$HCP

[DRILLINDK]

What's everyone's opinion of HCP? I'm considering entering a core position while it's at $40.

[Dividend Watcher]

It's one of the few Dividend Champion REITs. I also think it's the only REIT on the S&P Dividend Aristocrat list. Yields over 5.5%. Don't know what the trailing P/FFO is without going to look it up but at $40 it's not outrageously priced. It's in my wife's portfolio with a cost basis of $38 and, IIRC, the P/FFO at the time was in the low teens.

They had a stink a couple years ago about the old CEO leaving/being forced out. Don't know the internal politics but the new CEO, who had a lot of experience with REITs before taking over, seems to be keeping an even keel.

I like their diversification across 5 difference aspects of the healthcare field: senior housing, post-acute/skilled nursing, life science, medical office and hospital. To me, this may hinder their performance at times but it may also help with the volatility in a down market.

Not buying more for her right now because she's at a full position but am reinvesting the dividend. All my notes are old. I was going to redo my research on it later this spring because I was thinking of adding it to my portfolio sometime this year also. Maybe it will go down once interest rates go up but it hadn't climbed as much as the rest of the REITs this year also.

[DRILLINDK]

I agree, I think it's a great company and would love to pick up shares soon.

[earthtodan]

VTR is the one on my list since it has a higher dividend growth rate. However it has a lower starting yield.

[Dividend Watcher]

I like VTR too. If it were to take a decent drop, I'd add it to at least my portfolio but not at mid-3% yield.

[Kerim]

In the "What Did You Buy Today" thread I saw that Forward Dividends just picked up some more HCP, and Alex is playing with it too. I've been looking at it myself again lately, so I though I'd dust off this here thread and see if people would share more detailed thoughts about it.

I want to increase my exposure to both healthcare and REITs. I'm mostly looking at the "big 3" -- VTR, HCN, and HCP. I'm sure many of the others are great, and may be able to grow a lot faster, but I'm not in a speculating mood and take comfort in the larger capitalization.

Of the big 3, I am mostly attracted to HCP given its 30-year streak of dividend increases and higher starting yield. Its dividend is growing much more slowly than VTR's has in recent years, but HCP's starting yield is more than 2 percent higher. A bird in the hand!

There has been a lot of concern about troubles with HCP's biggest (by far) tenant HCR ManorCare. I just quickly read through the Q1 earnings call transcript, where management fielded a lot of questions on the subject. It seems like a real issue, and HCP took a hit restructuring leases for HCR, but they insist that they got value out of the deal. Of course they'd be inclined to put on a calm front, but I did come away reassured. Seems like they understand the problems and are managing around it.

Anyway, so I'm inclined to pick up a bit more HCP. But I'd love to hear more pros and cons, or arguments for either VTR or HCN instead (or yes, even OHI).

Thanks!

[Roadmap2Retire]

Kerim,
Ive been following all those companies you mentioned. I own OHI in my portfolio and its at a full position, so looking for a second name to add.

• HCP - I think you have already summarized it well in your post. The HCRManor issue needed some restructuring and they took a hit, but I think they are close to putting this behind them. Last year, they had the whole CEO getting booted issue hounding them and now this year, its this. I am still a bit skeptical, but I need to watch and read more before making judgment call whether its the best investment right now. It sure is trading at a very attractive valuation though.
  
• VTR - starting yield is low, but its also the one with the highest FFO growth rate potential. In addition, VTR is spinning off the skilled nursing unit later this year - which is slated to be about $5B market cap. The skilled nursing is expected to be a riskier asset and they made the decision to spin it off. Shareholders of VTR will get one share of the new SpinCo, while holding the VTR shares.
  
• HCN - The largest healthcare REIT, really well diversified - I like the fact that they also have a huge operation with a lot of sites in UK in addition to US and Canada (to compare: HCP operates only in US and UK; VTR operates in US, Canada and just two sites in UK)
  
• OHI - I own OHI and its been a great performer for me. Quarterly dividend raises make for faster compounding. They recently bought Aviv REIT, which should fortify their portfolio.
  

VTR P/FFO = 14.7
HCN P/FFO = 16.8
HCP P/FFO = 12.8
OHI P/FFO = 12.0

Check out the analysis articles from Brad Thomas on Seeking Alpha - he has some good comparison charts for different metrics in the sector.

[earthtodan]

I've been buying VTR with the dividends coming into my Roth, plus a little rebalancing to get the position started. The starting yield is a little lower (4.6% as of today, not 3.5% as shown on screeners due to the split dividend payment for Q1), but the DGR is a little higher and has been very consistent. The last raise was 9%, and the next one is supposed to be at least 10% due to the spinoff of their SNF portfolio as a separately traded company. Shareholders will receive 1 share of Care Capital Properties (CCP) for every 4 shares of VTR.

CCP is the portfolio supported by medicare/medicaid, similar to OHI. I don't know much about the political risk surrounding these payments, but I'm aware that it's an issue and I like the idea of not worrying about it. VTR will end up with purely private-pay tenants concentrated in upscale markets, meaning there is only broad economic risk. I'll probably sell my CCP and put the money back into VTR, although I'll try to wait until the yields aren't too far apart to do so.

[Forward Dividends]

(05-07-2015, 02:09 PM)Kerim Wrote: In the "What Did You Buy Today" thread I saw that Forward Dividends just picked up some more HCP, and Alex is playing with it too. I've been looking at it myself again lately, so I though I'd dust off this here thread and see if people would share more detailed thoughts about it.

I want to increase my exposure to both healthcare and REITs. I'm mostly looking at the "big 3" -- VTR, HCN, and HCP. I'm sure many of the others are great, and may be able to grow a lot faster, but I'm not in a speculating mood and take comfort in the larger capitalization.

Of the big 3, I am mostly attracted to HCP given its 30-year streak of dividend increases and higher starting yield. Its dividend is growing much more slowly than VTR's has in recent years, but HCP's starting yield is more than 2 percent higher. A bird in the hand!

There has been a lot of concern about troubles with HCP's biggest (by far) tenant HCR ManorCare. I just quickly read through the Q1 earnings call transcript, where management fielded a lot of questions on the subject. It seems like a real issue, and HCP took a hit restructuring leases for HCR, but they insist that they got value out of the deal. Of course they'd be inclined to put on a calm front, but I did come away reassured. Seems like they understand the problems and are managing around it.

Anyway, so I'm inclined to pick up a bit more HCP. But I'd love to hear more pros and cons, or arguments for either VTR or HCN instead (or yes, even OHI).

Thanks!

Kerim,

The dividend streak and the valuation is what attracted us to HCP. The company has not seen the gains the other healthcare REIT's have enjoyed over the last 4-6 years due to the issues that have plagued the company. However, the recent renegotiation of the HCR ManorCare leases is what tells us that management is more concerned with the end game here and is ready to take its lumps and move forward while diversifying the income stream. Additionally, the expansion overseas to the U.K. seems to be continuing as planned. This helps from a geographic diversification and a hedge as the market in the U.S. has seen rapid expansion post ACA and therefore potential for more competitive leasing opportunities moving forward (bad for lessor). At current levels, it just feels like much of the bad news is priced on. We bought a bit early but Alex made a great move already with his timing yesterday before ex-div.

Good luck with your decision.

FD

[hendi_alex]

I'm not interested so much in the big REITs. Yields are too low and growth is likely to be sluggish. As posted earlier, I'm more interested in smaller REITS whose growth curve will unfold into the future. By investing in a broad basket, I don't view this approach as speculative. My recent buy of HCP on the dip is definitely a short term speculative play. I've held a core position of HCP for a couple of years, but will look to close it out some time this year. HCP's total return for the period has been underwhelming.

Long term positions include: ROOF, CSG, IRT, MPW, and hopefully O in the near future.