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We hear about the aging US baby boom generation almost every day. They will present big problems for the US as they retire. Someone has to support them (or their retirement savings do). Just how bad is this situation? According to the US Census Bureau, the percentage of the population over 65 was 6%+ of the population in 1980. It is projected to be 21%+ of the population in 2050. You can complain about the burden of supporting seniors; or you can realize that caring for and housing seniors will be a steadily growing part of the US economy for many years to come. You can profit from this with some good long term investments. The chart of projected population growth from the US Census Bureau is below.

When you are facing a fiscal cliff, it is often wise to invest in areas that you know have strong long term upside. That way, if your stock(s) lose value in a possible recession, you can be reasonably sure that they will regain their value and more over the longer term. If your stock or stocks also pays a healthy dividend that will pay you to wait for it to recover from any downturn, you are that much better off. Further a good dividend will tend to make your stock less likely to fall in a downturn (or to fall less far). Healthcare REITs fit this bill.

This article does not try to analyze each REIT. Rather it presents some of the better yielding healthcare REITs with relatively strong technical charts. You can then compare the fundamental data yourself to see if you wish to invest in the company.

First let me give a small description of each healthcare REIT described herein:

Omega Healthcare Investors Inc. (OHI) invests in healthcare facilities. Its portfolio consists of over 400 healthcare facilities. Most of these are skilled nursing facilities (or retirement homes). These are distributed throughout the US.

Medical Properties Trust Inc. (MPW) invests in healthcare facilities. Its properties are mostly hospitals and acute care facilities.

Sabra Health Care REIT Inc. (SBRA) invests in healthcare facilities. These are mostly skilled nursing facilities (or retirement homes).

Universal Health Realty Income Trust (UHT) invests in healthcare and human services related facilities. These include acute care hospitals, behavioral healthcare facilities, rehabilitation hospitals, sub-acute facilities, surgery centers, childcare centers, and medical office buildings.

The table below contains some of the fundamental information about each company.

Stock

OHI

MPW

SBRA

UHT

Price

$23.10

$11.85

$22.37

$48.98

Dividend

7.7%

6.8%

5.9%

5.0%

PE

23.31

20.57

36.55

8.00

FPE

10.31

11.07

13.16

N/A

1 yr. avg. analysts' target estimate

$24.00

$11.90

$22.00

$33.00

Avg. Analysts' recommendation

2.8

2.9

2.0

3.0

CAPS rating

5 stars

3 stars

5 stars

5 stars

Market Cap

$2.59B

$1.60B

$828.83M

$621.31M

Price/Book (mrq)

2.54

1.55

2.66

3.43

Total Cash/share (mrq)

$0.06

$0.27

$0.82

$0.25

Beta

0.86

0.83

1.77

0.82

Short Interest as a % of Float (11/15)

7.40%

4.96%

5.74%

2.80%

Total Debt/Total Capital (mrq)

60.66%

49.81%

61.07%

52.38%

Quick Ratio (mrq)

--

--

--

--

Interest Coverage (mrq)

2.15x

2.68x

1.55x

3.43

Return on Equity (TTM)

11.06%

6.07%

7.09%

49.26%

Operating Profit Margin

57.82%

61.68%

22.44%

157.44%

Net Profit Margin

31.97%

32.45%

22.44%

157.44%

EPS misses in last 4 quarters

0

1

3

1

Analysts' forecast EPS Growth this FY2012

14.30%

25.40%

6.90%

N/A

Analysts' forecast EPS growth FY2013

3.70%

20.20%

21.40%

N/A

Analysts' forecast EPS growth per annum next 5 yrs

5.33%

10.33%

5.00%

2.40%

The fundamental data on their own seem to indicate that OHI and MPW may be the safest choices for your money. UHT's small market cap makes me wary of it. Its one year analysts' price target of $33.00 is far below its current price of $48.98. Its price/book ratio is also much higher than that of the other stocks above at 3.43. In an uncertain environment, you probably don't want to choose this stock.

SBRA has a higher PE of 36.55 than other stocks above. It missed estimates 3 out of the last 4 quarters. This is a characteristic of bad management. It also has a much higher Beta than the other stocks at 1.77. These are not the attributes you want in a "safe" stock for uncertain times.

Both OHI and MPW seem good choices based on their fundamentals above. These two stocks have the highest dividends of the four. Plus they have higher market caps, which tend to be more stable. MPW does not seem to be as well liked by the CAPS community at only three stars. However, it has the lowest price/book ratio of the four companies above at 1.55. Therefore it is one of the two I want to look at more carefully. The five year charts for these stocks are below. They may provide some technical direction.

The five year chart of OHI (7.7% dividend) is below:

(click to enlarge)

The slow stochastic sub chart shows that MPW is near overbought territory. The main chart shows that it is in both a short term and a long term uptrend. However, the 50-day SMA is already headed downward toward the 200-day SMA. Its uptrend is showing signs of weakening. Still it overall seems like a fundamentally solid company. You might consider averaging in around the fiscal cliff. It does pay a good 7.7% dividend.

The five year chart of MPW (6.8% dividend) is below.

(click to enlarge)

The slow stochastic sub chart shows that MPW is near overbought territory. The main chart shows that it is in a short term uptrend. However, it has mostly been consolidating over the last few years. It does pay a 6.8% dividend, which should help you wait on it. You would probably want to average in around the fiscal cliff and around a possible near term cycle downward.

The above analysis is only a first take on several companies that should benefit from an undeniable long term trend. I encourage readers to analyze these stocks further before investing. However, the long term trend may provide relative certainty in an uncertain market; and the above two stocks seem to be two of the better ones available in the healthcare REIT market.

Note: The much of the fundamental information above comes from Yahoo Finance and TD Ameritrade.

Good Luck Trading.

Source: Ride The Rising Senior Population Trend With Healthcare REITs