SNH Senior Housing Properties Trust

Senior Housing Properties Trust (SNH) pays a dividend that yields an attractive 6.3%. Estimates have been rising for SNH since it posted strong Q4 results in late February.

Senior Housing Properties Trust is a real estate investment trust. It owns independent and assisted living properties, continuing care retirement communities, nursing homes and medical-related office buildings throughout the United States.

Focusing on these stable industries has allowed SNH to pay a consistent quarterly dividend over the last decade, while REITs focused on other areas were forced to slash or suspend their dividend payments during the financial crisis.

Fourth Quarter Results

SNH reported its results for the fourth quarter of 2010 on February 23. Funds from operations, or FFO, came in at 44 cents, beating the Zacks Consensus Estimate by a penny. It was a 7% increase over the same quarter in 2009.

Rental income jumped 11% to $96.836 million for the quarter.

Total expenses (excluding depreciation) as a percentage of rental income increased from 11.8% to 14.8%, however. Meanwhile, earnings before interest, taxes, depreciation and amortization rose 9%.

Estimates Rising

Since its strong Q4 results in late February, analysts have been raising their estimates for both 2011 and 2012:

The Zacks Consensus Estimate for 2011 is $1.85, up from $1.78 two months ago. This represents 8% growth over 2010.

The 2012 consensus estimate is currently $1.95, equating to 5% growth. SNH is a Zacks #2 Rank (Buy) stock.

Income

SNH pays a dividend that yields an impressive 6.3%. Although it has only raised it at a compound annual rate of 1.9% since 2000, SNH has paid its dividend every quarter since 2000, even raising it in 2009 during the Great Recession.

Valuation

Valuation is attractive with shares trading at just 12.7x forward earnings, a discount to the industry average of 14.6x. Over the last 10 years, shares have traded at a median forward P/E of 11.6x.

SNH also trades at 1.5x book value, in-line the peer group.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
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