Back to top

Omega (OHI) Declares Dividend Hike, Time to Buy the Stock?

Read MoreHide Full Article

Delighting its shareholders, Omega Healthcare Investors, Inc. (OHI - Free Report) revealed a 1.7% hike in its quarterly cash dividend on Thursday. The company will now pay a dividend of 61 cents per share, up from 60 cents paid earlier. The raised dividend will be paid on Nov 15 to shareholders of record as on Oct 31, 2016.

Based on the increased rate, the annual dividend comes to $2.44 a share, resulting in an annualized yield of about 7.31%, considering Omega’s closing price of $33.40 on Oct 13. Given that the company’s dividend yield surpasses the industry average of 4.80%, the stock is likely to draw investors’ attention ahead.

In fact, solid dividend payouts are arguably the biggest enticement for REIT investors and this represents Omega’s 17th consecutive dividend hike. It reflects the company’s consistent efforts to increase shareholders’ wealth.

Omega has its solid fundamentals to back dividend hikes. This real estate investment trust (REIT) focuses on investing in and providing financing to the long-term care industry. As of Jun 30, Omega’s portfolio of investment included more than 900 properties, situated in 42 states and the U.K., and operated by 84 operators.

In fact, the company has been a steady performer, beating the Zacks Consensus Estimate in each of the past four trailing quarters, with an average positive surprise of 4.74%. Omega’s ROE is 14.28%, higher than the industry’s ROE of 13.01%.

Further, the company has current cash flow growth of 31.66% against the industry average of 15.84%. This should help the company to sustain its dividend payout to equity investors. It’s also very liquid, with a current ratio of 2.69.

Omega presently has a Zacks Rank #2 (Buy).

Investors interested in the REIT industry can also consider stocks like Arbor Realty Trust Inc. (ABR - Free Report) , Crown Castle International Corp. (CCI - Free Report) and InfraREIT, Inc. (HIFR - Free Report) . All of them sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arbor Realty Trust has exceeded estimates in three out of the trailing four quarters with an average positive surprise of 32.33% while Crown Castle has witnessed an upward revision of 2 cents over the past two months, in its 2016 estimate, to $4.45. On the other hand, InfraREIT has a long-term expected growth rate of 10% against the industry average of 5.9%.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>

More from Zacks Analyst Blog

You May Like