The COVID-19 pandemic was a complicated and uncertain time for the world. Individuals and companies did the best they could with the limited knowledge they had during this strange period. But some companies appear to have made better choices for their shareholders than others.
Here's why you might want to avoid Sabra Healthcare (SBRA +0.10%) despite its 6.2% yield. And why you might want to step in and buy Omega Healthcare (OHI +0.52%) and Alexandria Real Estate (ARE +1.42%), which have yields of 6.3% and 6.4%, respectively.
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What did Sabra do wrong during the pandemic?
From a business perspective, Sabra didn't really do anything wrong during the pandemic. Management and the board of directors made choices that helped ensure the company's long-term survival. The healthcare-focused real estate investment trust (REIT) is still here, so it looks like the steps taken during that global period of uncertainty worked as hoped.
NASDAQ: SBRA
Key Data Points
The problem is that one of the big steps used to survive the pandemic was a dramatic dividend cut. In 2020, Sabra's dividend fell from $0.45 per share per quarter to $0.30, a 33% trimming. The dividend has been stuck at that level ever since. To be fair, Sabra generates around 70% of its rents from senior housing, so the pandemic was a difficult period, given that this segment of the healthcare industry was particularly hard hit by COVID-19.
But if you were trying to live off your dividends, that cut would not have been a welcome outcome. And notably, other dividend cutters in the same property niche have already started to raise their dividends again. So Sabra is falling behind even among other healthcare REITs that cut their dividends. The real key, however, is that not all senior housing REITs cut their dividends. Which is why you might prefer Omega Healthcare over Sabra.
What Omega Healthcare got right
Omega Healthcare made the decision to hold the line on its dividend. It didn't increase the dividend, mind you, but it didn't cut the dividend either. The payment has sat at $0.67 per share per quarter since it was last increased in 2019. Omega's entire business is centered around senior housing, so there were some tense times for dividend investors. The dividend yield rose into the double digits at one point while Wall Street was downbeat on any REIT related to senior housing.
But the dividend held firm, which is something that passive income investors should find very reassuring. Even more reassuring is that Omega's business fundamentals are starting to improve. For example, adjusted funds from operations (FFO) in the second quarter of 2025 rose nearly 8% year over year. And management made over half a billion in investments in the quarter, suggesting that the business is ready to start growing again. To back that up, the REIT raised its full-year adjusted FFO guidance.
NYSE: OHI
Key Data Points
If you are looking for a high-yield healthcare REIT that has proven you can count on it to keep paying during thick and thin, Omega stands out. And given the recovery in the senior housing sector, it seems like the hard times are ending. Don't go in expecting huge dividend increases, but the lofty yield looks stronger now than it did just a year ago.
Sidestep senior housing with Alexandria Real Estate
If the whole notion of investing in senior housing is distasteful to you, given the fairly difficult pandemic period, you still have high-yield options in the healthcare REIT space. One of the most attractive could be Alexandria Real Estate, which is focused on owning medical research office assets. The dividend here has been increased annually for 15 consecutive years, including right through the pandemic.
To be fair, the yield is high today because investors are worried about the REIT's business fundamentals. Notably, occupancy fell from 94.6% at the start of 2025 to 90.8% at the end of the second quarter. Alexandria's FFO, meanwhile, has been a bit weak as a result. But the dividend is still well covered, with an FFO payout ratio of roughly 57%. That leaves plenty of room for a little adversity.
NYSE: ARE
Key Data Points
The big problem is that Wall Street is worried that the office downturn and changes in the healthcare industry are going to upend Alexandria's business model. Given the importance of research and development in the healthcare sector, it seems more likely that this REIT muddles through this rough patch. The dividend, notably, was increased at the end of 2024, just like usual. Alexandria Real Estate could be an opportunistic high-yield buy even for more conservative income investors.
Yield and reliability are what you get with Omega and Alexandria
Sabra Healthcare isn't a bad company, per se. It did what management and the board thought was necessary to ensure its survival during a difficult period. But Omega managed through that same period without resorting to a dividend cut. For most income investors, that will make Omega the better high-yield senior housing choice as that industry niche starts to get back on track. Or you can switch gears and pick high-yield Alexandria, which serves a totally different niche. And one that, despite near-term headwinds, is likely to see strong demand because of the importance of R&D to the healthcare industry.
