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Health Care REIT Posts Stronger Rental Income

Health Care REIT Inc.’s (HCN) fourth-quarter earnings more than doubled as the company saw stronger rental income and resident fees and posted a significantly higher gain on sales of properties.  HCN will benefit from an aging Baby Boomer generation’s growing demand for assisted and independent living facilities in the coming years. With a significant presence in these property types, Health Care REIT is in a relatively strong position than most of its competitors.

Health Care REIT also announced 2013 dividend payment rate of $3.06per share, representing a 3.4% increase above 2012 payments.   The dividend payout is a current dividend yield of 4.84%. The latest cash dividend was the company’s 167th consecutive quarterly dividend payment.

With strong quarterly results, Health Care REIT is well poised to maintain its growth curves and simultaneously benefit the shareholders with steadily rising dividends.

In the fourth quarter, the company acquired 11 properties with Belmont Village for $530 million, 11 properties with Brookdale Senior Living Inc. (BKD) for $271 million, and five properties with Sunrise Senior Living for $265 million.

According to the U.S. Census Bureau, the elderly population (aged 65 and older) is expected to jump 36% from 2010 to 2020 to 54.8 million people. The latest acquisition by Health Care REIT, therefore, reinforces the buzz in the healthcare REIT industry, spurred by an aging Baby Boomer generation’s increased demand for assisted and independent living facilities.

Health Care REIT reported a profit of $107.2 million, up from $44.5 million a year earlier.  On a per-share basis, earnings improved to $0.35 from $0.15. Excluding gains on properties and other items, funds from operations fell to $0.85 cents from $0.91 cents.

Revenue jumped 30% to $500.7 million. Analysts polled by Thomson Reuters had forecast earnings of $0.28 cents, FFO of $0.84 cents and revenue of $498 million.

Rental income, the biggest top-line contributor, rose 20%.  Resident fees and service revenue jumped 46%.

The latest period included a $54.5 million gain on property sales, compared with a $4.6 million gain a year earlier.

The senior housing- and health-care-focused real-estate investment trust expects 2013 FFO of$3.70 to $3.80 a share.

The shares of Health Care REIT currently trade at 16x the Consensus Estimate for 2013 FFO, a 4.6% premium to the industry average. On a price-to-book basis, Health Care REIT shares trade at 1.6x, a 15.8% discount to the industry average. On a price-to-book basis, the valuation looks fairly valued.

Bottom Line: Health Care REIT (HCN) is a stable, growing dividend play with a fair valuation at this time.  Investors may want to add shares on a price pullback to $60 or lower.

High Yield Dividend Stocks With Exploding Earnings

It’s the newest market riddle: where do you go for safety when the traditional option could be in a bubble?  With fiscal problems in Europe once again leading to sharp drops in global stock markets, many investors are seeking out stable assets that can both protect their principal and generate an income stream to keep up with inflation. Yet the most obvious choice – U.S. Treasury bonds – offer historically low yields. The benchmark 10-year Treasury yields 1.90 before taxes, well below the 2.26 percent annual rate of so-called “core” inflation, according to the U.S. Consumer Price index.  Investors should look for stocks offering high dividend yields and growing earnings.

Health Care REIT Inc.’s (HCN) first-quarter earnings jumped 81% as the senior housing and health-care focused real-estate investment trust continued its aggressive expansion.  HCN has been expanding its portfolio of assisted living and skilled-nursing facilities, including its $2.4 billion acquisition last year of Genesis Health Care. The company said it completed $753 million in investments during the latest quarter, including$426 million in medical office building investments, as well as $119 million in senior housing investments.  HCN reported a profit of $57.5 million, or 19 cents a share, up from $31.8 million, or 15 cents a share, a year earlier.

HCN has a dividend yield of 5.3% which are increased 3.5% each year.

Enterprise Products Partners L.P. (EPD) -quarter earnings jumped 49% as net income for the first quarter of 2012 was $656 million versus $435 million for the first quarter of 2011. Net income attributable to limited partners for the first quarter of 2012 was$0.73 per unit on a fully diluted basis compared to $0.49 per unit on a fully diluted basis for the first quarter of 2011.  EPD increased its cash distribution with respect to the first quarter of 2012 to$0.6275 per unit, or $2.51 per unit on an annualized basis, which represents a 5.0 percent increase from the distribution rate paid with respect to the first quarter of 2011. This is the 31st consecutive quarterly increase and the 40th increase since the partnership’s initial public offering in 1998.

EPD has a dividend yield of 5.24% which are increased 5% each year.

Canada’s biggest pipeline company TransCanada Corporation (TRP) announced comparable earnings for first quarter 2012 of $363 million or $0.52 per share. Net income attributable to common shares for first quarter 2012 was $352 million or $0.50 per share.  TRPs Board of Directors also declared a quarterly dividend of $0.44 per common share for the quarter ending June 30, 2012, equivalent to $1.76 per common share on an annualized basis.  While the 1Q earnings were not spectacular, TRP has a number of projects in process to increase future earnings,  Over the next three years, TransCanada expects to complete $13 billion of projects that are in the advanced stages of development – $7.8 billion in oil pipelines, $2.2 billion in natural gas pipelines and $3 billion in energy.

TRP has a dividend yield of 4.11% which were initiated in 2012.

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