"Safety is a cheap and effective insurance policy". Author Unknown
Volatility in the market increased significantly over the last week as investors woke up to the likelihood that no significant fiscal cliff deal was going to be completed by year end. Given the acrimony in the two parties as well as the upcoming debt limit talks, which are likely to be as rancorous, now is the time for safety. I will be using any additional sell-off to take new or add to existing high yielding plays to my income portfolio. Two income plays that should be long term beneficiaries of the aging of our population (one of the few facts both sides can agree upon) are below.
Medical Properties Trust Inc (MPW) invests in healthcare facilities. Its properties are mostly hospitals and acute care facilities.
4 reasons MPW is a good addition to your income portfolio at under $12 a share:
- MPW yields 6.8% and dividends should increase next year if the company hits the earnings expectations analyst for the firm.
- Earnings are rising nicely. MPW made 71 cents a share in FY2011, but is on track for 90 cents a share in FY2012. Analysts expect $1.07 in EPS currently for FY2013.
- The stock sells for less than 11x forward earnings, very reasonable for an almost 7% yielder.
- The company increased revenues by better than 40% in FY2012 and analysts expect more than a 20% sales increase in FY2013. MPW has a low five year projected PEG (1.27) for such a high yielder.
Omega Healthcare Investors (OHI) is a REIT that invests in healthcare facilities, principally long-term healthcare facilities in the United States. It primarily provides lease or mortgage financing to qualified operators for these facilities.
4 reasons OHI is a good yield pick up at under $24 a share:
- OHI is providing a 7.5% yield at current prices. It has consistently raised its dividend payments over the last decade. Payouts have rose 120% over the last eight years.
- Consensus earnings estimates for both FY2012 and FY2013 have gone up slightly over the last two months and the stock sells for a reasonable 10.5x forward earnings.
- The company is on track to grow revenues approximately 18% in FY2012 and analysts have another 7% sales increase penciled in for FY2013.
- The company is well diversified and provides one of the largest yields among healthcare REITs. The certainty provided by Obama's re-election and thus non-repeal of Obamacare should provide positive tailwinds.
Disclosure: I am long MPW.