Being that our goal is to purchase a dividend paying portfolio of stocks, we are going to buy another REIT (Real Estate Investment Trust). This will be our 4th REIT. Because REIT’s tend to pay a lot of dividends because of their tax rules, it makes sense that we will own a bunch of them. However, this will probably be our last REIT purchase for a little bit, so we can diversify more. But anyways, we are investing in HCP (HCP) today. The price was hard to pass up, and the stock symbol and company name are the same. How many of those are there?
With some of recent speculative picks, a safer pick is in order. HCP (HCP) is a safer pick. HCP (HCP) invest in real estate for the healthcare industry. Healthcare is not going anywhere anytime soon. In fact, I am willing to bet healthcare will keep increasing. In a way, I am betting on it by buying this stock. And as healthcare increases, the number of properties will need to increase. As they increase, HCP (HCP) will have more properties to buy and lease out, increasing their future profits and dividends.
Another benefit of HCP (HCP) is that they have been paying an increasing dividend for 30 years without missing a payment. Depending on the list you use, there are only 51 companies that have paid an increasing dividend for 25 or more years. In the NASDAQ and NYSE, there are about 4,000 US companies. That is a little over 1% of companies. So HCP (HCP) is going into our healthcare REIT best of breed list.
There is worry of increasing interest rates from the Federal Reserve, so a lot of dividend payers are going down. As interest rates rise, bonds will pay more money. As bonds pay more money, they will compete more with dividend paying stocks. When this happens, it causes dividend paying stock to go down in price. Because of this, HCP (HCP) is trading around its 52-week low. And not because of any changes to its business. So now, they are paying a 6.3% yield. Even when bond yields increase, the increasing payments of HCP (HCP) will keep its stock price stable, and we will keep making more and more dividend $$. With the stock being about 18% off of its 52-week high, it’s a safer buy now than way up there. And with the market weakness, only being down 18% is a lot better than many other stocks right now.
Too help keep us happy and healthy in retirement, we bought 7 shares for $258.02. Although the commission is less healthy for us, we do have to take our medicine. Our starting $15.82 dividend payment will help keep us healthy.