Investing in healthcare REITs can offer a unique opportunity for stable income and portfolio diversification, thanks to the essential nature of healthcare services. Therefore, high-potential REITs Ventas, Inc. (VTR), Omega Healthcare Investors, Inc. (OHI), and National Health Investors, Inc. (NHI) might be worthy watchlist additions.
Healthcare Real Estate Investment Trusts (REITs) are a dynamic sector within the real estate market, focusing on properties such as hospitals, nursing facilities, senior housing, and medical office buildings. These REITs are poised for strong performance, especially as the aging U.S. population drives increased demand for healthcare services and senior living facilities.
Healthcare is a stable market, providing stable occupancy rates and reliable income streams for these REITs. The shift toward outpatient services, along with technological advancements in medical care, further supports the demand for modern healthcare facilities. Furthermore, the REIT market is poised to reach $333.01 billion by 2027, growing at a CAGR of 2.8%.
Considering these conducive trends, let’s take a look at the fundamentals of the three choices from the REITs - Healthcare industry, starting with third in line.
Stock #3: Ventas, Inc. (VTR)
VTR is a leading S&P 500 real estate investment trust enabling exceptional environments that benefit a growing aging population. With approximately 1,350 properties in North America and the United Kingdom, the trust occupies an essential role in the longevity economy.
On September 16, 2024, VTR announced that it has entered into agreements with Kindred Healthcare, LLC and its parent companies, including regarding the 23 long-term acute care hospitals whose lease term is scheduled to mature on April 30, 2025, under the existing Master Lease between Ventas and Kindred.
VTR pays $1.80 annually, which translates to a yield of 2.89% on the prevailing price level. Its four-year average dividend yield is 3.78%.
VTR’s total revenues increased 6.8% year-over-year to $1.20 billion during the second quarter ended June 30, 2024. Its net income was reported at $21.17 million, and net income per share attributable to common stockholders at $0.05.
Street expects VTR’s revenue for the third quarter that ended September 2024 to increase 5.5% year-over-year to $1.21 billion. For the same quarter, the company’s EPS is expected to grow 5.8% year-over-year to $0.79. Furthermore, the company surpassed the consensus revenue and FFO estimates in each of the trailing four quarters.
VTR’s stock has gained 28.1% over the past nine months and 57.3% over the past year to close the last trading session at $62.38.
It’s no surprise that VTR has a B grade for Momentum, as reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. It is ranked #8 out of 14 stocks in the REITs - Healthcare industry.
To see additional POWR Ratings for Value, Sentiment, Stability, and Growth, click here.
Stock #2: Omega Healthcare Investors, Inc. (OHI)
OHI is a REIT that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure.
OHI pays $2.68 annually, which translates to a yield of 6.78% on the prevailing price level. Its four-year average dividend yield is 8.48%.
OHI’s total revenues for the fiscal second quarter that ended June 30, 2024, increased 6.5% year-over-year to $252.75 million. Net income and earnings per share stood at $117.08 million and $0.45, up 90.2% and 80% year-over-year, respectively.
For the third quarter ended September 2024, OHI’s revenue is expected to increase 5% year-over-year to $216.15 million. Its FFO for the same quarter is expected to be $0.71. OHI surpassed the consensus FFO estimates in each of the trailing four quarters.
OHI gained 17% over the past three months to close its last trading session at $39.51.
OHI has a B grade for Momentum and Quality. It is ranked #3 in the same industry.
For additional OHI’s Growth, Stability, Sentiment, and Value, click here.
Stock #1: National Health Investors, Inc. (NHI)
NHI is a real estate investment trust specializing in sales, leasebacks, joint ventures, senior housing operating partnerships, and mortgage and mezzanine financing of discretionary senior housing and medical investments. The company’s portfolio comprises independent living, assisted living and memory care communities, skilled nursing facilities, and specialty hospitals.
NHI pays $3.60 annually, which translates to a yield of 4.44% on the prevailing price level. Its four-year average dividend yield is 6.45%.
NHI’s total revenues for the second quarter ended June 30, 2024, were reported at $84.97 million, up 9.1% year-over-year. Net income attributable to stockholders was reported at $35.23 million, and earnings per common share was $0.81.
Street expects NHI’s revenue for the quarter ending December 2024 to increase 3.4% year-over-year to $85.35 million. Its EPS is expected to be $1.14 for the same quarter. NHI surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock gained 51.4% over the past nine to close the last trading session at $81.37.
NHI has a B grade for Momentum, Stability, and Quality. It is ranked first in the same industry.
Beyond what is stated above, we’ve also rated NHI for Value, Growth, and Sentiment. Get all NHI ratings here.
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VTR shares were trading at $62.22 per share on Wednesday afternoon, down $0.16 (-0.26%). Year-to-date, VTR has gained 28.16%, versus a 22.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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