I’ve just heard about REIT for the first time and I searched for a few goods ones and BXMT came across my desk. I looked at it and noticed the 8.05% dividend yield! That’s phenomenal!
Isn’t this asset beating the S&P500? Is BXMT the best REIT? What difference is it whith BXMT and BX?
Thanks for your clarifications.
Answer:
It has over 100% payout ratio. That means it pays out more in dividends than what it makes as a company. Usually the dividend will be cut, so don’t expect 8% to last. Usually, if a stock has a high dividend, they don’t grow too much per share. Not to mention taxes on reits are taxed differently than regular qualified dividends.
That is probably the EPS payout ratio, but in REIT you have to look at the FFO payout ratio!
Article released today comparing OHI and MPW. How timely!
Conclusion:
The two stocks both trade at a huge discount to the market multiple and to the REIT sector in general. Both have very low debt (for REITs), great dividend yields and good management teams. The EBITDAR coverage differences are quite drastic and tilt the scales in favor of MPW.
On our scale of 1-10, where 1 would be “Avoid like the bubonic plague” and 10 would be “Buy like this is Apple in March 2009,” I would rate MPW an 8 and OHI a 6.5. Both stocks are buyable at current prices, but if I had to pick only one stock here, it would be MPW, as it is likely to deliver far superior returns with lesser risk.
It’s hard to argue with the 2nd richest man in the world. Although, I think it’s important to note that zero profit is because of investment in future growth. The goal isn’t to run a break even business with no growth. It only works if revenue keeps growing fast enough. The magic question is what’s “fast enough”? I hope we don’t find out what’s not fast enough.
Zero profit works…Live off the capital gains at a lower tax rate than REiTS…Reits are like bond funds because they are a blended investment with management fees…Owning iindividual RE assets means more control and potential higher returns. .Reits are like blended scotch. .Individual property’s are like single malt.
[quote=“manch, post:31, topic:2680, full:true”]
Article released today comparing OHI and MPW. How timely!
seekingalpha.com
[/quote]> OHI’s portfolio comprises of over 970 healthcare facilities in 42 states and the UK, focusing on skilled nursing, transitional care and Senior Housing. The REIT receives fixed rent payments from tenants with annual escalators, while operators receive revenues through Medicare, Medicaid or Private Pay.
MPW owns and leases acute care hospitals and inpatient rehabilitation services. It has over 269 properties in 5 countries, which are leased to over 30 operators.
They operates in different market segment. Would there be more people needing acute care in the future?
