5 Healthcare REITs For Your High-Yield Portfolio

Jul. 22, 2019 3:22 PM ETPEAK, LTC, OHI, VTR, WELL9 Comments
Thomas Hughes profile picture
Thomas Hughes


  • Real estate and healthcare are poised to deliver solid growth this quarter, this year, and next despite an uncertain outlook for the broader market.
  • Healthcare REITs are a perfect blend of both worlds, healthcare and real estate, and deliver steady income for uncertain times.
  • Within that umbrella, the healthcare services and facilities, and especially owners of senior living, skilled nursing and healthcare are especially well-positioned for long-term growth.
  • This idea was discussed in more depth with members of my private investing community, The Technical Investor . Start your free trial today »

I've been targeting the healthcare and real estate sectors this quarter because of their earnings outlook. Both sectors are projected to produce positive earnings growth this quarter, positive growth this year, and positive growth next year at a time when the outlook for the broad market is uncertain at best. While researching REITs, it became clear very quickly there is an opportunity with healthcare REITs to capture strengths in both sectors.

Real estate, despite sluggishness in the housing market, is still a hot commodity. They aren't making any more land and the population of America is only getting bigger. Health care, especially senior living, skilled nursing facilities, rehab facilities, and patient care centers, are in high demand. Not only is our population growing but the spread of ages also continues to skew toward the elderly.

  • High barriers to entry, regulation/regulatory
  • Long-term contracts, steady dependable income
  • Inflation protected income streams

Estimates from the Population Reference Bureau show the U.S. over-65 population will nearly double in the next 40 years. At the same time, the number of over-65 Americans will overtake their younger counterparts creating a crisis of care; there won't be enough traditional family-based caregivers.

Source: HCP investor presentation

What this means for investors is that while demand for real estate will continue to grow, the demand for health-related real estate infrastructure will grow the most. This is going to fuel rents and revenues for REITs and, in turn, dividends for investors. The July Beige Book says non-residential construction activity is strong and commercial rents are on the rise.

Nonresidential construction activity increased or remained strong in most reporting Districts, and commercial rents rose.

Source: own work

Welltower - Popular But Not Today's Best Choice

Welltower (WELL) is a popular and widely owned healthcare-oriented REIT but not the best

With explosive earnings growth becoming ever-elusive in today's market I expect dividend growth stocks will outperform the broad market over the next few years.

Are you positioned to profit from the capital gains and ever-increasing Yield on Investment provided by dividend growth stocks?

At the Technical Investor, I dig deep into the market looking for the sectors and stocks best positioned to deliver the earnings and dividend growth it takes to drive double-digit capital returns.

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This article was written by

Thomas Hughes profile picture
I am the son of an Army helicopter pilot, a former chef, and a longtime market watcher and trader.I developed my trading style and market strategies writing analysis and commentary for OptionInvestor.com. I wrote daily analysis there for nearly a decade before venturing out on my own. I now write the Technical Investor, a market research newsletter where I take a technical approach to fundamental trading.In the Technical Investor, I keep abreast of economic trends and earnings outlook and then apply them to the market and the charts. In so doing, I root out the best sectors and companies for investment from the earnings growth perspective. As a trader, my main focus is the S&P 500 but I follow the broader market as well, gold, oil, the dollar, and cryptocurrencies. When it comes to investing my goal is buying strong dividend-paying stocks with earnings and dividends growth potential at the right technical times. I've found that this combination usually leads to capital gains, market-beating dividends, dividend growth, and an increasing yield on investment over the long term.

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.

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