Omega Healthcare Investors: Staying Bullish As The Company Raises Its Dividend

Jul.17.14 | About: Omega Healthcare (OHI)


On Tuesday, July 15, OHI announced it would be increasing its quarterly dividend by 2.0%.

OHI's upcoming earnings could exceed street estimates if the company can demonstrate an increases in both its net income and operating revenues.

Recent trend behavior could continue well into the second-half of the year, especially if OHI can meet and/or exceed analysts' earnings expectations for the upcoming quarter.

As an investor with a knack for higher-yielding (5% and above) stocks, dividend-related events are always something I tend to keep an eye on. It is these types of events that have a tendency to influence my decision in terms of which stocks I should keep on my radar and which ones I should not.

With that said, and in the wake of its latest dividend increase, I wanted to highlight several reasons why I've chosen to stay bullish on shares of Omega Healthcare Investors (NYSE:OHI).

Recent Dividend Behavior

On Tuesday, July 15, Omega Healthcare Investors announced a quarterly dividend increase of $0.01/share, which brings its upcoming dividend payout to $0.51/share. It should be noted that the increase will be paid on August 15 for shareholders on record as of July 31.

This boost represents a 2% increase from its prior dividend of $0.50/share, which was paid to shareholders on May 15. Comparably speaking, OHI's most recent increase was in-line with its previous increase of $0.01/share that was announced on April 20, 2014.

Based on the company's dividend behavior over the last 12 months, it should come as no surprise that I foresee its next quarterly dividend hike, which I estimate to take place in mid-Q3 2014 to be at least $0.01/share but no more than $0.02/share.

Upcoming Earnings Outlook

When it comes to the company's upcoming earnings, there are a number of things potential investors should consider. For example, analysts are currently calling for OHI to earn $0.68/share in terms of AFFO for Q2 when earnings are announced on July 23 (which is $0.03/share lower than what the company had reported during Q1 2014, and $0.02/share lower than the company had reported during the year-ago period).

In order to meet and/or exceed its quarterly AFFO estimates, I'd like to see an increase of at least 2.5% in terms of the company's adjusted funds from operations, an increase of at least 3% in terms of the company's net income and lastly, an increase of at least 3% in terms of the company's operating revenues. If the above mentioned criteria are met and/or exceeded, there's a very good chance that current AFFO per share estimates could be surpassed.

Recent Trend Behavior

On Wednesday, shares of OHI, which currently possess a market cap of $4.76 billion, a forward P/E ratio of 21.30, and a dividend yield of 5.40% ($2.04), settled at a price of $37.76/share.

Based on a closing price of $37.76/share, shares of OHI are trading 2.60% above their 20-day simple moving average, 3.27% above their 50-day simple moving average, and 15.54% above their 200-day simple moving average.

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These numbers indicate a short-term and mid-to-long term uptrend for the stock, which generally translates into a buying mode for most near-term traders and many long-term investors.

If the company can demonstrate a stronger-than-expected earnings performance when it announces Q2 results on July 23, there's a very good chance the company's trend behavior will continue to move in a very positive direction.


For those of you who may be considering a position in Omega Healthcare, I strongly recommend keeping a close eye on the company's recent dividend behavior which has demonstrated a solid uptrend over the last year and its ability to demonstrate steady increases in net income, adjusted funds from operations and its operating revenues as each of these catalysts will play a role in the company's long-term earnings growth.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.