How Safe Is Ventas' Nearly 10% Dividend Yield?
Countries around the world have essentially shut down economically because of COVID-19, and a global recession is likely already underway. Companies across most sectors will feel the pinch. However, for real estate investment trusts (REITs) that own senior housing properties, like Ventas (NYSE: VTR), the coronavirus pandemic is having a larger than average impact.
At this point, investors in this niche need to be anticipating dividend cuts. Here's a look at where things stand at Ventas.
Ventas ended 2019 on a very weak note. The real estate investment trust's portfolio is divided into three main segments: medical office, medical research, and senior housing. The first two combined made up around 27% of its net operating income (NOI) in 2019. Senior housing accounted for almost 70% of NOI, so it's clearly the most important part of the business. That segment is broken down into two parts, with properties leased to others accounting for 36% of NOI, and properties that Ventas owns and manages (it actually hires others to do the day-to-day work), accounting for the other 32%. That second part is known in the industry as a senior housing operated portfolio (SHOP), and it allows property-level performance to flow through to the REIT. In good years, that means a boost to earnings. In bad years, it means exactly the opposite.
Source Fool.com
