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Is National Health Investors (NHI) a Good Pick for Income Investors?
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
National Health Investors in Focus
National Health Investors (NHI - Free Report) is headquartered in Murfreesboro, and is in the Finance sector. The stock has seen a price change of -0.78% since the start of the year. The health care real estate investment trust is currently shelling out a dividend of $1 per share, with a dividend yield of 5.35%. This compares to the REIT and Equity Trust - Other industry's yield of 4.13% and the S&P 500's yield of 1.79%.
Taking a look at the company's dividend growth, its current annualized dividend of $4 is up 5.3% from last year. National Health Investors has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.87%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, National Health Investors's payout ratio is 74%, which means it paid out 74% of its trailing 12-month EPS as dividend.
NHI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $5.50 per share, representing a year-over-year earnings growth rate of 3.19%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that NHI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Is National Health Investors (NHI) a Good Pick for Income Investors?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
National Health Investors in Focus
National Health Investors (NHI - Free Report) is headquartered in Murfreesboro, and is in the Finance sector. The stock has seen a price change of -0.78% since the start of the year. The health care real estate investment trust is currently shelling out a dividend of $1 per share, with a dividend yield of 5.35%. This compares to the REIT and Equity Trust - Other industry's yield of 4.13% and the S&P 500's yield of 1.79%.
Taking a look at the company's dividend growth, its current annualized dividend of $4 is up 5.3% from last year. National Health Investors has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 6.87%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, National Health Investors's payout ratio is 74%, which means it paid out 74% of its trailing 12-month EPS as dividend.
NHI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $5.50 per share, representing a year-over-year earnings growth rate of 3.19%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that NHI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).