Friday, June 8, 2012

Even better than a typical dividend machine! NHI

Dividend Machine for week of June 4, 2012 National Health Investors, Inc. (NHI)
           
            I need to find a new term for a company like National Health Investors, (NHI.)  It is a cash cow and a good fit for investors searching for dividend yield.

            You know that I really like companies that not only pay a great and ever increasing dividend but also provide covered call potential.  It is hard to live on a four percent yield … at least for some of us.   That is why I tend to learn toward stocks that also have covered call options.  NHI is not one of those.  However, it makes up for it by delivering a dividend yield north of five percent and it spices up the income with little special dividend gifts as their cash flow allows.

            National Health Investors is a REIT, a real estate investment trust, and as such it must pay out the majority of its earnings to the share holders.   That is good!   Their real estate is concentrated in health facilities and we all know that as we boomers age, more and more of us need or will need health facilities and we have enough money to afford a nice one. 

            We all like a good story about demand, but we still have to look at the fundamentals.  NHI operates with almost no debt.    How many real estate investments use minimal debt?  NHI operates with a one percent debt to equity ratio (D/E ratio.)

            If you own NHI by June 27, 2012, you will receive their quarterly dividend of $.65 per share.  On an annualized basis your income would be $2.65 per share.  Today NHI closed at $49.18 providing you with a yield of 5.3%.  They have piad dividends every year since 1991.  During the past four quarters EPS have been $2.89 and dividends were $2.75. 

            Consider this company for the income producing portion of your portfolio. 
           
Very Truly Yours,

TheMoneyMadam