Dividend Watch: Payouts From Old Folks, Not Just For Old Folks (SNH)

Time for the 11:00 AM Daily Dividend… Real estate investment trusts are often sought after for their high dividends that they offer investors.  As long as these entities pay out 90% of their taxable federal income in the form of dividends, the trusts effectively avoid federal tax.  REITs have many categories from mortgage REITs, to shopping malls, office buildings, healthcare properties, apartments, multi-use, and more.  Then there is a unique sector within housing REITs with a mixed track record that may be set to benefit from the aging population trends: housing for seniors.  In short, these are dividends which ultimately come from old folks.

This morning came news that Senior Housing Properties Trust (NYSE: SNH) declared its regular dividend of $0.37 per quarter.  While this may not sound like much news on the surface, this $1.48 annualized payout generates a dividend yield of about 6.4% for dividend investors.  With shares at $23.10, the 52-week trading range is $19.25 to $25.28.  This marks the third consecutive $0.37 payout, which had been $0.36 for five consecutive quarters and compares to a $0.35 dividend which had been paid for seven consecutive quarters before that.

Senior Housing Properties is rather well diversified in geographic segments. One earthquake, one hurricane, or one local natural disaster is unlikely to topple the company.  It claimed some $3.8 billion in senior properties with some 27,000 living units located in 36 states.  It invests in hospitals, nursing homes, senior apartments, independent living properties, and assisted living properties.  Many of its properties are some of the larger centers of each type in local communities which you live in. 

This segment did not escape the recession entirely unscathed.  What happens when grandma and grandpa or your elderly parents are upside down in their house?  Chances are that they can’t sell the house to move into a retirement facility.  In 2008 this one saw its shares drop from $24.00 down to under $11.00 at the peak.  It was not until mid-2009 that shares got back above $20.00.  Amazingly, the REIT never cut its dividend and the times when this one gets hit hard have proven over and over to be great opportunities.

With the aging population of America, with the baby boomers finally starting to reach retirement age, and with that age group being more well off than their kids, this sector at least has the demographic trends to look forward to.  With a 6.4% dividend yield to boot, this one offers solid investing dividends for old folks from old folks.

JON C. OGG