Real Estate Investment Trusts, or REITs, are a favored asset class for income investors. There is good reason for this, since REITs are required to distribute 90% of their taxable income to shareholders.
This typically results in high dividend yields across the REIT space.
Welltower (HCN) is a REIT specializing in health care properties, such as seniors housing and post-acute communities and outpatient medical properties.
On Jan. 26, the company raised its dividend by 1%. The upcoming payment will mark Welltower’s 183rd consecutive dividend.
And, Welltower is a Dividend Achiever, a group of 272 stocks with 10+ years of consecutive dividend increases.
You can see the full Dividend Achievers List here.
After the dividend increase, Welltower’s forward yield rises to 5.3%.
This article will discuss Welltower’s recent dividend increase in the context of its current fundamentals, financial position, and future outlook.
Business Overview
Welltower owns more than 1,400 properties in the U.S., Canada and the U.K.
Source:Â Third Quarter Earnings Presentation, page 17
Among geographic regions, Welltower has placed the following investments:
- U.S. (76% of Gross Real Estate Investments)
- Canada (13% of Gross Real Estate Investments)
- U.K. (11% of Gross Real Estate Investments)
The company’s focus is on high barrier-to-entry markets, such as urban areas and large cities. These markets tend to offer larger populations and pricing power, thanks to favorable supply and demand characteristics.
The company holds this emphasis across its Canada and U.K. operations as well.
Source:Â Third Quarter Earnings Presentation, page 20
Source: Third Quarter Earnings Presentation, page 19
These types of properties are the focus of the company’s investment. For example, Welltower placed gross investment of $1.2 billion in the third quarter alone.
