High Yield Investment Trusts: Big Returns, Added Risk    Bookmark and Share

Published Tue, 17 July 2012 23:30 CET by TopYields.nl

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 symbol(s): HCN,MPW,OHI



Stock name                      ISIN Last trade   P/E EPS Div PS Ex Div Date Payout Ratio Div Yield  
MEDICAL PROPERTIES TRUST
P/E ratio of MEDICAL PROPERTIES TRUST on Google Finance
US58463J3041 13.11   48.3 0.3 0.84 Sep 16 2014 301 6.41
OMEGA HEALTHCARE INVESTORS
P/E ratio of OMEGA HEALTHCARE INVESTORS on Google Finance
US6819361006 38.62   25.2 1.5 2.08 Jul 29 2014 137 5.39
HEALTH CARE REIT
P/E ratio of HEALTH CARE REIT on Google Finance
US42217K1060 68.19   140.6 0.5 3.18 Aug 07 2014 657 4.66


Articles featuring Medical Properties Trust (MPW):
-Stocks Trading Ex-Dividend on 9/16/2014
-Medical Properties Trust, Inc. Declares Regular Quarterly Dividend of $0.21 Per Share
-Stocks Trading Ex-Dividend on 6/10/2014
-Medical Properties Trust Inc. Declares Regular Quarterly Dividend of $0.21 Per Share
-Intelligent REIT Investors Must Stay Focused On Dividend Dependability
-Medical Properties Trust Inc. Declares Regular Quarterly Dividend of $0.21 Per Share
-The REIT Way To Become A Disciplined Dividend Investor
-Medical Properties Trust, Inc. Increases Quarterly Dividend 5 Percent to 21 Cents Per...
-5 Small-Cap Top Dividend Yielders; Are They Bargain Stocks Now?
-Stocks Trading Ex-Dividend on 9/10/2013