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12 Healthcare REITs That Should Resist Recession

By Marc Rapport - Aug 1, 2022 at 7:20AM
A businessperson holding a stopwatch behind an ascending stack of coins.

12 Healthcare REITs That Should Resist Recession

Essential businesses should keep the rent flowing to these REITs -- the dividends then follow

Healthcare is essential to daily life, right after food, shelter, and water -- maybe alongside them. It's also a very large business. Healthcare spending now accounts for around 20% of the U.S. economy, and about one in eight U.S. citizens are employed in the industry.

If the much-expected recession arrives, it will hurt many businesses, and healthcare providers won't be immune. But they still have to pay the rent, making real estate investment trusts (REITs) a good candidate for recession-resistant market picks.

Along with the obligation to pay 90% of their taxable income out as dividends, healthcare REITs reap the rewards of being the landlords to a wide array of essential providers of critical services -- from urgent care to hospitals to nursing homes. Here are some to consider.

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Two people in scrubs talking with patient in hospital bed.

1. Medical Properties Trust

Medical Properties Trust (NYSE:MPW) isn't the largest of REITs, but it's considered perhaps the largest private owner of hospitals worldwide, with a portfolio of about 440 properties in 10 countries. (The majority of its business is in the U.S.) About half are general acute care hospitals, with the rest divided among behavioral health centers, urgent care clinics, and inpatient rehab facilities.

Since going public in 2003, Birmingham, Alabama-based MPT has provided a total return of about 437% compared with about 352% for the S&P 500. So, the company has outperformed the greater market while providing consistent dividend income. Right now, the yield is about 7% at a share price of about $16.

ALSO READ: Got $774? Buy 50 Shares of This Beaten-Down Hospital Stock Before It Rebounds

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A person helping another person get out of a bed.

2. CareTrust REIT

CareTrust REIT (NYSE:CTRE) is a San Clemente, California-based investor primarily in skilled nursing and assisted living facilities. The company went public on the NASDAQ in 2005 at a share price of about $10.50 and moved to the NYSE just this past May.

Since that IPO some 17 years ago, CareTrust has grown its portfolio to 228 net-leased properties in 29 states. It's also proven itself a market beater, nearly doubling the S&P 500 in total return over that time. The stock price has also nearly doubled to about $20 a share and is yielding around 5.6% after raising the dividend for eight years in a row.

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Medical worker checking patient's blood pressure in home setting.

3. LTC Properties

LTC Properties (NYSE:LTC) is invested in 202 properties in 29 states, with its business evenly divided between senior housing and skilled nursing properties. The Westlake Village, California, company makes its money on net-leased arrangements with its operators as well as mortgages, joint ventures, and other financing arrangements.

This healthcare REIT also pays monthly instead of quarterly -- currently at a yield of about 5.6% and share price of about $39 -- making it a nice choice for smoothing out the monthly cash flow while riding out a recession.

ALSO READ: Investing in Healthcare REITs

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Patient in face mask having temperature checked by medical worker.

4. Community Healthcare Trust

Community Healthcare Trust (NYSE:CHCT) owns 158 properties in 34 states, focusing on nonurban areas and a diverse mix of physicians' offices, hospitals, rehab facilities, and other healthcare providers. Based in the Nashville suburb of Franklin, Tennessee, this REIT only went public in 2015. But since then, it has grown its portfolio and payout record quickly, raising its dividend each year and now yielding about 4.8% at a share price of about $37.

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A physician giving a high-five to a child seated on a parent's lap.

5. Physicians Realty Trust

Someone had to get this ticker, and it was Physicians Realty Trust (NYSE:DOC). As its name implies, Physicians Realty Trust focuses on medical offices, with a portfolio now comprised of 291 properties worth nearly $6 billion. The company's stock currently yields about 5.6% while trading at about $17 a share.

The management team of this Milwaukee-based operation is helmed by seasoned senior executives with deep backgrounds from other REITs. And speaking of heavy hitters, the board is chaired by former Wisconsin Governor and U.S. Secretary of Health and Human Services Tommy Thompson.

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Several medical professionals sit in a group with stethoscopes and papers in hand.

6. Welltower

Welltower (NYSE:WELL) is one of the largest healthcare REITs, with a portfolio of nearly 1,900 properties across the United States and in Canada and the United Kingdom. Nearly 1,200 of this Toledo, Ohio, company's properties are senior housing, with the rest divided among outpatient medical, health system, and long-term/post-acute care facilities. Welltower stock is rated a moderate buy by analysts and currently yields about 3% at a share price hovering around $81.

ALSO READ: 2 Real Estate Companies That Are Making the World a Better Place

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A medical secretary checks in a patient at a desk.

7. Healthpeak Properties

Healthpeak Properties is also a big operation, with a portfolio of about 600 properties divided among life sciences, medical offices, and senior housing. Healthpeak stock is currently trading for about $27 a share and yields about 4.6%.

This Denver company targets private pay businesses, meaning the tenants aren't dependent on Medicaid or Medicare payments to make payrolls and rent. Healthpeak also heavily invests in life sciences properties, which don't depend directly on patient and resident payments at all.

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A child receiving a vaccination.

8. Alexandria Real Estate Equities

A pioneer in the life sciences space, Alexandria Real Estate Equities (NYSE:ARE) is also now a major landlord for a who's who of drugmakers, vaccine developers, and other biomedical companies. Its collaborative office and laboratory campuses can be found in several key markets, including Boston, North Carolina's Research Triangle, the Bay Area, and its hometown of San Diego.

Analysts rate Alexandria's stock a moderate buy. It currently trades at about $148 a share, with a dividend yield of around 3.2% that follows 13 straight years of increases. Alexandria's is actually considered an office REIT, but its skin in the healthcare game is substantial.

ALSO READ: Investing in Office REITs

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Doctor handing a piece of paper to a patient.

9. Ventas

Ventas (NYSE:VTR) has a mix of businesses in its very large portfolio of more than 1,200 properties. About 800 are senior housing communities, 311 are medical office buildings, 43 are life science properties, and the rest are a mixed bag of rehab, health system, and skilled nursing facilities -- with three international hospitals in there for good measure.

Shares in this Chicago-based healthcare REIT are currently yielding about 3.5% at around $51 a share. Analysts give it a consensus target price of $61.57, which would be a nice gain in and of itself.

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Person in scrubs holding the hand of person using wheelchair.

10. Omega Healthcare Investors

Omega Healthcare Investors (NYSE:OHI) has a portfolio of 938 properties in 42 states and the United Kingdom and is a specialist in elder care housing in the form of skilled nursing and assisted living facilities.

Omega is headquartered in Hunt Valley, Maryland, and was one of those companies hit hard by COVID-19's impact on this kind of real estate. But Omega has recovered enough to sustain a strong dividend payout of about 8.8% at a share price of about $31.

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Physician kneeling to talk to a child in a hospital hallway.

11. National Health Investors

National Health Investors (NYSE:NHI) specializes in sale-leaseback, joint venture, mortgage, and other financing arrangements with operators of a wide variety of healthcare properties. More than 200 are senior living facilities across the country, including independent, assisted living, and memory care facilities. The rest are a mix of entrance-fee communities, office buildings, and specialty hospitals in the portfolio.

You can pick up shares of NHI stock for about $62 each and earn a yield of about 5.9%, making this Murfreesboro, Tennessee, company an investment worth considering for both passive income and recession resistance.

ALSO READ: What is Passive Income?

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Doctor smiling in a medical office.

12. Global Medical REIT

Global Medical REIT (NYSE:GMRE) owns and buys medical office buildings and surgery centers in suburban and secondary markets and leases them to healthcare systems. This REIT's portfolio now numbers about 170 properties that are 97% occupied, with a 6.9-year average weighted lease term remaining.

The Bethesda, Maryland, company was founded in 2011 and has provided a total return of about 72% since going public in 2016. Its stock now sells for about $12 a share and yields a nice 7.4%.

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REIT spelled out above a real estate investment trust sign.

Proven portfolios should continue to profit from tenants in essential services

These REITs each have their own risks and potential for continuing rewards. They do share proven records of shareholder payback and critical spots in the healthcare supply chain: the buildings themselves, which host thousands of these providers of such essential services.

It's not that a recession won't hurt. It would. But these businesses -- especially with an aging population leading the growing demand for healthcare and senior housing alike – could stand a better chance than many other industries of keeping the shareholder return flowing when times get tougher.

Marc Rapport has positions in Alexandria Real Estate Equities and Medical Properties Trust. The Motley Fool recommends Alexandria Real Estate Equities and Physicians Realty Trust. The Motley Fool has a disclosure policy.

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