Regular readers of my columns know that I peruse Barron's for top insider buys during the week and that has been the origin of many articles as well as numerous investments within my own portfolio. I have found buying along with insiders has been a lucrative strategy over the years. In this week's magazine, insider buys in two high yielding entities involved in real estate caught my eye.
Healthcare Trust of America (HTA) is a real estate investment trust that primarily focuses on medical office buildings, healthcare-related facilities, and quality commercial office properties.
4 reasons HTA should be considered by income investors at $10 a share:
- 8 insiders bought approximately 100,000 shares in early December.
- The company just came public in June, but based on the last quarter's dividend payout, HTA is yielding 5.8%.
- The company has quintupled its operating cash flow over the last three years. The company is focused almost exclusively on the Medical Office Building sector, with has the lowest risk profile within the space as these practices tend to have the lowest dependency on government reimbursement.
- HTA has a diverse portfolio, with buildings in 27 states and no one tenant makes up more than 6% of total revenue. The company has a low debt to enterprise value (around 30%) for this space and just under $600mm available on a credit facility. The company is positioned well to continue to roll up these small medical practice buildings (between $25mm to $75mm in value) in the coming years.
Apollo Residential Mortgage (AMTG) is a residential real estate finance company. It focuses on investing in, financing, and managing mortgage-backed securities, residential mortgage loans, and other residential mortgage assets.
4 reasons to buy AMTG could be a good yield play at $21 a share:
- An insider bought over 16,000 shares in December.
- Since going public in July 2011, the company has almost tripled payouts in that time and now yields 16%. However, part of that was a special dividend and the yield is more like 13% taken that into consideration; which is still substantial.
- AMTG is selling for just over 7x forward earnings and 75% of book value.
- QE3 substantially helped the company's mortgage portfolio last quarter as AMTG increased its book value by over 9% Q/Q. The company should continue to benefit as the housing market continues to improve.