Healthcare real estate investment trust (REIT) -
) - 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
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
Kindred Healthcare Inc.
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.
Sabra Health Care REIT, Inc.
). Both stocks carry a Zacks Rank #1 (Strong Buy).
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
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SABRA HEALTHCR (SBRA): Free Stock Analysis
VENTAS INC (VTR): Free Stock Analysis Report
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