It’s Time to Buy Omega Healthcare Investors Inc

Omega Healthcare Investors Inc (OHI) is a real estate investment firm that is focused on SNF (skilled nursing facilities) in the US. The company is a high yielder and grows dividends regularly on a quarterly basis putting more money in investors’ pockets for faster compounding. With 10,000 baby boomers turning 65 each day, the massive population demographic aging that requires medical care, Healthcare REITs stand to benefit, and as such, there is a very strong case for investing in the sector. The stock currently appears undervalued.

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5 thoughts on “It’s Time to Buy Omega Healthcare Investors Inc

  1. Great write up on OHI. Wish I was a shareholder (or had the capital to buy).

    I don’t really see the Medicare/Medicaid thing as THAT big of an issue considering that OHI is a REIT. They’re not a medical company; they are a landlord. So as long as the tenants are paying the rents (and as long as Gen Xers and Milennials are paying to take care of their elderly Baby Boomer seniors), I don’t really see a revenue problem cropping up. The interest rates are more of a problem, especially if they want to acquire new properties or refinance their current ones.

    Do you think there’s any benefit of them having ONLY SNFs in their portfolio? I’d prefer that they be more diversified in the type of facilities they own, but there might be a benefit to what they are doing. Diversification for diversification’s sake doesn’t provide any positives.

    How do you think OHI compares to those other health care REITs you mentioned (in conclusion, not number to number). I saw some if them have higher market caps than OHI, fatter yields, or lower P/FFOs. Or any combination of the three.

    Take care.

    ARB–Angry Retail Banker

    • Glad you liked it, ARB.
      Good point on that the the facilities are leased to 3rd party operators. But Im wondering if there are cutbacks in medicare/medicaid, there might be some knock-on effect.

      I think the company does SNFs really well and they are sticking to what they know best. They obviously have a great amount of faith in that subsegment of the industry and are focused on it. I prefer diversification in my investments, things will work out great until they dont…the only way to protect against a severe downturn in one industry is by diversifying. However, if one needs to build wealth (when we talk investments) or lead in the field (as a business), in that case – diversification can run the resources thin.

      OHI is definitely more riskier than the others I mentioned (HCP, HCN, VTR) because of the lack of diversification – and investors are well compensated for that risk…that 6% yield is nothing to sneeze about.

      HCP – has had its own share of troubles, starting from ousting the CEO last year, to the HCRManor issue this year. I am still a bit skeptical, but I need to watch and read more before making judgment call whether its the best investment right now. It sure is trading at a very attractive valuation though.
      VTR – has the highest FFO growth rate potential. The spinoff is an attractive option right now.
      HCN – The largest healthcare REIT, really well diversified – I like the fact that they also have a huge operation with a lot of sites in UK in addition to US and Canada (to compare: HCP operates only in US and UK; VTR operates in US, Canada and just two sites in UK)

      Hope that helps

  2. Loved this write up and just wanted to mention how awesome it was seeing fast graphs used in your analysis! So glad to be a new shareholder alongside you. Thanks for sharing!

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