Source: Company

Ventas (VTR 0.52%) allows investors to play one of the most convincing megatrends in our society: Rising health care costs associated with a rising share of elderly in our total population. This trend means growing profits for health care-focused real estate investment trusts.

Ventas is an easy sell. Besides fundamental secular tailwinds stemming from an aging population, an investment in Ventas allows investors to access a superior funds from operation (FFO) and dividend stream, which could receive further boosts from Ventas' acquisition hunger.

The health care REIT has a vast property portfolio across the health care spectrum including senior housing properties, medical office buildings, hospitals and others. Ventas currently owns properties across the United States, Canada and the United Kingdom and is one of the largest theme-focused REITs in the sector with a market capitalization of nearly $19 billion.

Source: Ventas Investor Presentation June 2014

At the end of the first quarter of 2014, Ventas owned 1,473 properties of which 713 related to senior housing communities, 375 were skilled nursing facilities, 327 were medical office buildings, 47 were U.S. hospitals and 11 were other institutions.

Healthcare demand for senior citizens is almost set to increase over the next two to three decades. With improvements in medical treatments and longer life expectancies, the age cohort 75+ is one of the fastest growing segments of the population.

With an increasing share of older people as part of the total population in the next couple of decades, secular tailwinds should substantially support the earnings and cash flow picture of health care-focused REITs such as Ventas which invest today.

Acquisition hunger
Since 2011, Ventas has invested nearly $16 billion in acquisitions and its hunger for acquisition-fueled growth is not slowing down: At the beginning of June, Ventas announced, that it is going to acquire American Realty Capital Healthcare REIT for a consideration of $2.6 billion in stock and cash.

The transaction would further broaden Ventas' facility footprint in the United States and add another 143 properties to its existing property portfolio.

Furthermore, Ventas announced at the same time, that it would acquire 29 senior living communities in Canada from Holiday Retirement for a consideration of $900 million. Ventas expects both transactions to be accretive to 2015 underlying FFO.

FFO and dividend growth
Both organic growth and acquisitions have fueled Ventas' FFO and dividend growth over the last couple of years. From 2000 to 2014 (based on an estimated full-year 2014 FFO of $4.34), Ventas increased its funds from operations by 10% annually and its dividends by 9%.

Source: Ventas Investor Presentation June 2014

Ventas' normalized FFO increased by 13% annually from $2.88 per share in 2010 to $4.14 per share in 2013. Its dividends rose from $2.14 per share to $2.74 over the same time period, which leads to a compound annual growth rate of 9%.

All the while, Ventas' normalized FFO handsomely covered the dividend payout. Ventas projects a 2014 payout ratio of 67% which will allow for generous shareholder remuneration as well as retention of cash to fund the health care REIT's expansion hunger.

With an estimated dividend payout of $2.90 (annualized) in 2014, Ventas offers investors an enjoyable 4.5% dividend yield. Investors buying today have a good shot at seeing a 5% dividend yield on a cost basis a year from now, if Ventas is able to sustain its dividend growth into 2015. Given its accretive acquisition of American Realty Capital Healthcare REIT, Ventas has even more potential to hike its dividends in the next couple of quarters.

The Foolish Bottom Line
Ventas is a big boy in the health care industry and its large, diversified property portfolio backs an ever increasing FFO and dividend stream.

Its recent acquisition of American Realty Capital Healthcare REIT further underscores Ventas' ambition to turbocharge growth and find accretive acquisition targets.

Ventas' FFO and dividend growth appeal to investors who are seeking regular income from a high-quality REIT determined to grow.