Holding on to dividend-paying stocks for decades at a time is a great way to build wealth, but the average yield offered by those in the S&P 500 index is a paltry 1.9%. That makes it awfully hard to ignore New Senior Investment Group Inc. (SNR)Senior Housing Properties Trust (DHC), and Omega Healthcare Investors Inc. (OHI -0.03%), all of which offer 10% or better at recent prices.

These three senior care REITs offer huge yields now because investors are afraid they won't be able to maintain their payout levels much longer. Let's see if they're right to be so worried.

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A senior-housing REIT offering 13.6%

New Senior Investment Group's dividend yield didn't get this big as a treat to shareholders. The stock price keeps tanking because investors are worried it won't be able to meet its obligations without steadily selling off assets. The company reported $0.97 per share in funds from operations (FFO) last year but declared a dividend that works out to an annualized $1.04 per share.

New Senior began 2015 with 154 properties and by the end of 2017 had just 133 in its portfolio. If not for a $72 million gain on the sale of properties, the company would have lost $56 million during the period, and that's before meeting an $85 million dividend obligation. New Senior hasn't lowered the payout yet, but I really don't see how it will keep it up much longer.

The stock bumped up following the company's fourth-quarter earnings release, mostly because management signaled it might be ready to throw in the towel. Although nobody on the call could elaborate on what "strategic alternatives" the company will take, they'll probably look like fire sales that cautious investors don't want any part of.

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Profitable, but stretched too thin

Senior Housing Properties Trust runs a portfolio more diverse than its name suggests. Last year, 39% of the company's net operating income came from medical office buildings, and 45% came from triple-net leased senior living communities. Plus, the relatively small number of senior care centers it manages collected monthly fees that averaged $1,194 more per occupied bed than New Senior's did in 2017.

Senior Housing Properties offers a tempting 10.2% dividend yield at recent prices. While this distribution is on better footing than New Senior's, don't be surprised if the company has to dial it down a notch. Last year, FFO fell 17% to $1.55 per share, which is $0.01 less than the dividend payments shareholders are expecting this year.  

While its stock price is depressed, New Senior isn't about to raise equity to expand its operations, but it recently secured $500 million at 4.8% until 2028. That gives management some breathing room, and perhaps a little firepower to expand operations a bit this year. 

Assisted living center caregiver helping an elderly person to her feet.

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Meet the latest member of the Frozen Dividend Club

An aging U.S. population bodes well for Omega Healthcare Investors Inc., and the stock offers a tempting 10.2% yield at recent prices. Senior Housing and New Senior froze their dividends years ago, but Omega raised its payout for 22 straight quarters before announcing it did not expect to raise the dividend in 2018. Management expects FFO to come in between $2.96 and $3.06 per share, which should be more than enough to cover a dividend frozen at an annualized $2.64 per share.

Nearly all of Omega's properties are triple-net leased nursing homes and long-term care facilities that rely heavily on Medicare and Medicaid reimbursement programs. Healthcare reforms have hurt nursing home operators across the board, but a handful that Omega collects rent from are in deep trouble. At the end of 2017, three operators were 90 or more days past due on their rent.

It's going to take more than three broke operators to derail Omega's dividend. At the end of 2017, the REIT was collecting rent from 74 operators in 41 states and the United Kingdom. The REIT's revenue stream is so diverse that Ciena Healthcare was the lead revenue generator at only 10% of the total last year. Omega shouldn't have too much difficulty transitioning properties from troubled operators to ones capable of making rent payments, allowing operations to return to steady growth.

Investors should know that only two operators were more than 90 days behind last June. If the trend accelerates, Omega might find it hard to return to regular payout increases. While cautious investors might want to play wait-and-see for another quarter or two, I don't see compelling reasons to let go of my shares.