One way income investors can make prudent decisions on which dividend stocks to purchase is by studying the past history of a company. Has there been dividend growth? Have there been any suspensions or cuts to the dividend? What is the average yield of the dividend over time?
It’s often useful to use a five-year term when assessing a company’s dividend history. With that said, here’s a breakdown of a stock with a solid history of dividend payments since September 2017.
Omega Healthcare Investors Inc. OHI is a Hunt Valley, Maryland, healthcare real estate investment trust (REIT) that has owned and operated assisted living and skilled nursing facilities since 1992. Its 921 facilities are spread across 42 states throughout the U.S., and it owns one facility in the United Kingdom.
As a REIT, Omega is required by law to return at least 90% of its taxable income to its shareholders. Therefore, like many other REITS, Omega has paid its shareholders a fairly high dividend yield throughout its history. The current annual dividend of $2.68 yields just over 8.2%. The beta on Omega is 0.97, or slightly less volatile than the U.S. stock market as a whole.
If you invested $10,000 in Omega stock five years ago, you would have purchased 308 shares at about $32.46. Your first quarterly dividend payment of 65 cents per share would have been paid at the end of October 2017, and you would have received $200.20.
Over the past five years Omega has slowly increased its quarterly dividend payment from 65 cents to 67 cents. The total dividends paid out over five years on 308 shares would have been $13.31 per share so you would have received $4,099.48. Your total investment would now be worth $14,099.48, or a return of 41%.
Ironically, Omega’s current price of $32.42 is almost identical to what it was five years ago. The stock has been as high as $36.50 and as low as $18.68 during that five-year period, but clearly this is not the type of stock from which investors can expect much appreciation.
Check out: This Little Known REIT Has Produced Double-Digit Annual Returns For The Past Five Years
However, if you had reinvested Omega shares in a dividend reinvestment plan (DRIP), your original 308 shares would have grown to 464.74 shares for a total return of 50.67%, or an average of 8.54% per year. You would now have $15,065.30.
So to summarize, Omega is a low-volatility, slow-growing income stock that is well-suited for long-term income-oriented investors — especially if they don’t need immediate income and have the ability to reinvest their dividends for several years.
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