Omega Healthcare (OHI) Handing Out Another Raise
We may earn money or products from the companies mentioned in this post.
Our family is on pace this year (2017) to earn $2,400 in dividend income. That is the goal we set at the beginning of the year and should come close to hitting it.
The following year (2018), we have a goal to earn $3,000. The year after that … possibly $4,000 in dividend income.
So you may be wondering – How can you grow your dividend income by that much every year?
Well … there are 3 ways we use to keep our dividend income stream growing every single year, month, and even daily.
The first and the biggest boost comes from investing new money into the market. We are still in our allocation phase of building our portfolio and are investing as much as we can afford into new shares of dividend stocks.
In addition to new investments, we are taking the dividend income we are earning every year and reinvesting it. So if we bring in $2,400 this year … every single penny will be reinvested to grow our income.
Finally, the simplest way we are helping to build our dividend income stream is by doing nothing at all!
You see, most of the companies that we own give us a raise every year through annual dividend increases.
All we have to do is be loyal shareholders and stick with the company year after year. Of course, we still need to monitor these companies to make sure business is still good.
The most recent dividend increase from a stock we own was from Omega Healthcare (OHI).
OHI Shareholders Get (another) 1.6% Raise
Omega Healthcare (OHI) recently announced yet another quarterly dividend increase. This Real Estate Income Trust (REIT) has been consistently raising dividends (every quarter) for the past several years. This is the second increase in 2017.
REIT’s typically operate differently than a normal dividend stock, as they pay the majority of their earnings back in dividends.
Company shareholders will now receive $0.63 in quarterly dividends for each share they own … instead of $0.62 paid last quarter. Overall, that is a 1.61% quarterly increase.
Note – The last increase that was paid in February (2017) was a 1.64% increase from the previous quarter.
The latest increase bumps the annual dividend for OHI up to $2.52 per share compared to $2.48 last quarter.
How Much Extra Income?
We currently own 83 shares of OHI in our Money Sprout Index. Our first shares of the company were purchased back in May 2015 from our Robinhood account.
This latest dividend increase has pushed our 12 month forward dividend income for OHI up to $209.16, compared to $205.84 last quarter.
That is an annual dividend income increase of $3.32
While this is a small increase, it is another reminder that our dividend income stream is constantly growing without any extra work from us.
No matter if they are large or small, all of these increases have been adding up over the months and years.
With this latest increase by Omega Healthcare, along with recent stock purchases and dividend reinvestment … our annualized forward dividend income has risen to $2,4391.89.
Note – Since the beginning of the year (2017), our annual dividend income for OHI has increased by $6.64 or 3.3%.
Dividend Growth for OHI
We have owned shares of Omega Healthcare for 2 years now. The company has consistently been raising dividends each quarter since we purchased these shares.
Take a look at the annual dividend payments since 2012 –
- 2012 – $1.69
- 2013 – $1.86
- 2014 – $2.02
- 2015 – $2.18
- 2016 – $2.36
- 2017 – $2.51 (projected)
Note – The 2017 dividend has been prorated to reflect a $0.62 first quarterly dividend and $.63 the remainder of the year. If the company continues to raise quarterly dividends by a penny each time, the the 2017 would be $2.54.
As you can tell from the numbers above, OHI dividends have been raised consistently over the past several years with healthy growth.
Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Omega Healthcare has been a good fit for our portfolio recently based on DGR’s above 6% … along with several other criteria.
Here are a few average growth rates for shares of Omega Healthcare –
- 1 Year DGR – 6.36% (2016 to 2017)
- 3 Year DGR – 7.51% (2014 to 2017)
- 5 Year DGR – 8.24% (2012 to 2017)
Overall, the dividend growth of the company is well above that 6% rate – which is what I love to see!
Omega Healthcare – Buy, Sell, or Hold?
Our first purchase of Omega Healthcare was back in May of 2015 from our Robinhood account, where we purchased 39 shares.
Back in 2015, we had a goal to use most of our tax refund to invest in high yielding dividend stocks – one of which was Omega Healthcare. Since that first investment, we have purchased an additional 44 shares of the stock in various transactions.
Overall, we have earned $205.01 in dividends from the company. Since we own these shares in our Robinhood account, there is no option for DRiP – therefore no additional shares have been earned from dividends.
Note – Even though we don’t have DRiP for our OHI shares, we have used our dividends to fund other purchases.
Here are a few stats from over the years of buying stock in Omega Healthcare –
- Total Investment – $2,805.19
- Shares Purchased – 83.00
- Dividends Earned – $205.01
- DRiP Shares – 0.00
At the time of this writing, OHI has the following dividend stock metrics that I track –
- Current Yield – 7.52%
- Payout Ratio – 137.02%
- P/E Ratio – 18.23
Since this company is a Real Estate Income Trust, most of the conventional stock screen criteria goes out the window. For example, the payout ratio is well over 100% for OHI.
Based on our current portfolio allocation, we are keeping a HOLD status on our Omega Healthcare holdings.
While the high yielding REIT helps us push our yield on cost higher … we also don’t want to overexpose our portfolio. Therefore, at this time we are not actively buying shares of OHI and plan to focus on other top dividend paying stocks.
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – OHI. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.