Omega Healthcare Hikes Dividend - Analyst Blog
October 16 2013 - 4:00PM
Zacks
As part of its continuing efforts
to enhance stockholder value, Omega Healthcare Investors
Inc. (OHI) hiked its quarterly cash dividend by 2.1% to 48
cents per share from 47 cents paid in the last quarter. Notably,
this depicts the company’s 26th dividend hike since
first-quarter 2004. The new dividend will be paid on Nov 15, 2013
to shareholders of record as of Oct 31, 2013.
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 6.05% based on the
closing price of Omega Healthcare’s stock on Oct 15.
With low funds from operations
(FFO) payout ratio of 68.6% as of Jun 30, 2013, Omega Healthcare
has adequate room to enhance its dividend rate going forward.
Moreover, as of Jun 30, 2013, the company had cash and cash
equivalents worth $7.0 million, up from $1.7 million as of Dec 31,
2012.
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 2.2% to 47 cents in the prior
quarter.
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 Jun 30, 2013, the company
owned or held mortgages on 477 assisted living facilities, skilled
nursing facilities and other specialty hospitals, situated across
33 states.
Last month, another REIT -
Host Hotels & Resorts Inc. (HST) – announced a
9.1% sequential hike in its quarterly cash dividend. The company
will now pay a dividend of 12 cents per share compared with 11
cents paid in the prior quarter. The increased dividend was first
paid on Oct 15, 2013 to stockholders of record on Sep 30.
Omega Healthcare currently has a
Zacks Rank #3 (Hold). Some better performing REITs include
LaSalle Hotel Properties (LHO) and Parkway
Properties Inc. (PKY). Both of these carry a Zacks Rank #1
(Strong 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
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
LASALLE HTL PRP (LHO): Free Stock Analysis Report
OMEGA HLTHCARE (OHI): Free Stock Analysis Report
PARKWAY PPTY (PKY): Free Stock Analysis Report
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