HCP, Inc: A Healthcare REIT For My Dividend Growth Machine


My primary goal as a dividend growth investor is to build a sustainable and rising stream of dividend income that will eventually enable me to be financially independent. I plan to achieve this goal by regularly investing new capital in attractively valued dividend growth stocks and reinvesting the dividends received from those stocks. The combination of new capital investment, dividend reinvestment, and dividend growth over many years will facilitate the growth of my dividend income stream. To read about my dividend growth investing progress thus far, please see my latest quarterly review.

In my ongoing search for attractively valued dividend growth stocks, my attention has been drawn recently to real estate investment trusts [REITs]. Until now, my portfolio had zero exposure to real estate, partly because the highest-quality REITs often command premium valuations. However, there has been a strong sell-off among REITs since late May, mainly due to concerns about how rising interest rates will affect their operations when the Federal Reserve tapers its quantitative easing program. Due to the sell-off, several REITs have become fairly valued or undervalued, motivating me to look more closely at them.

I focused my search on healthcare REITs because I have been wanting to increase my portfolio's exposure to healthcare and this REIT category is likely to benefit from a favorable demographic trend. The figure below shows the projected population growth of individuals aged 65 years or older in the U.S. until 2050. As individuals get older, their healthcare needs often become greater, and this strong demographic trend bodes well for healthcare REITs.

Five of the 12 healthcare REITs listed by NAREIT appear on David Fish's Dividend Champions, Contenders, and Challengers list because they each have at least 5 consecutive years of dividend growth. These REITs are HCP, Inc. (HCP), Health Care

This article was written by

I am a 40-year-old investor and a professor at a university. I have been following a value-oriented dividend growth investing strategy since 2012. I have written occasional reviews on Seeking Alpha about my portfolio and investing progress.

Recommended For You

Comments (78)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.