3 Elite Medical REITs That Look Like Great Buys Now
Many medical real estate investment trusts (REITs) have bounced back from their COVID-19 pandemic lows, but not at the rate of the general market and some other lucky REITs.
There was a lot of concern among investors that declining numbers of doctor and hospital visits would slow the pace of rentals for medical REITs. While that did happen in some cases, occupancy and collection rates remained high for most. Healthcare REITs provide a simplified opportunity to invest in commercial real estate. Each of these REITs manages a portfolio of real estate properties and mortgages, and make money by collecting rent from healthcare tenants such as medical office buildings, hospitals, and nursing facilities. That's good for income investors, because it presents a real estate investment opportunity at a reasonable price.
Normally, when you look at dividend-producing companies, it makes sense to find one where its payout ratio is not more than 50%, in order to make sure that the company is spending money on its own future growth. But that calculus doesn't work with REITs because of their special status. The Securities and Exchange Commission (SEC) mandates that REITs should have most of their assets and income should be connected to real estate, and that the companies must pay shareholders at least 90% of their taxable income in the form of dividends. REITs can deduct all of the dividends they pay out, so most pay 100% of their taxable income to avoid paying corporate taxes. Global Medical REIT (NYSE: GMRE), Medical Properties Trust (NYSE: MPW), and Physicians Realty Trust (NYSE: DOC) all offer dividends with yields above 5%, and their shares show ample potential to bounce back as the pandemic ebbs.
Source Fool.com
