Health in Healthcare
- Dec 28, 2012
(U.S. REIT dividend yield by sector)
By Jason Lail
REITs are required to pay out 90 percent of their taxable income in dividends; hence, dividend yield is an important metric to look at when evaluating REIT stocks.
As of Nov. 1, healthcare REITs provided the highest dividend yield among all sectors at 4.87 percent. Three healthcare REITs—Omega Healthcare Investors, Care Investment Trust and Senior Housing Properties Trust—provided dividend yields greater than 7 percent, with Omega Healthcare Investors leading the way at 7.59 percent. Omega Health Investors has steadily increased its dividends during 2012, moving from a 41 cents payout in the first quarter of 2012 to a 44 cents payout announced on Oct. 17. With those increases, the company continues to provide investors with a healthy yield, even after seeing a one-year price increase of 33 percent.
Shopping center REITs are next in line, with a dividend yield of 3.8 percent as of Nov. 1. Whitestone REIT leads the group, as well as equity REITs as a whole, with a dividend yield of 8.47 percent. The company has paid a steady dividend of 9.5 cents per month since completing its IPO in August 2010, and has enjoyed a price increase of more than 20 percent during the past year. Inland Real Estate Corp. is second among shopping center REITs with a yield of 7.05 percent. The company also pays a monthly dividend, and has paid out a steady 4.75 cents per month since the second quarter of 2009.
The regional mall REIT sector provided the lowest dividend yield at 2.91 percent. Yields ranged from 4.08 percent for Macerich to 1.85 and 0 percent, respectively, for Rouse Properties Inc. and Trade Street Residential Inc. Trade Street’s dividend has been suspended since the second quarter of 2007. Rouse is currently paying a seven cents quarterly dividend, on a closing price as of Nov. 1 of $15.16. Regional mall REITs, however, have provided a median one-year price change of 25.8 percent, compared to 19.8 percent for equity REITs overall.
—Jason Lail is manager of real estate research for SNL Financial.