With almost a 8% dividend (7.8% at the time of this writing), Omega Healthcare (OHI) makes a nice stock to own in your retirement portfolio. It recently hit a short-term bottom at $32 and has been slowly moving back up. There is plenty of noise about buyers trying to get in at $28 which would be a great level but highly unlikely to get to that point. Yellen has mentioned that she plans to raise rates in September which should be a tiny raise and should not affect the pricing of this stock. Remember, the baby boomer generate is continuing to retire and move into senior housing which will benefit this stock.
Tag: OHI
I mentioned Omega Healthcare Investors Inc (OHI) in an earlier post. It has dropped 5% in the past couple days giving you an opportunity to buy at a undervalued price. The company posted earnings recently and beat forecasts by 0.40 EPS. As we know the market is speculative and sometimes not efficient, therefore, the stock dropped from a recent weekly high of $32.70 down to $30.70.
The stock is sitting nicely at low $31s as of this morning and it still gives you a great price to get in. Remember, you can take further advantage by purchasing through a tax-advantaged account like a ROTH IRA or Traditional IRA.
As expected, with the rate hike yesterday, dividend stocks have took a drop in prices. The two REITs that I mentioned earlier are both discounted for and you should briefly have some time today to take advantage. You can get Omega Healthcare Investors (OHI) for less than $30 a share. New Senior Investment Group (SNR) also is going for less than $10 a share.
I would recommend the Omega Healthcare Investors (OHI) as the market cap of $5.7B is much bigger than SNR’s market cap as less than $1B. It could be argued that New Senior Investment Group has more potential to go appreciate but I also like knowing that there are multiple hedge funds already in OHI and I’ve already seen it start its move back up in the technical front. SNR has continued to go down since I first started looking at it which makes me rather wait on that one until I see a bottoming pattern.
When I first started investing, I was never really was interested in dividend stocks. I wanted appreciation. I wanted to find the next Google (GOOG), Apple (APPL), Microsoft (MSFT), that next stock that will leap 1000% in appreciation retuns. The further I have gone into stock investing the more I understood that its rare to find these good stocks. I also know for retirement accounts which do not get hit with capital gain taxes when you sell that they are perfect for dividend stocks.
If I have a choice to a brokerage account or retirement account, you always want to invest the dividend stocks into the retirement account. You get the interest without any of the taxes involved. If I had bought the dividend stock in my normal after-tax brokerage account, I would have to pay taxes on the interest. Therefore, I rather load up my retirement accounts with dividend stocks that will pay for the long-term. This means I am looking for dividend stocks that have continued to raise their dividend year-after-year and they have a long-term track record of stock rising. It doesn’t matter that it appreciates only a little at a time because I am getting the nice dividends.
In the past year, I have advocated oil stocks like Chevron (CVX). It pays a nice dividend but it also has appreciated rapidly since my recommendations. The price makes it more tough to recommend such a stock since that means the dividend percentage is lower when you purchase at the price currently at $113 which gives it a 3.87% dividend. This isn’t bad but I also think the price is a little high.
I rather look at stocks that are weak now and undervalued. With the Fed planning to meet in the middle of December, there is a high chance that they will raise interest rates. This means strong dividend stocks will most likely get sold off. I am setting my radar on Omega Healthcare Investors (OHI) which pays over 8% dividend. I am also looking at New Senior Investment Group (SNR) which pays over 10% dividend. I have discussed them in the past article and I think they will be nice long-term holds that will continue to pay the dividend and hopefully raise it long term.
With the presidency of Donald Trump, there has been a steady growth of news that interest rates will rise. The rates even jumped the first week of his presidency. Dividend stocks also have taken a slight drop. Why would people want to invest in dividend stocks when they can get the same interest rate in the bank account?
Well, it will be a while before your bank will give you a similar rate if ever. Most banks are giving 1% or less in the savings account. Even with rising interest rates, I highly doubt that you will see rates rise to a point where it makes sense to move your monies from stocks.
Today, I want you to look at a couple REITs both in the industry of senior housing care. Both are under the radar with good reason. First, their prices have dipped as people expect interest rates to rise. Again, I don’t expect big jump in interest rates. This also has caused their prices to drop recently and it gives better reason to start investing in them. I do think that an increase in December rates maybe the BEST time to get in.
Why invest in Senior Healthcare Facilities?
First, the baby boomers are getting into retirement age. They don’t need a house anymore. The kids are out. They want community still and most importantly they want nursing care to live out their senior years. This is an industry that will be a great investment for many years.
Second, they pay a nice dividend that I expect will continue to increase. OHI, Omega Healthcare Investors, offers a 8% dividend. The stock has dropped from $38 to less than $29 in the past year. This means you get a substantial discount on a dividend that will keep on giving. The CEO has bought stock recently which is a great sign. Scott Black, the president and founder of the Delphi Management fund, has also purchased into this company. This company gets lots of revenue from Government sponsored programs like Medicare. If you expect a cut in these sponsored programs, it may not be a good stock to invest in. With a market cap over $5 billion, I believe this is a fairly stable stock that will continue to pay forward.
The second company is a more risky REIT that was recently spin-off in 2015. It offers a bigger dividend than OHI and I believe it has plenty of reward vs risk. It was once a $20 stock but now trades at 50% that price offering a nice discount. It also offers a 10% dividend at today’s rates. The stock is New Senior Investment Group with stock symbol SNR. With a market cap of less than $1 billion, there isn’t much coverage nor many funds that want to get into this one.
I believe this gives you more risk but the 10% dividend and for the smaller investor you can get into a stock with a substantial discount with plenty of upside. It did recently miss on revenue estimates. However, SNR gets all of it revenue from private payments. It doesn’t get affected by government sponsored programs. You don’t get the risk of the government cutting the program and you know that baby boomers will pay for the care.
Both of these stocks look like good plays for future investment. I expect the december rate hikes that I assume will happen will be a great time to get in one or both of these stocks. Please do your due diligence and research.
