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Old 11-10-2016,
AhmedRadog AhmedRadog is offline
 
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Default My Top 2 REITs to Boost Your Retirement Savings

If you're a baby boomer, then supplementing your retirement earnings with rising dividend income is likely at the top of your wish list.

A great way to accomplish this is by owning stocks that pay above-average dividends for their sector. With the exception of a few brief periods, above-average yielders have consistently outperformed the S&P 500 since 1990, returning on average 10% annually, versus 8.6% annual returns for the benchmark index. It may not sound like much, but an extra 1.4% a year can make a big difference in the current low interest rate environment where 10-Year Treasury bonds yield less than 2%.
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Old 11-12-2016,
AidanLomi AidanLomi is offline
 
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Of course, an above-average yield doesn't necessarily mean we have a high-quality stock, so it's important to choose carefully. My colleague Carla Pasternak, director of income research of High-Yield Investing, uses these guidelines to select what she calls the best "Retirement Savings Stocks:"

1. Long track record of paying consistent and rising dividends.
2. Matching history of improving earnings.
3. Strong cash flow sufficient to pay dividends and then some.
4. High projected growth that can lead to dividend increases.
5. Zero or little debt, because debt-free companies have more cash to distribute.
6. Noncyclical business models that can profit in all markets any time.

A reliable income investment that meets all of the above parameters is Senior Housing Properties Trust (NYSE: SNH).

Senior Housing is the nation's fourth-largest health care real estate investment trust (REIT). The company owns $5.3 billion of assets, consisting mainly of senior living properties and medical office buildings. Senior Housing derives most of its rent from triple-net leases, which require the tenant to pay the property's operating expenses and insurance, making it less risky for the REIT.
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Old 11-12-2016,
aitzjida84 aitzjida84 is offline
 
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Among the health care REITs, Senior Housing has the highest percentage of private-pay renters at 94% of the portfolio. That's by design. The REIT doesn't purchase nursing homes or other facilities that depend on Medicare/Medicaid income and has been steadily divesting these for a decade. A portfolio of private payers helps Senior Housing lock in higher profits and minimize exposure to looming cuts in government spending.

What I find most appealing about this REIT is its growing portfolio of medical office buildings, most of which are located on hospital campuses.
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Old 11-14-2016,
ajaxunos ajaxunos is offline
 
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Occupancy rates are 93% for the medical office building portfolio. These properties will benefit not only from aging baby boomers using more health care services than younger Americans, but also from a growing trend favoring outpatient medical procedures. Not long ago, even simple surgeries required a hospital stay, but that is changing as new minimally invasive procedures cut the number of hospitalizations.

Physicians often spend their careers in the same location, so medical office buildings generally enjoy stable occupancy rates and predictable annual 2-3% rent bumps. At present, medical office buildings account for roughly one-third of the portfolio, but Senior Housing wants to increase this percentage to more than 40%.

Senior Housing grows funds from operations (FFO) by investing in properties offering attractive return on investments, while maintaining a prudent payout ratio and balance sheet. Year-over-year FFO grew 15% in 2012 to $296 million, and analysts expect the REIT to deliver 7% growth in 2014 and 5% annual growth thereafter. In addition, Senior Housing has a solid balance sheet with debt at 43% of book capital and no near-term debt maturities.
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