Healthcare REITs have emerged as a vital asset class, offering investors a stable income through healthy dividend yields while providing exposure to the growing healthcare sector. Therefore, investors could consider keeping an eye on three fundamentally stable healthcare REITs: Welltower Inc. (WELL), Ventas, Inc. (VTR), and National Health Investors, Inc. (NHI).
During economic turndowns, one of the key strengths of healthcare REITs is its resilience. The demand for healthcare services remains relatively inelastic even in challenging economic conditions, ensuring steady occupancy rates and rental income. Further, the aging demographic trend and the increasing need for specialized medical facilities position healthcare REITs for long-term growth.
The sector is also poised for growth due to demographic trends and technological advancements in healthcare. As populations age and medical technology evolve, the need for modern, efficient healthcare facilities increases, further driving demand for properties within the healthcare REIT portfolio.
Moreover, the global healthcare real estate market is anticipated to reach $2.27 trillion by 2030, exhibiting a CAGR of 7.9%.
Considering these conducive trends, let’s take a look at the fundamentals of the three choices from the REITs - Healthcare industry, starting with third in line.
Stock #3: Welltower Inc. (WELL)
WELL is a REIT that is driving the transformation of healthcare infrastructure by investing with senior housing operators, post-acute providers, and health systems to fund the real estate infrastructure needed to scale care delivery models and improve people's wellness and overall healthcare experience.
Buoyed by strong financial performance, the company declared its shareholders a quarterly dividend of $0.67 per share, payable on March 6, 2025.
WELL pays an annual dividend of $2.68, which translates to a yield of 1.87% at the current share price. Its four-year average dividend yield is 2.88%. Moreover, the company’s dividend payouts have increased at a CAGR of 1.6% over the past three years.
WELL’s total revenues for the fiscal year 2024, which ended December 31, 2024, increased 20.4% year-over-year to $7.99 billion. The company’s income from continuing operations came in at $972.86 million, representing an increase of 171.6% from last year.
In addition, attributable net income and earnings per share attributable to WELL common stockholders stood at $951.68 million and $1.57, up 179.8% and 137.9% year-over-year, respectively.
Street expects WELL’s FFO for the fiscal first quarter (ending March 2025) to increase 13.7% year-over-year to $1.15. Its revenue is expected to increase 27.9% year-over-year to $2.38 billion. Further, WELL topped the street FFO estimates in each of the trailing four quarters, which is promising.
Moreover, WELL’s revenue has grown at CAGRs of 19% and 9.3% over the past three and five years, respectively. In addition, its diluted EPS increased at 26.2% CAGR over the past three years.
Shares of WELL have gained 67.3% over the past year and 48.2% over the past nine months to close the last trading session at $146.50.
WELL’s stance is apparent in its POWR Ratings. The stock has a B grade for Growth and Sentiment. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
Among the 14 stocks in the REITs - Healthcare industry, it is ranked #11. Click here to see the additional WELL ratings (Value, Momentum, Stability, and Quality).
Stock #2: Ventas, Inc. (VTR)
VTR is a leading REIT specializing in senior housing, medical buildings, and healthcare facilities across North America and the United Kingdom. The company leverages its operational expertise and data-driven insights from its Ventas Operational Insights platform.
On January 16, the company paid a quarterly dividend of $0.45 per share. VTR pays an annual dividend of $1.80, which translates to a yield of 3.02% at the current share price. Its four-year average dividend yield is 3.60%. Also, the company’s dividend payouts have increased at a CAGR of 5.4% over the past five years.
For the fiscal fourth quarter that ended December 31, 2024, VTR’s total revenues amounted to $1.29 billion, with a 10.5% year-over-year increase. Its attributable net income came in at $56.84 million compared to the year-ago net loss of $90.82 million, while its EPS came in at $0.13 versus a loss of $0.23 per share last year. Moreover, the company’s FFO attributable amounted to $495.66 million and $0.85 per share, increasing 13.7% and 7.6% from the prior year’s period.
The consensus revenue estimate of $1.29 billion for the fiscal first quarter (ending March 2025) represents a 7.7% increase year-over-year. The consensus EPS estimate of $0.82 for the about-to-be-reported quarter indicates a 4.9% improvement year-over-year. The company has an excellent surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
VTR’s revenue has grown at CAGRs of 8.5% and 4.9% over the past three and five years, respectively. Likewise, the company’s levered FCF has increased at a CAGR of 24.1% over the past three years.
Over the past year, the stock has surged 32.4%, closing the last trading session at $59.94.
VTR’s POWR Ratings reflect this outlook. It has a B grade for Growth, Stability, and Sentiment and is ranked #9 out of 14 stocks in the same industry. To see the other ratings of VTR for Value, Momentum, and Quality, click here.
Stock #1: National Health Investors, Inc. (NHI)
NHI is a real estate investment trust that specializes in sales, leasebacks, joint ventures, senior housing operating partnerships, and mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments.
On January 29, demonstrating its commitment to returning value to shareholders, the company paid a quarterly dividend of $0.90 per common share. NHI pays an annual dividend of $3.60, which translates to a yield of 5.43% at the current share price. Its four-year average dividend yield is 6.29%.
In the third quarter (ended September 30, 2024), NHI’s total revenues increased 3.6% year-over-year to $82.94 million. The company's net income attributable to stockholders was reported at $28.51 million, and earnings per common share was $0.65.
Analysts expect NHI’s revenue for the fourth quarter (ended December 2024) to increase 2.1% year-over-year to $81.13 million, while its EPS for the same period is expected to grow 2.1% from the prior year to $1.11. Moreover, it topped Street revenue estimates in each of the trailing four quarters, which is excellent.
Over the past three and five years, NHI’s revenue income grew at CAGRs of 2.4% and 1.3%, respectively, while its levered FCF grew at 4.5% CAGR over the past three years.
The stock has gained 22.5% over the past year to close the last trading session at $65.79.
NHI’s fundamentals are reflected in its POWR Ratings. The stock has a B grade for Stability and Quality. It is ranked #5 in the REITs - Healthcare industry.
Beyond what is stated above, we’ve also rated NHI for Growth, Value, Momentum, and Sentiment. Get all NHI’s ratings here.
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WELL shares were trading at $150.10 per share on Thursday afternoon, up $3.60 (+2.46%). Year-to-date, WELL has gained 19.10%, versus a 3.78% rise in the benchmark S&P 500 index during the same period.
About the Author: ShreyaRathi
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