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Instant Analysis: HCP Bumps its Dividend 2% Higher

By Eric Volkman - Jan 29, 2016 at 6:26PM

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The specialty REIT tops up its quarterly distribution, maintaining its dividend aristocrat status.

What happened?
For income investors, a dividend raise is the feel-good pill the doctor ordered. So it is with HCP (NYSE: HCP), a real estate investment trust that specializes in healthcare facilities. The company announced a slight raise in its quarterly dividend, by 2% to nearly $0.58.

This was expected; HCP is a dividend aristocrat, one of the very few stocks on the market that has lifted its payout at least once annually for a minimum of 25 years running. This raise marks its 31st year in a row.

The new dividend is to be paid of Feb. 23 to stockholders of record as of Feb. 8. At the most recent closing stock price, it yields 6.4%. This is nearly three times that of the average yield of stocks on the S&P 500 index, which stands at 2.2%.

Does it matter?
The dividend raise, modest as it is, won't change investor sentiment much on HCP. Times are good for the healthcare segment these days. America's massive baby boomer generation is entering their senior years and consequently requiring more medical attention. This boosts demand for the kind of healthcare facilities operated by HCP, Welltower, and Ventas.

Although HCP's funds from operations (a critical profitability metric for REITs) hasn't climbed as high as those of rivals Welltower and Ventas over the past few years, the former has a much longer history of raising its dividend. That reliability, plus the fact that its niche is a good one to be involved in just now, should continue to attract income investors and yield seekers to the stock. 

Eric Volkman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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