Omega Healthcare (OHI) Gives Out Third Raise This Year – 1.6% Dividend Increase

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I have a goal to earn $3,000 in dividend income next year (2018). If we are to reach that goal, it would be a 25% increase from this year’s (2017) projected totals of $2,400 in dividend income.

Since we are on pace to break our goal for this current year, it is time to start making plans for next year. And in order to hit that $3K target in dividend income … we are going to need a lot of help.

Most of our increase will come from new investments we plan to make between now and then. Our current goal is to invest around 25% of our income each month (or $1,400+). That should get us close to our target … but not all the way.

In addition to new investments, we are also busy reinvesting our dividend income either through DRiP (dividend reinvestment plans) or by one-time purchases through our Robinhood account. During 2017, we will reinvest almost $2,400 of dividend income into more stock.

The final way we are working to grow our income stream is through company dividend increases. Without question … this is the easiest way to help build your income. Most of the companies that we own increase their dividend once every year … and that is why we buy shares in them.

In some cases, a company may raise their dividend more than one time per year. Omega Healthcare (OHI) is one of those companies that usually gives my family a raise every quarter.

And this quarter they did not disappoint with yet another raise for 2017!

OHI Shareholders Get a 1.6% Raise

Omega Healthcare (OHI) recently announced yet another quarterly dividend increase. This Real Estate Income Trust (REIT) has been consistently raising dividends for 20 consecutive quarters. This is the third 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 $0.64 in quarterly dividends for each share they own … instead of $0.63 paid last quarter. Overall, that is a 1.59% quarterly increase.

Note – The last increase that was paid in May (2017) was a 1.61% increase from the previous quarter.

The latest increase bumps the annual dividend for OHI up to $2.56 per share compared to $2.52 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.

Join Robinhood and we’ll both get a share of stock like Apple, Ford, or Sprint for free.

This latest dividend increase has pushed our 12 month forward dividend income for OHI up to $212.48, compared to $209.16 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 $2,658.66.

Note – Since the beginning of the year (2017), our annual dividend income for OHI has increased by $9.96 or 4.92%. Since this company typically raises dividends each quarter, it is a bit different than most companies that raise their payouts one time per year.

Dividend Growth for OHI

We have owned shares of Omega Healthcare for a little more than 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 – $2.53 (projected)

Note – The 2017 dividend has been prorated to reflect a $0.62 first quarterly dividend, a $.63 second quarterly dividend, and $.64 the remainder two quarters 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 – 7.20% (2016 to 2017)
  • 3 Year DGR – 7.79% (2014 to 2017)
  • 5 Year DGR – 8.41% (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 $257.30 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 – $257.30
  • DRiP Shares – 0.00

Note – In just over 2 years since purchasing our first shares of OHI, we have earned back 9.2% of our total purchase price in dividends!

At the time of this writing, OHI has the following dividend stock metrics that I track –

  • Current Yield – 7.63%
  • Payout Ratio – 123.53%
  • P/E Ratio – 16.9

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.

Note – OHI makes up 8% of our portfolio at this time.

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.

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