Senior Housing Property REIT's Dividend Yield Tops 6%


Combine a dividend yield of more than 6% and a steady stock performance, and you have the makings of an appealing income stock.

That's the basic profile ofSenior Housing Properties Trust ( SNH ), a real estate investment trust, or REIT, that owns senior living communities, medical office buildings and other facilities in 40 states and Washington, D.C.

In total, the Newton, Mass.-based company has about 400 buildings in its portfolio.

Because it is structured as a REIT, the company pays out most of its profit -- or fund from operations, as it's called for REITs -- through dividends.

It currently pays a quarterly dividend of 39 cents a share, which works out to an annualized yield of 6.5%.

The annual dividend has risen steadily from $1.24 a share 10 years ago.

The stock's long-term chart shows that it's been basically sideways since 2009.

Its current yearlong correction of 31% is the deepest in that span. At the same time, it has offered little by way of share-price appreciation.

Senior Housing Properties believes that the aging baby-boomer generation is working in its favor. Demand for senior housing is exceeding supply, the company says. An aging population also is raising demand for health care.

Among rivals, Senior Housing Properties says that it has the highest percentage of revenue from private tenants while having the lowest exposure to Medicare and Medicaid tenant revenue.

Its funds from operations have been lower or flat for many quarters. Pretax margin for 2013 was 24.2% -- healthy but still below the 45% peak in 2007 and 2008.

IBD's property REIT industry group, which has about 170 companies, has been rising quickly in rankings as investors flee from more speculative investments. The group ranked No. 36 out of 197 in Friday's edition, rallying from No. 128 just three weeks ago.

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 , Investing Ideas

Referenced Stocks: SNH

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