Three Buy-Ranked REITs With Strong Fundamentals And Dividends

The Fed expects to raise interest rates only twice this year.That’s half the number of rate increases it originally expected to make in 2016.The reduced number of anticipated rate hikes is largely due to the fact that there are international economic concerns which can negatively impact growth in the United States.

As interest rates stay low, there tends to be an increased preference for dividend stocks.This higher demand for companies which dole out higher yields drives share prices higher.Investors tend to favor dividend income in times of market volatility. We’ve seen plenty of this in 2016, so companies doling out higher yields could stand to experience superior returns this year.

REITs, or real estate investment trusts, give out the majority of their net income to investors in the form of dividends.If they give out 90% of their income, then these companies are exempt from paying federal income taxes. 

REITs give out superior yields compared to most companies in the market, so these companies could benefit the most from the market’s growing preference for dividend stocks.Below, we highlight three REITs with strong fundamentals who are also offering high dividend yields. 

Omega Healthcare Investors-(OHI – Snapshot Report)

Omega Healthcare is a self-administered REIT which invests in income-producing healthcare facilities.The company currently holds a Zacks Rank #2 (Buy), and doles out a dividend yield of 6.61%.  The company has current cash flow growth of 31.66%, which should help the company to sustain its dividend payout to equity investors.It’s also very liquid, with a current ratio of 2.71.

Omega has a debt/capital of 46.53%.Compared to other REIT’s, OHI is in a different league with regards to profitability, having net margins of 30.19%.Omega’s ROE is 6.41%, which is also considerably higher than the industry’s ROE of 5.21%. 

Sales are projected to grow by 15.36% this year, which makes OHI an especially interesting growth candidate, since it has a combination of high sales growth along with large profit margins.Omega’s EPS is projected to grow by 14.97% this year.