Cosmo, I played a few REIT's over the years but only kept 2 for the long haul. HCP was sort of a spinoff from Tenet Healthcare, formally known as National Medical Enterprise, where HCP bought hospital, healthcare facilities and medical office buildings from the owners and then leased them back. The other is MGI, Mortgage Growth Investors, they bought and rented out commercial and residential properties. MGI is now liquidating their assets at good prices and paying the proceeds to shareholders as a liquidation distribution. Management decided that the maximum benefit to shareholders was to liquidate, not that business was bad or that the company was in financial trouble.
Since its inception in the 1985 IPO, HCP has INCREASED its dividend EVERY QUARTER. The initial split adjusted IPO price was $10 per share. On that original $10 per share cost basis, a total of $27.19 was paid out in dividends over a 14 1/2 year holding period. During that period the stock has appreciated to $27 7/16, yesterday's closing price. The current price has trended down in the last year or two due to the overall market disenchantment for any REIT stock. However, due to its dividend policy, the yield goes higher when the stock price drifts lower or remains the same. Current yield is 10.59%. With a yield that high the stock price has downside protection.
A side benefit for owning REIT's is that the dividend paid usually is not all taxable. Almost every year, there is a portion that is either a return of capital, or a capital gain.
The key to successfully playing REIT's is to find a niche company that owns real estate that will not fluctuate greatly in value from boom and bust periods. I lucked out with HCP.<g>
Regards |
