Health-Care Property Owners May Lead U.S. REIT Dividend Boosts
Comment of the Day

January 25 2011

Commentary by Eoin Treacy

Health-Care Property Owners May Lead U.S. REIT Dividend Boosts

This article by Brian Louis for Bloomberg may be of interest to subscribers. Here is a section:
Health-care property companies trailed gains in the overall Bloomberg Real Estate Investment Trust Index in 2010, keeping the dividend yield of the group higher than that of office, regional mall and apartment owners. The Bloomberg REIT health- care index increased 13 percent last year, while the broader measure gained 25 percent.

The dividend yield for the Bloomberg REIT Healthcare Index was 5.3 percent as of yesterday, compared with 3.1 percent for office owners, 1 percent for hotels, 3.1 percent for apartment companies, and 3.8 percent for industrial landlords.

U.S. law requires REITs to distribute at least 90 percent of their annual taxable income to shareholders through dividends.

Other types of property owners may be slower to boost dividends after the U.S. recession increased vacancies and lowered income from commercial real estate. Almost 60 U.S. REITs cut or suspended their dividends in 2009, the year the recession ended, according to SNL. That was the most since 2000.

Four of the 13 members of the Bloomberg apartment index are projected to raise their next dividend, according to Bloomberg data. Three of the 17 companies in the office property index may have higher payouts, the data show. None of the members of the industrial and hotel indexes are projected to have increases.

Eoin Treacy's view Reliable dividend paying shares and trusts have enjoyed a revival over the last couple of years. This is at least in part because interest rates have fallen so much and Treasuries yields are still relatively unattractive. I have added the Bloomberg Healthcare REIT Index to the Chart Library.

Following a sharp rally from the March 2008 lows, the Index has moved into a more gradual advance, defined by a progression of higher reaction lows. It found support near the 200-day MA, again in December and a sustained move below 125 would be required to question potential for continued higher to lateral ranging.

Here are the results of a Chart Library Performance Filter for its 12 constituents, ranked by 12-month performance. Health Care Property Investors, Ventas, Health Care REIT and National Health Investors share the Index's chart pattern.

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