible for all expenses linked to the property. Over 85% of Omega's revenues are linked to Medicaid and Medicare. Compared to hospitals, SNFs are cheaper for the taxpayer and there is strong government support for this healthcare vertical. This healthcare niche has provided Omega with dependability of revenue and dividend uncertainty for shareholders.
The COVID pandemic threw an unexpected challenge for Omega and exposed a risk to its business model. The pandemic resulted in increased costs for its operators while reducing revenue. Cost increases were associated with new protocols required to maintain a safe environment for both staff and patients under care. The pandemic also resulted in a strong decline in elective surgeries which resulted in unoccupied... Read more