Recent Buy

I revealed recently that I sold off the rest of my stake in Intel Corporation (INTC) late last week after the company declared a seventh straight dividend at the same rate – $0.225 per share, quarterly. I rarely sell, as many of you long-time readers are aware, but a static dividend is a big red flag for me. After extremely careful consideration I felt compelled to move on to other companies with better opportunities for continued dividend growth by way of growing profits, ensuring me increased purchasing power going forward.

The great thing is that not only was I able to make up for the lost income from the Intel sale, but I actually increased my dividend income and gave myself a great chance at better dividend growth going forward.

I purchased 60 shares of Omega Healthcare Investors Inc. (OHI) on 1/24/13 for $32.02 per share.

Omega is a real estate investment trust (REIT) that provides financing and capital to the long-term healthcare industry, with a primary focus on skilled nursing facilities. Their properties are located in the U.S., and spread out across 33 states. As of September 30, 2013 they owned or held mortgages on 477 skilled nursing facilities, assisted living facilities and other specialty hospitals. 

I was recently analyzing Omega and really liked what I saw. The growth over the last five years has been strong, and this REIT appears to be very committed to growing the dividend. Furthermore, the entry yield is very enticing at today’s price.

From 2008-2012 revenue has grown at a compounded annual rate of 16%. Now, the company also issued a lot of shares during this time which helped propel this substantial growth. Looking at revenue growth per share, OHI was still able to deliver relatively strong growth with a CAGR of 7%.

When looking at a REIT’s profitability you don’t want to use earnings because REITs have large depreciation costs. Instead, it makes more sense to use FFO (funds from operations), which adds back in depreciation and amortization expenses. And FFO growth over the last five years has been rather robust, with a CAGR of just over 12%.

But what about the dividends? Show me the money, right? As a dividend growth investor it is imperative for me to invest in a company that takes its business relationship with the part-owners (us shareholders) seriously, and so how can management show that it takes this relationship more seriously than handing out more cash every single year as the profits in the underlying company continues to grow?

Well, Omega has been able to grow its dividend for the last 11 years straight. It’s 10-year dividend growth rate is over 28%, and the 5-year DGR is just over 9%. These are very solid numbers here, especially considering that OHI currently has a yield of 6.1%. Furthermore, Omega has built up a fairly consistent record of increasing the dividend every quarter or every two quarters over the last few years. Most recently, the company announced a dividend increase to $0.49 quarterly per share, an increase of $0.01, or 2.1%, over the old quarterly dividend of $0.48 per share. And this was after the company increased dividends the last five quarters! A yield of over 6% backed by solid mid-single-digit growth is something I can get very excited about.

Furthermore, the dividend is well covered here by Omega. The company currently has a payout ratio of 80% using TTM FFO, which is healthy for a REIT. This means that there is a reasonable chance for further solid dividend growth from Omega going forward.

Another thing I like about OHI is that it’s a rather small company, with a total market cap of just under $4 billion. Most of my holdings are with fairly large blue-chip companies, and this provides me some exposure to a faster growing, mid-cap company.

The balance sheet looks fair, with just over $3 billion in assets against just over $1.8 billion in liabilities. The debt/equity ratio is currently at 1.4, and the interest coverage ratio is over 2. I don’t see anything to be concerned about here, as it is leveraged appropriately when comparing to other REITs in this space.

Overall, I really like Omega. The company has a track record of solid growth, and has shown a willingness to share that growth with shareholders in the form of rising dividends. Moreover, the aging population we have here in the U.S. bodes well for this healthcare REIT. According to the Administration on Aging, the population of persons aged 65 or older will be about 72.1 million – more than twice the number in 2000. While being over 65 years old does not necessarily mean one needs the assistance of a skilled nursing facility, the general trend towards an increasing elderly population simply means there is a greater pool of potential clients from which OHI can draw from. In addition, I like the fact that OHI focuses on the financial side of owning these properties or providing financing, while allowing third parties to provide the day to day care and operations. This means OHI can focus on what they specialize in.

Omega has been very active in issuing new shares and using this capital to fund new properties. In 2012, they closed over $500 million in new investments consisting of: 39 skilled nursing facilities, 6 assisted living facilities and 6 independent living facilities. The company continues to aggressively add to its portfolio in a manner that is most profitable for shareholders.

There are risks with this REIT. Clients that use the services of Omega are obviously dependent on income from Medicare. Any cuts in Medicare could impact Omega’s clients, and therefore Omega. Medicare is typically hard to target as far as budget cuts, and I feel that any risks there are outweighed by the growth in the population segment that OHI targets. Another potential risk is that Omega is not particularly diversified in other industries, but that’s why I like to own REITs in other industries like retail, office space and technology.

I valued shares using my typical Dividend Discount Model analysis. I used a 10% discount rate (my required rate of return) and a 6% long-term growth rate – well below what OHI has managed to deliver thus far. This gave me a fair value on shares of $51.94. I think it’s reasonable to assume that a 10%+ margin of safety exists in shares at today’s price. OHI currently trades at a P/FFO ratio of 13, using TTM FFO, which is fairly attractive, in my view.

This purchase adds $117.60 to my annual dividend income total based on the current quarterly payout of $0.49 per share. I purchased shares just before the ex-dividend date, so I will receive the February dividend. In addition, this dividend income more than makes up for the income I lost by way of the Intel sale. This purchase did not use up all of the proceeds from the sale of INTC shares, and I’ll be discussing what I did with the rest in the coming days.

My portfolio currently holds 43 positions. Although I closed out my position with INTC, reducing the portfolio to 42 investments, OHI was a new position for me and brought the portfolio back up to 43 holdings.

I usually like to include valuation comparisons from analysts with Morningstar and S&P Capital IQ, but neither firm tracks OHI.

I’ll update my Freedom Fund in early February to reflect my recent addition.

Full Disclosure: Long OHI

Do you like OHI? Own it? What are you buying right now?

Thanks for reading. 

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

Edit: Corrected grammatical errors.

Comments

  1. says

    That looks like it could be a long term winner Jason. It could also be a short term winner if investors keep fleeing to bonds and bond proxies (like REITs) as they have the last several days. My friend Roadmap 2 Retire has been talking about this REIT for a while and it’s on my list to analyze.

    Given the ageing population, facilities like the ones OHI owns should remain in demand. Plus, you’re right….for a REIT OHI’s debt load doesn’t look too bad. Are you averaging in? Or did you buy your entire position?
    -Bryan

    • says

      Bryan,

      Thanks for stopping by! I do hope you take the time to analyze the company. I’d be interested to see what you come up with. :)

      I think OHI looks solid in this space. HCP is another fine pick here.

      I’m going to average in. I don’t know when I’ll buy again, but as my portfolio grows I hope my position with OHI grows with it.

      Best wishes!

    • says

      Mantra,
      Cant go wrong with OHI. Its a great buy at current levels and the solid dividend payout will definitely give your passive income a boost. I have held OHI for a few months ago and the good news just keeps rolling each quarter with a dividend increase.

      Thanks for the mention, Bryan.

      regards

  2. says

    OHI sounds like a great addition to your portfolio. That dividend growth is certainly something to be admired! I’ll have to look into it deeper but I already have 3 REITs in my 17 positions so it’ll be awhile before I look to add anymore.

    • says

      Divi Me Up,

      I don’t blame you for holding off on any more REITs with your exposure as it stands. I’d like my long-term weighting to REITs to be somewhere around 5%. I’m okay if this oscillates a little in the meanwhile, but I find that number to be attractive for me.

      Thanks for the perspective!

      Best regards.

  3. says

    Nice yield. I’m not a fan of any REIT other than O. Only VNQ for me! I know OHI has had some tough times in the past and seems to have come through ok. I’m personally not very risky. I would have bought KO or GE instead, but ur a lot smarter than me though, so nice pickup.

    • says

      Monty,

      Hey, I’m not smarter than you or anyone else. I’m just a regular guy working at a car dealership who loves to research and invest in companies that grow their dividends. :)

      And regarding KO and GE they were both high on my list for the second purchase with the remainder of the capital I had left over, and I did pick one of them. The one I didn’t pick is still high on my list for a buy in February.

      Cheers!

    • says

      I’m waiting for Friday/payday. GE and TGT are great deals now IMO. I’ll probably be purchasing both on payday. Of course, COP is on sale now too. So many deals so little powder….

    • says

      Monty,

      So many stocks, so little capital. I need to win the lottery. :)

      I agree on GE and TGT. TGT is one I’ve been loading up on over the last few months, and I’m looking forward to adding more GE very soon.

      Cheers!

  4. says

    A solid buy here, and certainly more than a capable replacement for Intel. As an owner of OHI myself, I have been pleased with the regular dividend raises and like yourself look forward to seeing the market expand as the overall population ages.

    Looking forward to seeing what your decided on as your second purchase.

    • says

      w2r,

      Glad to be a fellow shareholder with you!

      I’m super excited to be invested in Omega here. The yield and dividend growth is a phenomenal combination. Even with a slower growth rate in the mid single-digits we’re looking at very attractive total returns here, and the demographics bode well for this company.

      Best regards.

  5. Anonymous says

    Yay, I bought 332 shares of OHI at $30.13 towards the end of December when all the fed interest rate panic was going on. Glad for the reassurance my purchase was a good one! Thanks Jason.

    • says

      Anonymous,

      Wow! Nice move there. That’s called backing up the truck! :)

      I wish I had capital like that to make buys with, but I’m building my castle of freedom one brick at a time. Congratulations on getting a great price there. If Omega falls below $30, which is certainly possible with interest rate changes, I’d be willing to double down if the capital is available.

      Take care!

    • says

      Investing Pursuits,

      Thanks for the support! Glad you agree with Omega here. There’s not much to dislike across the board here. Certainly there are risks, but what company doesn’t have risks? I’m hoping for continued dividend growth, even if it’s not as robust as what the company has been able to deliver over the last few years.

      Best wishes.

    • says

      Anonymous,

      That wasn’t my aim, to be honest. Can you please elaborate on why you feel that way?

      If I was really reaching for yield there’s some mREITs and BDCs that I could have easily gone for with 12%+ yields.

      Take care.

    • Anonymous says

      You are taking on a lot of risk only because it makes your yearly dividend better. I told you were talking on a lot of risk when you bought that last REIT that crashed 30%+ in two months right after you bought it.

  6. Spoonman says

    OHI is a solid company, with excellent yield and respectable growth prospects. I own quite a bit of OHI, so I’ve resisted the urge to buy some more. But I may succumb if it goes below $30 like it has in the past.

    Three cheers to moving on!

    • says

      Spoonman,

      Glad to be on board with you here with OHI. I’m easing my way in, like I do with most purchases. But if it drops below $30 I’d be there with you on buying more.

      Anything on your radar right now?

      Best regards!

    • Spoonman says

      Right now I’ve got the following companies on my radar: TGT, BP, WMT, WFC, IBM. I’m also hoping that NNN or UHT become cheap again one of these days. I initiated positions in those companies back when I started my journey and neither of them has quite come back down to reality just yet. I’m also thinking about initiating a position in UL, I’ll keep my eye on it.

  7. says

    I am also in the senior living space with HCP. I was going to buy OHI today but decided against it because of my position in HCP. I also have a small stake in STON which I think is an interesting play on the aging population.
    As you said “Clients that use the services of Omega are obviously dependent on income from Medicare. Any cuts in Medicare could impact Omega’s clients, and therefore Omega. Medicare is typically hard to target as far as budget cuts, and I feel that any risks there are outweighed by the growth in the population segment that OHI targets. Another potential risk is that Omega is not particularly diversified in other industries, but that’s why I like to own REITs in other industries like retail, office space and technology.”

    The thing is you can’t stop people from dying, at least not yet. That is why I own STON.

    (I meant to say the following in my first post but forgot to)
    As a side note I have been following you for about a year now and can say I am very impressed. It has been awesome to see your portfolio valuation close in on $150,000 and # of page views cross the 2 million mark. As a 16 year old I have also decided that dividends are the way to go. I am slowly building up a base of dividend payers and then I will take about 10% of my portfolio and look for some growth stocks. Because of my age I figure I can add a little risk. I also tried to start writing for Seeking Alpha but they have an age requirement so I was denied. I may end up making a blog for myself titled “Dividend Prodigy”. I will continue to follow your journey and I wish you all the best.

    Dividend Prodigy

    • says

      Dividend Prodigy,

      HCP is another fine pick in this space. I ultimately chose OHI because of the higher dividend growth rate and bigger yield, but I could see myself owning a chunk of HCP at some point in the future.

      Congrats to you on starting so early. Investing in high quality stocks at 16 is most impressive! If you decide to start your own blog make sure you stop by and let me know. I’d love to check it out.

      Keep up the great work!

      Best wishes.

    • says

      AAI,

      I’m late to the OHI party, but I brought pizza! :)

      Great to be a fellow shareholder. I looked at Omega over a period of two days, and I just couldn’t really see anything that I didn’t like. The growth was solid, the company is still small and nimble, and demand for their services isn’t going away anytime soon.

      Cheers!

  8. says

    For 2013, 17.41% of their “dividend” was a ROC, the rest was ordinary income(not qualified). This is the case for most REITS though it seems. I’ve always viewed ROC as very negative. Also issuing more shares which again is something most REITS do I don’t view as positive. I mean ROC + issuing more shares = bad, at least imho.

    I’m sure you have opinions on this,and I would love to hear them. REITS seem to be very very popular but I don’t see the appeal.

    Note I actually do own REITS but only through index funds and they make up about 1% of my portfolio. The only reason I own them is to diversify some of my holdings into real estate.

    • says

      I personally agree with your observation. I was amazed how most REITs actually dilute the shares like this. I have to admit that I do like the yield that most of them provide, so I personally keep around 10% in REITs, but only in an index fund. REIT accounting worries me too much – My 10% is in VNQ.

    • says

      The Dividend Guy,

      I hear you. REITs aren’t for everyone, and I plan on keeping my overall allocation to REITs quite low – at maybe 5% or so.

      I like to have a nice mix of stocks in my portfolio. You’ve got your low yielding/higher growth plays (like IBM), your “sweet spot” stocks with 3% or so yield and 7-10% growth (JNJ, KO) and then you’ve got your higher yielding/lower growth stocks like REITs. I think all of them have a place in my portfolio, but I obviously prefer to allocate the most weight to the stocks in that “sweet spot”.

      As far as issuing shares, you want to look at growth on a per-share rate. I calculated both the growth rate before accounting for share issuance and after. Even after accounting for share issuance this REIT has grown at a substantial rate, which indicates they’ve been particularly intelligent with shareholder capital. That won’t always be the case, but that can be said for any business.

      Best wishes!

  9. says

    I have some VNQ shares as well. I prefer bonds for yield usually. They say interest rates are rising but nobody really knows, so I buy a little every month and try not to think about it.

    Currently I am slightly overweight bonds so I am slowly adding some stocks/etfs with higher dividends(3% or more).

  10. says

    Hey Mantra, nice picks. I like your style of investing and i’ve taken a leaf out of your book the last year, nice to have something on the side to grow while trying other ideas out. I am much more aggressive but i don’t mind that at this stage, my style is price first with a dividend for backup. i like dividends but also like speculating. Anyway back to dividends :P I agree with your Intel consensus currently although i think, like IBM believe it or not they will turn around and become a competitor again so i will be looking for an entry where i think the valuation becomes too extreme..happens to the best of them.
    I have a question for you, all the panic in the emerging markets, i’ve been looking at some stocks in that sector – what do you think of PBR in its current guise? I really like the valuation here, the sentiment is horrible – yes all the metrics don’t make sense but they are a huge company. For me that is an opportunity but i totally get why it may not be suitable and too risky for many reasons.

    • says

      TalesFromTheTape,

      Thanks for stopping by.

      I haven’t actually followed PBR at all. I’ve never took a look at them, but I’d be careful with something like that. I prefer to stay away from ownership in foreign companies unless the government is very, very trustworthy. As such, I mostly stick to researching investments in the UK and the rest of Northern Europe. I know that it seems highly unlikely because there hasn’t been any global unrest in quite some time, but you have to always keep the thought of nationalization in the back of your head. I’m just conservative like that. It’s the price of sleeping well at night. Beyond that, PBR doesn’t seem to have a regular record of dividend increases, unless I’m not looking at them correctly. Furthermore, the yield is quite low. I’d just prefer to go with a Chevron if you’re looking for a high quality, fully integrated oil company. It’s U.S.-based and you get a higher yield and a significant record of dividend growth.

      Just my $0.02. :)

      Best wishes.

  11. says

    DM,
    I’m in the HCP boat at the moment, but looking for another pullback. For now I’m just holding one REIT because I need to diversify more broadly before adding another HC REIT. But that’s some nice yield!
    -RBD

    • says

      Retire Before Dad,

      HCP is another great pick here. I only went with OHI because of the higher growth rate and bigger yield. I wouldn’t mind owning a piece of HCP in the future, however.

      Best regards.

  12. says

    Hi Jason
    You should have also bought these at a reduced cost following the recent falls, thereby increasing the number of shares and the income compared to the recent higher prices.

    I am looking at buying shares with my accumulated dividends following two more payments in early February, and as I have posted on my blog, I hope the recent falls in prices remain so I can buy more income for the same price.

    Best Wishes
    FI UK

    • says

      FI UK,

      I’ll definitely look to purchase more if the price falls further. OHI can be quite volatile in the face of interest rate changes, as can REITs in general. So further rate hikes could provide a nice opportunity to average down.

      I’ve got quite a few stocks on my watch list right now. It’s incredibly tough to find enough money for them all, but it’s also pretty fun shopping. :)

      Cheers!

    • says

      moneycone,

      O is a fantastic REIT. That was my first ever REIT investment. I’m planning on holding on to my shares in Realty Income for many, many years.

      OHI does indeed look compelling. I was actually researching the company for an article I was writing for Daily Trade Alert and found the numbers pretty juicy and the future bright. I was then compelled to purchase a stake in the company.

      Glad I could provide you a potential idea. :)

      Best wishes.

  13. says

    Sounds like a good buy! I don’t own any REITs, but the one takeaway I had from my consultation with Personal Capital was that we might benefit from having some alternatives (precious metals, commodities, REITs) representing a small portion of our portfolio. We’re considering a slight change to our AA…maybe REITs will be part of that.

    • says

      I was writing my post below just as you wrote this. I would encourage this strongly! Btw I LOVE LOVE LOVE personal capital. Fantastic, and did I mention free, tool. It really helps put things in perspective when you have a large number of holdings.

      If you’re uncomfortable with REITs which is totally acceptable, especially if you don’t understand how they work and how you can value that risk, consider MLPs. Particularly in energy MLPs based in the US. Very strong yields and likely to distribute gobs of cash over the next 15 years due to all this oil development.

    • says

      DB40,

      That’s cool to get a nice AA analysis. Definitely food for thought!

      I don’t think I’d ever be comfortable with precious metals, but I’m okay with REITs here as long as I keep it a small part of the portfolio.

      Personal Capital is indeed an interesting and valuable service. I’m going to do a review soon on PC. :)

      Take care.

  14. says

    Have you considered any non-long term dividend growth stocks as part of your income portfolio? Are you familiar with the “efficient frontier” concept in portfolio theory? You can google search it and find tons of research, but the basic idea is an upward sloping parabola with risk on the x-axis and return on the y-axis. Based on the concept, I think your portfolio leans a bit too far to the left… meaning, for a small increase in risk you can gain a large amount of return. The essence is that you are trying to maximize your return to risk ratio (maximum return per unit of risk).

    This concept can be applied to allocation (stocks, bonds, alternatives, etc) or even within a single class (stocks), or in your case (dividend stocks). In this case, you may consider leveraged income funds, energy MLPs, or mortgage REITs to amplify your current income. Of course, these will increase your portfolio’s volatility, but will even more greatly amplify your returns in a 10 year horizon.

    Example, I bought TWO (mortgage REIT investing in asset-backed securities) 200 shares in 2/2012 at $9.92/sh ($1,983 basis). At this time, yield was around 14% ($0.40/sh/quarter) I believe. I knew this yield would drop going forward since rates were at multi-decade lows. Today, it yields around 10.5% ($0.26/sh/qtr), with the possibility of dropping further. The neat thing is that today, 1/28/14, my position has a net value of $2,548 (total return 28.4%, annualized return ~13.3%). This includes reinvested dividends. If I had no reinvested, I would have received total dividends from purchase to today of $2.88/sh (between 2/2012 and today). During this period, price per share has fluctuated from ~$9 to $12.50… but I didn’t care!

    With a 10-year horizon, I expect to hit one more recession cycle (which will increase the yield slightly). Investors typically price a REIT of this type to yield at least 9% (meaning your share price may fluctuate a solid amount +/- 25%), but your dividends will keep pouring in which you can (read: SHOULD) continue to invest in your more typical growth investments.

    In finance terms, a REIT (or MLP or leveraged income fund like YYY) will increase your current yield at the expense of future yield… TWO will likely underperform dividend stocks over the long long long-term… but by increasing liquidity (current cash flow) it allows you to more effectively reallocate capital on a regular basis. After all, outperforming based on a dividend growth investing style is highly dependent on finding good stocks at a good price.

    In your portfolio ~$140K, even a small amount around $10K (7%), could greatly amplify your income potential on a 10-year horizon while adding a small amount of risk. Full disclosure: I am a CPA with degrees in Accounting and Finance and currently work at a Fortune 10 in Treasury. My job has nothing to do with investing for retirement, but I probably spend around an hour a day reading anything I can get my hands on.

    Consider several investments, perhaps one asset backed REIT (note this is NOT a mREIT which is definitely higher risk), one MLP, and one income funds/ETFs (iShares or Nuveen are probably a good place to search) for a gross investment under $14K (10% of your portfolio today). You can get terrific exposure to some alternative investments (decrease your beta–market sensitivity), strong current income (you can target 7-9% on a combined basis), and on a 10-15 year horizon get a great total return!

    Thoughts?

    • says

      Ravi,

      I’ve purposely stayed away from mREITs like AGNC. I just don’t totally understand the business, and investing in something that I can’t fully analyze and understand is a big no-no for me. Furthermore, I’ve not been that impressed with the performance of many of these stocks. AGNC, for instance, is down some 34% over the last 52 weeks (before factoring in the dividend). I also wonder what’s going to happen to some of these companies when cheap money stops flowing? And then you have the dividend cuts. These stocks just go in the wrong direction, in my opinion. I’m looking for consistent and reliable growth in my income, well above the rate of inflation – not cut after cut.

      I find the risk-adjusted returns that many dividend growth stocks offer to be just too much to pass up, and more than enough for me. I aim for 10% returns, but I honestly don’t even need to knock it out of the park to reach my overarching goal of retiring by 40. I ultimately view one’s ability to save as more important than one’s ability to consistently beat the market (a metric I don’t follow). I believe in saving aggressively and investing conservatively.

      Thanks for stopping by. I do appreciate your perspective. I just don’t think I need to take on additional risk when the companies I invest in are already providing me what I need. Greater risk does not always mean greater returns, and that’s something that gets repeated over and over again throughout history.

      Cheers!

  15. Paul says

    DM,

    For many of the reasons that you cited, I have owned shares of OHI for quite some time. Although one poster suggests that investing in OHI is nothing more than chasing after yield, my experience suggests otherwise. Over time, my position in OHI has gained 43%. As you stated, there has been steady growth and management consistently delivers dividend increases. I have to say that the performance of OHI has been about as “blue chip” as a REIT can be. I’m sure happy with an annual income of $2,255 just from from OHI!

    By the way, I really enjoy your blog. Your stock analysis is very good. Although I am quite a bit older than you are, it never hurts to see what others are thinking. Sometimes I need the sanity check!!!! DM, you’re definitely on the right track to a future where you can call your own shots. During the “tech wreck” of fifteen years ago and during the “great recession” of 2008/2009, when people cashed out everything and fled the market in a losing panic, I threw every available dollar that I had into the likes of MMM, MO, KMB, KO, PG, COP, MCD, etc. Believe me, it required nerves of steel to throw money into a sinking market.

    Today, at age 55, I work maybe 10-15 hours a week doing part time consulting. If I wanted to do so, I could quit working and be completely retired. Dividend income allows me to have such options. It’s funny, my acquaintances all seem to want to chase the next Tesla or the next Twitter. No thanks, I’ll stick with boring detergent, tobacco, diapers, and oil.

    Regards, Paul

    • says

      Hi Paul, thank you so much for sharing this. It wipes the face off many naysayers. It is real good to have the more seasoned investors posting here as well, please keep it up!

    • says

      Paul,

      Congratulations on putting yourself in the position where you can completely live off dividend income. You’re living the dream! That’s fantastic. I can only hope I’m in your position one day. :)

      I can totally understand how difficult it was to invest during the height of panic back in ’08 and ’09. I started in early 2010, and the market definitely had not completely recovered yet (thankfully). It was hard to throw most of my worldly wealth in the stock market and just make a go of it. Life rewards the brave sometimes. Good for you for doing what was necessary to acheive the wealth necessary to not have to worry about work anymore. Incredibly freeing, I’m sure.

      Would you be open minded for an interview? I’ve been interested in interviewing people that already live off dividend income, and I did one with Derek Foster a little while ago. It’d be cool to hear from another investor who has already been to the other side. :)

      If you’re interested, please feel free to email me at: dividendmantra@yahoo.com

      Stay in touch!

      Best regards.

  16. says

    DM, OHI looks good, and is in sync with my efforts to balance my portfolio over the next 3 months, I will consider a full position in OHI soon, thanks.

    • says

      Katz,

      Glad I could offer a suggestion. I know you didn’t agree with my Intel sale, but I’m glad to know you like what you see with OHI. The numbers look very robust, and I think demographic trends are a huge tailwind for the company.

      Cheers!

  17. says

    Cool DM,
    you bought your second REIT! :-)

    first REIT: O – industry
    second REIT: OHI .- healthcare

    Why do you bought OHI and not HCP – I think both are in the healthcare-industry.

    OHI: PER and dividend-yield is a lilttle bit higher than HCP.
    More PER = negativ
    More dividend yield = positiv

    Best regards!

    D-S

    • says

      D-S,

      This is actually my fourth REIT – I also own O, DLR and ARCP.

      I like HCP as well. I only picked OHI because it has both a larger yield and greater dividend growth rate. However, I think HCP is another great pick in this space. I wouldn’t mind at all owning a piece of HCP in the future, as it has an outstanding track record.

      Take care!

  18. says

    OHI is a good stock. I have it in my Motif investing account. I cannot be buying more REITs as I am already quite exposed to this industry. But I like the stock and plan adding more as my allocation allows.

    • says

      Martin,

      Glad to be a fellow shareholder. I don’t have a heavy allocation to REITs, and I plan to keep it that way. So if OHI falls significantly I wouldn’t mind adding to it, or adding another REIT, for that matter.

      Best wishes.

  19. Eric74310 says

    Hi Jason,
    Would be great if you can interview Paul and others “veterans”, their experience is unvaluable for us.
    Also to compare DGI with real estate and business investing methods and results.
    It’s difficult to find datas and practice have a better taste than academic backtests.
    Also we are stange people, we invest all our money in the market and we pray for the next financial collapse ;)
    Take care, it’s a long road but we are running faster and faster !
    Eric (France)

    • says

      Eric74310,

      I’m hoping to interview a few people that are already retired and living off dividend income over the coming year or so. I interviewed Derek Foster a while back, and he’s been living off dividend income for a while now. It’d be really interesting to get a few different perspectives and stories from people who took different paths or used different methods.

      I agree that we’re strange in that we hope for the price of our investments to actually fall so that we can accumulate more shares for the same amount of money. Although, that’s probably just true for those of us in the accumulation phase. I’m not sure how much I’d enjoy watching my portfolio crash if I were living off my dividend income. I suppose at that point I wouldn’t be glad, but would also probably not be upset either. I guess I’d be neutral, but we’ll see in the end. I hope to one day just be in the position to find out. :)

      Thanks for stopping by from France! It’s wonderful to have a readership from across the globe.

      Cheers!

  20. says

    I like the OHI purchase and it’s on my list of possible buys. I’ve been quite surprised with how well REITs in general have been doing this year. There’s not a lot of companies that will offer such a high DGR with that high of a yield so you could have a huge winner here. If I remember correctly OHI is fairly concentrated in a few health care sectors. Any concerns on that front or do you feel those are the best places to be? I went with HCP for my first healthcare REIT specifically for the diversity they offer.

  21. says

    Hello,

    I look at the recent cash flow statements on OHI, and it looks like the dividend payouts have been exceeding the free cash flows (operating cash flow minus capex), which is normally not a good thing.

    I’m relatively new to REITs, and I understand that there are other things to look at as opposed to with other companies, such as using FFO instead of earnings.

    Am I missing something here? Just worried about dividend sustainability.

    Thanks to anyone who can help me understand.

    Dave

Join The Discussion!