One Raise at a Time | 23 Consecutive Quarters

Concept of how dividend growth investing works, health care, real estate
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Omega Healthcare for yet another dividend increase!
Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.

On January 16th the Board of Directors at Omega Healthcare Investors (OHI) approved another increase to their quarterly dividend payment.  The dividend was increased from $0.65 per share to $0.66.  That works out to a 1.54% increase from the prior payout.  Omega Healthcare Investors is a Dividend Contender with 15 consecutive years of dividend increases.  Shares currently yield 9.63% based on the new annualized payout. 

That increase might seem a bit small at just 1.5%; however, Omega Healthcare Investors typically gives a small increase with each quarterly payout.  In fact they've given a raise for 23 consecutive quarters dating back to November 2012.  Compared to the same payout as last year the dividend has increased 6.45%.  

Since I own 84.706 shares of Omega in my FI Portfolio this raise increased my forward 12-month dividends by $3.39.  This is the 21st dividend increase I've received from Omega Healthcare since initiating a position in March 2015.  Cumulatively since I first bought shares my dividends have increased by 22.2% through organic dividend growth alone.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 4.0%.  That's dividend growth investing at work.  

A full screen version of this chart can be found here.

I like to examine the dividend growth rates that a company has doled out over time in order to see whether dividend growth is holding steady, increasing or decreasing.  Looking at this gives you an idea of the possible future direction of dividend growth.

Omega Healthcare Investors has paid and raised dividends every year since 2003.  The yield has typically been 6% plus during that time so you would expect that dividend growth would be slow.  However, that's not been the case for Omega Healthcare with annual raises coming in at 7%+.  For a 6% starting yield that's huge growth.
dividend growth investing, dividend, passive income, financial independence
Omega Healthcare Investors (OHI) Annual Dividend and Rolling Dividend Growth Rates
*2018's dividend assumes the current quarterly payout of $0.66 per share is maintained for the rest of the year.

A full screen interactive version can be found here.

Over the last 6 months or so Omega Healthcare Investors share price has been on a slow grind lower pushing the yield up to 9.63%.  Seeing a yield that high is definitely a cause for concern.  Omega Healthcare operates as a landlord primarily for skilled nursing facilities.  Unfortunately there's some very real concerns about whether those tenants will be able to keep making their rent payment which has been an anchor on Omega's share price dragging it lower.  If the tenants' issues are resolved then this marks a great buying opportunity; however, a nearly 10% yield isn't something that typically last for too long.  More research is definitely needed with this one.

Wrap Up

My forward dividends increased by $3.39 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.56% this raise is like I invested an extra $132 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way.  

That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

So far in 2018 I've received 2 dividend increases from the companies owned in my FI Portfolio raising my forward 12-month dividends by $10.87.

My FI Portfolio's forward-12 month dividends increased to $5,871.86.  Including my FolioFirst portfolio's forward dividends of $77.16 brings my total taxable accounts dividends to $5,949.02.  My Roth IRA's forward 12-month dividends are at $336.21.

Do you own shares of Omega Healthcare Investors?  Do you believe the dividend is sustainable or is it poised for a cut?

Please share your thoughts below.

Image source


  1. JC, I have never owned OHI, but it seems to be a popular choice lately with REITs trailing the market. I do own VTR and HCN in what is a very viable sector for us dividend stock investors. Tom

    1. Tom,

      OHI has been a solid investment at least in terms of generating dividends. Unfortunately due to rising rates and the concerns about some of their renters the share price hasn't quite followed suit thus the big rise in the dividend yield. I also own VTR which has been a nice investment too. I really like the HC REIT space because it combines 2 of my favorite sectors for dividend growth.

      All the best.

  2. JC, I like the HC REIT space as well. I know OHI has some risks involved with getting their rents paid, but with people living longer I can only feel like the need for skilled nursing facilities is growing. Hopefully, management can figure out a way to navigate around these obstacles and into clear water, but for now I will gladly take this raise.

    1. Money Hungry,

      Overall I share your same thoughts regarding longer life spans meaning more need for SNF. It'll be interesting to see how things play out, but I think it's a good sign that management isn't too concerned just yet since they just boosted the dividend again.

      Thanks for stopping by!

  3. Hi JC. I do own OHI. I'm a little uncomfortable with the high yield as well. I'm just watching and waiting , as opposed to adding more. This will be a good test for OHI management, as we'll get to see how they navigate the choppy waters.

    1. ED,

      That high yield is worrisome but I'm going to stick with management on this one. They still raised the dividend which I take as a sign they think they'll be able to navigate through these choppy waters.

      All the best.

  4. Love my OHI it’s my second largest Reit holding and second largest payout. Would love to add more but also have other stocks I have to add to decisions decisions. If they can keep this up for another 4-5 years would be sweet

    1. Doug,

      OHI is my second largest REIT holding as well although it's less than 1% of my total portfolio based on value. Due to the high yield it's nearly 3% of my forward dividends. There's no complaints from me about what OHI has done since I purchased shares although I have to admit that seeing a nearly 10% yield is a bit worrisome. For now though it's hold on and see what happens.

      Thanks for stopping by!


Post a Comment