Dividend Hike at Ventas - Analyst Blog


Healthcare real estate investment trust (REIT) - Ventas Inc. ( VTR ) - announced an 8.2% sequential hike in its quarterly cash dividend rate. The company will now pay a dividend of 72.5 cents per share for the fourth quarter compared with 67 cents paid in the prior quarter. The increased dividend will be paid on Dec 31, 2013 to stockholders of record on Dec 16, 2013.

The dividend hike is based on Ventas' expectation of robust growth of 11% in 2013 normalized funds from operations (FFO) per share (excluding non-cash items). The company has a consistent track record of increasing shareholders' wealth and its dividend exhibited a 10% compound annual growth rate over the last 10 years.

After incorporating the fourth-quarter dividend, Ventas' total 2013 dividend came in at $2.735 per share. This reflects a 10.3% hike from 2012 dividend. Notably, solid dividend payouts are arguably the biggest attraction for 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.

In late October, Ventas came up with improved third-quarter 2013 results with normalized FFO per share of $1.04, exceeding the Zacks Consensus Estimate by nearly 2% and the year-ago quarter figure by 8.3%. An uptick in net operating income in its private pay seniors housing communities, triple-net lease portfolio and medical office building segment were the major drivers.

At that time Ventas raised its outlook for full-year 2013, backed by its solid business model, strategic efforts and accretive acquisitions. It projected normalized FFO per share in the range $4.12 - $4.14, up from the prior range of $4.06 - $4.10. The company also crafted a favorable lease extension deal with its tenant Kindred Healthcare Inc. ( KND ).

Going forward, we expect Ventas to benefit from its diversified portfolio, growing healthcare spending and aging population. Moreover, with strong quarterly results, the company is well poised to maintain its growth curves and simultaneously benefit the shareholders with steadily rising dividends.

Ventas currently has a Zacks Rank #3 (Hold). Investors interested in the healthcare REIT industry may consider stocks like National Health Investors Inc. ( NHI ) and Sabra Health Care REIT, Inc. ( SBRA ). Both stocks 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.

KINDRED HLTHCR (KND): Free Stock Analysis Report

NATL HEALTH INV (NHI): Free Stock Analysis Report

SABRA HEALTHCR (SBRA): Free Stock Analysis Report

VENTAS INC (VTR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: KND , NHI , SBRA , VTR



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