A Healthcare High Dividend Stock With 25%+ FFO Growth; Yielding Over 7%


  • The aging of US baby boomers will continue to create increasing demand for healthcare facilities.
  • Healthcare is the leading sector over the past year and year-to-date, but there are very few dividends paying over 6%.
  • Sabra Healthcare offers income investors a well-covered 7%-plus preferred dividend yield.

Let's face it, the US populace, which is 26% baby boomers, is getting a bit gray around the temples. How gray? AARP has this to say, "In 2011, the first of the baby boom generation reached what used to be known as retirement age. And for the next 18 years, boomers will be turning 65 at a rate of about 8,000 a day. As this unique cohort grows older, it will likely transform the institutions of aging." (Source: AARP website)

So, Healthcare facilities will become increasingly important, or, at least the market thinks so, having made the Healthcare sector the leading sector over the past year, and year-to-date in 2014.

The bummer for income investors is that there aren't a huge amount of high dividend stocks in this sector. Among common stocks, there are less than 5 paying a 5%-plus dividend. Among Healthcare REITs, there are 11 paying above 5%, but none above 7%.

A 7% Preferred Dividend: Sabra Healthcare REIT, (NASDAQ:SBRA), offers a preferred dividend which is yielding over 7%. These shares trade on the NASDAQ, and are listed on Yahoo and Google Finance under the ticker symbol SBRAP. We're tracking both the preferred and the common shares in our High Dividend Stocks By Sector Tables, (in the Healthcare section).

As we noted in last week's article about some other high-yielding preferred stocks, preferred shares are much better-covered than common dividends. Why? Because net income is usually declared after subtracting preferred distribution payments. Here's how SBRAP was covered over the past 4 quarters. Even with negative income in Q1 2014, SBRA averaged 3.15 preferred dividend coverage over the past 4 quarters:

In last week's article, we also noted that, in general, you should try to buy preferred shares under their liquidation value. However, if that's not possible, then determine if you'll receive enough dividends prior

This article was written by

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Target 5-10% yields backed by solid earnings for better portfolio income.

Robert Hauver, MBA, was VP of Finance for an industry-leading corporation for 18 years, and publishes SA articles under the name DoubleDividendStocks. TipRanks rates DoubleDividendStocks in the Top 25 of all financial bloggers, and Seeking Alpha rates us in the Top 5 of several categories, including Dividend Ideas, Basic Materials, and Utilities. 

"Hidden Dividend Stocks Plus", a Seeking Alpha Marketplace service, which focuses on undercovered and undervalued income vehicles. HDS+ scours the world's markets to find solid income opportunities with dividend yields ranging from 5% to 10%-plus, backed by strong earnings.

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.

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