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Healthcare Trust Of America: 4.8% Yield, Strong Growth, 135% Dividend Coverage, Upside

Achilles Research profile picture
Achilles Research


  • Healthcare Trust of America is a promising long-term dividend vehicle.
  • Long-term trends in the health care sector underpin HTA's FFO growth.
  • Healthcare Trust of America has 135 percent dividend coverage (last six quarters).
  • Shares sell for ~15x Q4-2017 run-rate normalized FFO.
  • An investment in HTA yields almost 5 percent.

Healthcare Trust of America, Inc. (HTA) is a long-term income play benefiting from an aging U.S. population and increasing health care expenditures in the coming decades. Healthcare Trust of America faces attractive long-term demand growth, and the real estate investment trust consistently covered its dividend with normalized funds from operations. The risk-reward combination looks attractive on the sell-off. An investment in HTA yields 4.8 percent.

With income investors ditching income vehicles including real estate investment trusts and business development companies, Healthcare Trust of America also has become a lot cheaper lately. Though no longer oversold, I think Healthcare Trust of America is a promising health care REIT to consider for a DGI portfolio.

Source: StockCharts

Attractive Long-Term Growth

The U.S. population is aging, and it is aging at a fast clip. As the population ages, health care expenditures in absolute and relative terms (i.e. measured as a percentage of GDP) are going to rise dramatically in the coming years and decades. Estimates are that health care spending will increase to ~20 percent of GDP within the next seven years.

Source: Healthcare Trust of America Investor Presentation

In addition, outpatient visits have grown dramatically over time while inpatient admissions have decreased. The trend is clear: More dollars will be spend on outpatient care going forward.

Source: Healthcare Trust of America

Healthcare Trust of America benefits from these trends (an aging U.S. population, growing health care expenditures, growth in outpatient visits) through its portfolio of medical office buildings. The REIT's property portfolio comprised of ~$7 billion of gross real estate investments at the end of the December quarter. The lease rate was 92 percent.

Here's a location map.

Source: Healthcare Trust of America

Investment-Grade Balance Sheet

Healthcare Trust of America has a moderate degree of leverage (debt accounts for less than a third

This article was written by

Achilles Research profile picture
I am a dividend investor and look for undervalued investments in the stock market. I identify misunderstood and undervalued equity investments and hold those securities until their price approximates my estimate of intrinsic value. I am a long-term investor only. I am building a $100,000 high-yield income portfolio. I am running this portfolio as an experiment to see if long-term sustainable income can be generated from a diversified pool of high-risk, high-yield securities. I am willing to accept high risk in order to meet my performance goals.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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