Health Care REIT February 20, 2012Posted by shaferfinancial in Uncategorized.
I have been paying very close attention to my ownership of this equity because over the last year  the payout ratio’s had gone up. But I am pleased to see them drop back over the last 6 months. The 4th quarter had a FFO payout ratio of 79% compared to 92% from the same quarter of 2010, which dropped the year long ration to 83%. This is a more normative ratio that gives me a good feeling on being able to increase the dividend in the future. While the FAD payout ratio was 89% for the quarter and 95% for the year. The FFO increased 11% for the year and 21% for the quarter [over the same quarter in 2010]. Debt remains constrained with overall debt around 52%.
As to the dividend, it was $.74 for the quarter an increase of 7% from the year earlier. I am satisfied with the 7% increase this last year, but expect a little better increase for 2012. Basically, I think the company needs to make up for a couple of years of sub-par dividend increases during the great recession.
As to the details of the performance:
$6 Billion in new investments for the year;
First Canadian investment will close this month [$925M]
12 New Medical Office Buildings last quarter
$178M in senior housing in the Northeast for the quarter
$627M in senior housing mostly in Southern California
The Company is expecting to see it’s FFO raise 8-11% for 2012
The Company is expecting its FFD to raise 9-12% in 2012
This is all good news and if the company can increase dividends in the 8-11% range for 2012 I will be satisfied enough to hold the stock going forward.
The market value of the REIT went from $47.64 to $54.53 in 2011 for a 14.5% increase.
My yield on cost is north of 12% at this time so my return was almost 27%. For the year the return was 21% combining the increase in value and the dividends paid. Current price is $55.46. Not bad, but I really don’t count the capital appreciation in my matrix, only look at the increase in dividends. That is why I was getting concerned about this equity, but the trend is back up again.
I think this is a good stock to own and continue to reinvest dividends.