Universal Health Realty Income Trust: Don't Overlook This Dividend Gem

Summary

  • UHT is weathering the current pandemic rather well, with strong rent collection.
  • It has a 33-year track record of annual dividend increases, and its total return has far outpaced that of the S&P 500 over the past 25 years.
  • UHT should benefit from the long-term growth in the senior population, with its well-located properties that are mostly in warmer climates.

When it comes to durable REITs that are also dividend aristocrats, Realty Income (O) often comes to mind. One REIT that flies under the radar for most investors is Universal Health Realty Income Trust (NYSE:UHT), which is a healthcare REIT that also has a 33-year track record of consecutive annual dividend raises.

Such a long dividend-paying track record through a multitude of economic cycles is no easy feat, with well-known healthcare REITs such as Welltower (WELL) and Ventas (VTR) being forced to end their respective histories of uninterrupted dividends with dividend cuts this year. In this article, I evaluate what makes UHT worth owning at the current valuation, so let’s get started.

(Source: Company website)

A Look Into UHT

Universal Health Realty Income Trust is a REIT that specializes in healthcare properties across the U.S. It was formed back in 1986, and as of September 30th, it owns 71 properties located in 22 states, including two that are under construction. Its portfolio mix is primarily comprised of MOBs (medical office building), with MOBs representing 74% of gross asset value. The remainder of the portfolio is comprised of Acute Care Hospitals (17%), Ambulatory Care (4%), Sub-Acute (2%), and Other (3%). As seen below, UHT’s properties are geographically diversified with larger concentrations in Las Vegas, NV, Arizona, Texas, Atlanta, GA, and Pennsylvania.

(Source)

UHT has a solid track record of outperformance. As seen below, since 1995, UHT has posted a 12.6% CAGR (including dividends), which compares favorably to the 9.4% CAGR of the S&P 500 (SPY) over the same time period. This speaks to the durability of UHT’s business model, and the value of a steadily increasing dividend.

(Source: Dividend Channel)

UHT is performing well in the current environment, with FFO/share improving by 3.6% YoY, from $0.83 in Q3’19, to $0.86

This article was written by

Gen Alpha profile picture
13.85K Followers
Build sustainable portfolio income with premium dividend yields up to 10%.

I'm a U.S. based financial writer with an MBA in Finance. I have over 14 years of investment experience, and generally focus on stocks that are more defensive in nature, with a medium to long-term horizon. My goal is to share useful and insightful knowledge and analysis with readers.  Contributing author for Hoya Capital Income Builder. 

Disclosure: I am/we are long O. 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.

Additional disclosure: This article is for informational purposes and does not constitute as financial advice. Readers are encouraged and expected to perform due diligence and draw their own conclusions prior to making any investment decisions.

Recommended For You

Comments (15)

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.