Continuing with its efforts to enhance stockholder value, Omega Healthcare Investors Inc. (OHI) raised its quarterly cash dividend by 2.1% to 49 cents per share from 48 cents paid in the last quarter. Notably, this depicts the company’s 27th dividend hike since first-quarter 2004. The new dividend will be paid on Feb 17, 2014 to shareholders of record as of Jan 31, 2014.
A steady dividend payout is in line with the long-term strategy of Omega Healthcare to provide attractive risk-adjusted returns to its stockholders. The new dividend rate results in an annualized yield of 6.27% based on the closing price of Omega Healthcare’s stock on Jan 15. As of Sep 30, 2013, the company had cash and cash equivalents worth $67.7 million, up from $7.0 million as of Jun 30, 2013. Hence, we believe Omega Healthcare has sufficient cash to pay dividends.
Solid dividend payouts are arguably the biggest attraction for real estate investment trust (REIT) investors as the U.S. law requires these companies to distribute 90% of their annual taxable income in the form of dividends to shareholders.
Notably, Omega Healthcare has a consistent track record of increasing shareholders' wealth. Most recently, the company hiked its dividend by 2.1% to 48 cents in the prior quarter. As a matter of fact, Omega Healthcare has come up with encouraging results in the past quarters. Its average earnings surprise for the past four quarters is 2.98%.With strong fundamentals, we believe Omega Healthcare can continue to make decent dividend payouts in coming quarters too.
Omega Healthcare invests in and offers mortgage financing to qualified operators of skilled nursing facilities (SNFs), as well as assisted living facilities (ALFs) and specialty hospitals in the U.S. As of Sep 30, 2013, the company owned or held mortgages on 477 assisted living facilities, skilled nursing facilities and other specialty hospitals, situated across 33 states.
Omega Healthcare currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the REIT – Equity Trust – Other industry include National Health Investors, Inc. (NHI), Ventas, Inc. (VTR) and Medical Properties Trust Inc. (MPW). National Health Investors carries a Zacks Rank #1 (Strong Buy). On the other hand, Ventas and Medical Properties carry a Zacks Rank #2 (Buy).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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