Run And Hide From These Two Wretched REITs
What’s not to love about a company that has doctors as it clients?
A company that owns more than $500 million worth of medical office buildings, and collects rent like clockwork from doctors and health care businesses?
After all, the doctors aren’t going to walk out on their leases, are they?
Well…
You’d think not. And you’d figure that a REIT with medical office buildings would be a safe bet.
But here’s the problem with Physicians Realty Trust (DOC).
It doesn’t make very good real investments. Take a look at the net margins and you’ll see they’re -23%. Return on equity is -3%.
These are well below industry averages.
And there’s another reason Physicians Realty Trust isn’t a healthy addition for your portfolio.
It’s paying out more in dividends than it can afford. Something’s got to give when your payout ratio is over 100%.
Take two aspirin and cancel your appointment with DOC.
Physicians Realty Trust (DOC)
Dividend Yield: 6.25%
Annual Payout: .90
Payout Ratio: 101.1%
Trailer Parks – No Foundations!
You guessed it.
A REIT that owns what the industry calls “manufactured home communities”.
Granted, some of these homes don’t look like trailers.
But when you look at UMH Properties (UMH), a REIT with 86 communities and 14,800 developed home sites, you want to run for cover.
If tornadoes seem to have a fondness for crashing through trailer parks, you know it’s just a matter of time before UMH Properties takes a thrashing.
Why?
Do you think a dividend payout ratio of 101.1% is bad? How about 128.6%?
Net margin is -5% and return on equity is -3.5%.
And expenses are soaring, up 23% the first quarter of 2014 over 2013.
All in all, not a good neighborhood for a dividend investor.
Best to go manufacture your dividends someplace else.
UMH Properties (UMH)
Dividend Yield: 7.35%
Annual Payout: .72
Payout Ratio: 128.6%
Profitbaly Yours,
Michael Jennings
Category: Dividend Stocks
