High Yield Investment Trusts: Big Returns, Added Risk

Published Tue, 17 July 2012 23:30 CET by DividendYields.org

If the old adage “you can catch more flies with a spoonful of honey than a spoonful of vinegar” is true then it is evidenced in the world of high yield investments. Investment trusts and closed end investment funds often offer higher yields then traditional stocks and other safe haven investments in an effort to attract investors. This is because these investments also come with an elevated amount of risk, the extra income is the “honey” attracting investors. In order to successfully invest in high yield trusts an extra amount of due diligence is required. Knowing how and why a trust is making money can help you avoid potentially bad investments.

Real Estate Investment Trusts, which got a lot of attention during the US financial crisis, are another avenue for high yield returns. These investment funds invest, own or manage real estate and can have a narrow or wide focus. The primary source of income for these funds is rental income from managed properties. These funds can be very sensitive to interest rates and economic conditions because of the heavy debt loads they carry. However, at this time interest rates are at or near all-time lows, helping REITs in more ways than one. Not only are they able to reposition their debt in lower interest rate loans they are also in better position to compete against treasury bonds and other safe havens whose yields have been falling.

Within the world of real estate investing there are some good and bad sectors. One sector with an especially bright future is health care. Health care is one of the largest industries in America and one of the fastest growing. REITs investing in this sector has the added bonus of a strongly growing industry to support it. Health Care REIT (NYSE: HCN) is one fund producing a good return. The REIT pays a dividend of $2.96 (4.9% at the current levels). Health Care REIT Inc, invests in diversified properties throughout the health care sector. The company has a history of solid revenue growth and pays a healthy dividend. Despite low profit margins the fund's history of cash flow and steady earnings make it an attractive candidate.

Another strong REIT, Omega Healthcare Investors (NYSE: OHI), invests in long term care facilities. The company owns and manages over 400 facilities throughout the United States. The company also provides leases and mortgage financing to operators of long term care facilities. Omega pays a dividend of $1.68 (7% at the current levels) and is another attractive REIT for dividend investors. The company has been in business for over 20 years, producing steady earnings and often beating Wall Street estimates.

Health REIT Dividend Yields Table
Medical Properties Trust (NYSE: MPW) is a an Alabama based REIT investing in hospitals, acute care centers and single-focus specialty care centers such as heart or cancer treatment centers. The trust yields $0.80 annually (8% at the current level) and has a good history of payments. The stock is thinly traded, less than 1 million shares daily, but has a high institutional investment ratio at over 70%. The company has been growing its portfolio aggressively and should continue to provide growth as well as dividends into the future.

Stock name Dividend Yield
Omega Healthcare Investors 8.01
Medical Properties Trust 7.21
Health Care Reit 5.10

Articles featuring Omega Healthcare Investors (OHI):

10 Attractive 5% Yields: Preferred Stocks, Bonds And Conservative Options Trades

If you are an income-focused investor, you don't necessarily have to spend all your money chasing big dividend stocks. Preferred stocks, higher-income bonds, and conservative income-generating options strategies are worth considering. This article highlights 10 attractive higher-income investment ideas. And just so no one forgets, long-term capital gains can be a good source of income too. Without further ado, here is our list... Preferred Stocks 1. STAG Preferred Stock (STAG-C),... Read more

How To Get 6.3% Dividends From REITs At Low Cost

Real estate investment trusts (REITs) not only provide superior returns to the S&P 500 over a long period of time, but many withstood the Global Financial Crisis despite its real estate focus and offer far superior dividend yields. We can use a few simple screening criteria to create a portfolio of sustainable dividends yielding over 6% that also offer capital gains upside and a growing income stream. In what follows I will start with a universe of roughly 30 REITs and look at a variety... Read more

Shall You Buy Omega Healthcare Investors Before Or After Its Ex-Dividend Date?

Omega Healthcare Investors (NYSE: OHI), a quality triple-net equity REIT, is going ex-dividend over the next fortnight on October 30. Omega delivers clockwork-like dividend growth backed by strong and rising cash flows in an attractive industry (for the long term). Source: Omega Healthcare Investors, all courtesy remains Dividend investors seeking to optimize income from their investments should look at ex-dividend dates and time their purchases accordingly. Timing the market... Read more

Dividend Sensei's Portfolio Update 5: My First 2 Sales And 7 Undervalued Stocks Worth Buying Right Now

First, let me be very clear that this is my personal portfolio tailored to my specific financial situation, risk profile, time horizon, and personality traits. I am NOT recommending anyone mirror this portfolio, which is merely designed to show my unique rule-based, methodical approach to value-focused, long-term, dividend growth investing. For a detailed explanation of my methodology, please read my introductory article to the EDDGE 3.0 portfolio. What Happened This Week Genesis... Read more

11 Dividend Increases: October 9-13, 2017

Monitoring dividend increases for stocks on my watch list helps me identify candidates for further analysis. Companies that regularly raise dividends show confidence in the potential growth of future earnings. In the past week, eleven companies on my watch list decided to increase their dividends, including two of the stocks I own. The table below presents a summary of these increases. The table is sorted by the percentage increase, %Incr. Dividends are annualized and in US$, unless... Read more