Monday, December 23, 2013

Recent buy: Omega Healthcare Investors

Today I've initiated a new position. With €1.250 in fresh capital and some extra dividends I purchased 59 shares of Omega Healthcare Investors Inc (OHI). As I previously wrote, OHI is a Real Estate Investment Trust ("REIT") providing financing and capital to the long-term healthcare industry with a particular focus on skilled nursing facilities located in the United States.
OHI currently yields 6.4% and this purchase will add roughly €80 to my annual dividend income. OHI is a dividend contender with a streak of 11 years of consecutive yearly dividend raises and a 5yr dividend growth rate of almost 10%! 

I've compared OHI with other players in the REIT healthcare sector such as Ventas (VTR) and HCP. OHI is 5-6 times smaller in terms of revenue and assets. Based on Price/FFO, OHI is cheaper than others. However, based on 52wk high-low ranges and 5yr historic yield others have slightly more upside potential. It seems OHI sold off less in the last few months than other REITs.

Source: Google Finance (link)

OHI has shown consistent revenue growth in the past few years (~16% per year) so this amply covers the dividend growth rate. One of the reasons for this purchase is that I would like to get some (small) exposure to the REIT sector and also to some higher yielding companies. One of the best tips is to diversify through sectors, small/large cap, local/global, developed markets/emerging markets, etc. Yield diversification is another way of hedging your bets.

I probably have some capital left for a purchase next month. I am looking towards buying another EUR stock to decrease my (relative) exposure to the EUR.USD rate.

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