As part of its continuing efforts to enhance stockholder value, Omega Healthcare Investors Inc. (OHI) hiked its quarterly cash dividend by 2.1% to 48 cents per share from 47 cents paid in the last quarter. Notably, this depicts the company’s 26th dividend hike since first-quarter 2004. The new dividend will be paid on Nov 15, 2013 to shareholders of record as of Oct 31, 2013.
A steady dividend payout is in line with the long-term strategy of Omega Healthcare to provide attractive risk-adjusted returns to its stockholders. The new dividend rate results in an annualized yield of 6.05% based on the closing price of Omega Healthcare’s stock on Oct 15.
With low funds from operations (:FFO) payout ratio of 68.6% as of Jun 30, 2013, Omega Healthcare has adequate room to enhance its dividend rate going forward. Moreover, as of Jun 30, 2013, the company had cash and cash equivalents worth $7.0 million, up from $1.7 million as of Dec 31, 2012.
Solid dividend payouts are arguably the biggest attraction for real estate investment trust (: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. Notably, Omega Healthcare has a consistent track record of increasing shareholders' wealth. Most recently, the company hiked its dividend by 2.2% to 47 cents in the prior quarter.
Omega Healthcare invests in and offers mortgage financing to qualified operators of skilled nursing facilities (SNFs), as well as assisted living facilities (ALFs) and specialty hospitals in the U.S. As of Jun 30, 2013, the company owned or held mortgages on 477 assisted living facilities, skilled nursing facilities and other specialty hospitals, situated across 33 states.
Last month, another REIT - Host Hotels & Resorts Inc. (HST) – announced a 9.1% sequential hike in its quarterly cash dividend. The company will now pay a dividend of 12 cents per share compared with 11 cents paid in the prior quarter. The increased dividend was first paid on Oct 15, 2013 to stockholders of record on Sep 30.
Omega Healthcare currently has a Zacks Rank #3 (Hold). Some better performing REITs include LaSalle Hotel Properties (LHO) and Parkway Properties Inc. (PKY). Both of these 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