Latest Stock Purchase 5/27/14

Well gosh darn it, I did it again!  I purchased 3 individual stocks on a market trade with my brokerage account that was set in the past!  But it’s okay, that bulk purchase of $2,772 spread event over three companies provided me with quite a “bang” to my annual dividend income.  Here is the breakdown of the trades that happened a few days ago on May 27, 2014:

Can we say I’m diving into some Real Estate Investment Trust (REIT) action?  Reason being: The market is going well for rental income, and those that are unable to buy flat out property or are locked into long term leases – REITs are a solid investment.  Additionally, they payout essentially 90% of the Funds From Operations (FFO) to their shareholders.  A few years back, I pondered an interesting “Niche” for lack of better words within the REIT realm – Healthcare area.  Here are the breakdown of each of the three ($924 invested a piece):

Healthcare

Senior Housing Properties Trust (SNH) From Google to make this short “The Company owned 369 properties located in 38 states and Washington, D.C. Its portfolio includes 249 senior living communities with 29,678 living units / beds and two rehabilitation hospitals with 364 licensed beds; 108 properties leased to medical providers or medical related businesses, clinics and biotech laboratory tenants (MOBs), and 10 wellness centers with approximately 812,000 square feet of interior space plus outdoor developed facilities. The first operating segment provides short term and long term residential care communities. The second operating segment provides properties where medical related activities occur but where residential overnight stays or dining services are not provided. On December 31, 2013, the Company sold two rehabilitation hospitals to a joint venture consisted of affiliates of The Sanders Trust, LLC and Harrison Street Real Estate Capital, LLC.”  The company is growing, their dividend is growing and they have had sufficient cash flow to provide their dividend.  I like this REIT simply for the fact that they are senior living communities, and the trend in the population is catering towards those retiring baby boomers.  I’ve been excited for this stock for quite some time.

Medical Properties Trust (MPW) From Google to make this short “A self-advised real estate investment trust (REIT) focused on investing in and owning net-leased healthcare facilities. The Company conducts substantially all of its business through MPT Operating Partnership, L.P. The Company acquires and develops healthcare facilities and leases the facilities to healthcare operating companies under long-term net leases, which require the tenant to bear the costs associated with the property. The Company also makes mortgage loans to healthcare operators collateralized by their real estate assets. In December 2013, the Company announced that it has completed the acquisition of the real estate of 11 rehabilitation facilities in Germany operated by RHM Klinik- und Altenheimbetriebe GmbH & Co. KG.”  I like this REIT for the healthcare facilities, it’s growth in that realm and the fact that it requires the tenant to bear costs of the property.  Additionally, it is surrounded by healthcare real estate, which the trend in healthcare is to have more available resources to service the needs of this country as well as globally.

Sabra Health Care (SBRA)From Google to make this short “A wholly owned subsidiary of Sun Healthcare Group, Inc., a provider of nursing, rehabilitative and related specialty healthcare services to the senior population in the United States. As of December 31, 2010, its portfolio consisted of 86 properties, which include 67 nursing facilities, 10 combined nursing, assisted living and independent living facilities, five assisted living facilities, two mental health facilities, one independent living facility, and one continuing care retirement community. In February 2014, the Company acquired six undisclosed senior housing campuses, located in Omaha, Nebraska. In March 2014, Sabra Health Care REIT Inc completed the acquisition of two skilled nursing facilities with a total of 254 licensed beds. In May 2014, the Company acquired senior housing campus in Fort Wayne, Indiana.” Again, similar to SNH above, this correlates to the senior population and is there for nursing and assisted living, which is the other end of the spectrum from SNH, as they are geared towards senior living, whereas this is more for caring/assisting with the senior community.

So now – with that being said – You see how that touches on 3 different areas of healthcare: Senior Living, Healthcare Facility properties, Senior Assisting/Nursing facilities.

Metrics: They all sported somewhere between 5.25 – 6.75% yield, not too high for a REIT, but definitely not too low.  They all had increasingly revenue trends for an above the line perspective, all are investing into additional facilities to service more and more clientele – which is the direction our country is heading with healthcare and age.  Additionally, I wanted to “spread” my risk by purchasing three different players in this market.  Also, as a little tax perspective – I purchased these in my Roth IRA, and therefore, won’t be subject to taxation, though I won’t essentially be able to use the dividends as a mean of living until 59.5.  Further, this plays with my goal to increase my Roth IRA overall yield of 3.00% which was described at my Portfolio Goals breakdown.

This total/combined purchase of $2,772 adds $166 to my projected annual Dividend Income, which inches me closer to my projected annual dividend income goal of $3,750.

What do you think of REITs and/or the Healthcare arena?  Would you be investing?  Thoughts about me purchasing this into a ROTH rather than my individual?  Always curious and of course – thanks for stopping by.  In the words of the DD – “Keep Dividend Investing, my friend”

-Lanny

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7 thoughts on “Latest Stock Purchase 5/27/14

  1. I own a few REITs and my opinion is that they are a decent hold. They pay high dividend but often have close to no growth. Some actually decline in growth cause their payouts are so high they seem to implode. I love their often monthly payouts but many Reits they include interest payments in part of their dividends so they are not as tax efficient. They are good holdings if markets crash cause tenants are very steady. As long as you stay with very large dependable REIT companies I think they are a good hold, I would just stay away from chasing yield and self imploding REITS which their are many!

    Good Day and Grind ON !

    • Asset-Grinder,

      Thanks for rolling on by. I agree – I have owned REITs in the past, where the dividend is either no growth or slow/little growth. I think I like where it is within the Roth IRA, where really it’s to pump and grow the base of that portfolio at a slightly faster rate. Luckily it’s a very small % of my overall retirement portfolio, but I am hopeful that I didn’t choose the alarmingly high dividend yielders in the REIT realm and that the 5.25-6.75%ers stay somewhat around that range. There are definitely many REITs that pay from 10%-20% rates! I won’t be heavily invested into those as the sustainability in the long-term isn’t clear/there. I would say it’s safe to play with REITs.. in moderation. Thanks again AG!

      -Lanny

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