This Ultra-High-Yield Dividend Stock Has Quietly Been a Very Enriching Investment

Core Insights - Omega Healthcare Investors is a real estate investment trust (REIT) focused on the long-term healthcare industry, particularly skilled nursing and assisted living facilities [1] - The company has generated a total return of over 1,500% over the last 20 years, making it one of the top-performing REITs [2] - Omega Healthcare currently offers a high dividend yield of 6.5%, which has been a significant driver of its total returns [2] Investment Portfolio - Omega Healthcare has invested in approximately 900 long-term healthcare properties in the U.S. and U.K., with 70% in skilled nursing and transitional facilities and 30% in senior housing [3] - The majority of its portfolio, 83.3%, consists of rental properties operated under long-term triple net (NNN) leases, providing stable rental income [3][4] - The company also holds real estate loans (12.3%), real estate tax and ground leases (1.6%), and other investments (3%) [3] Financial Performance - Omega Healthcare has a high dividend payout ratio of 99.2% of its funds available for distribution (FAD) and 94.7% of its adjusted funds from operations (FFO) [5] - The company has made $13.6 billion in new investments since 2010, contributing to a 13.2% compound annual growth rate in adjusted FFO since 2009 [7] - Despite recent slowdowns in dividend growth, the company has maintained its dividend since the pandemic, unlike many peers [8] Growth Potential - Omega Healthcare has a conservative balance sheet with a leverage ratio of around 4.76, within its target range of 4.0-5.0 [9] - The company is actively using its balance sheet capacity and stock sales to fund new investments, having closed nearly $650 million in new investments by July [10] - With only 5% market ownership in skilled nursing facilities, Omega has significant growth opportunities, especially with an aging population driving demand [11] Income Generation - The REIT has capitalized on high investment yields for skilled nursing facilities, which has supported its income and dividend payments [12] - Future investments are expected to continue generating income to sustain the high-yielding dividend, making Omega an attractive option for passive income seekers [12]