How to Invest In a Healthcare REIT
A real estate investment trust (REIT) is a commercial real estate company with shares trading on the stock market. A REIT is required to pass the majority of earnings from its real estate holdings on to investors in the form of dividends. Most REIT shares are high-yield stock investments. Healthcare REITs invest in healthcare facilities such as hospitals, nursing homes and medical office buildings.
- Difficulty:
- Moderate
Instructions
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1
Perform research on the different healthcare REIT companies. As of July 2011, there were 13 healthcare REIT stocks trading publicly (see Resources). Items of research include share price history, dividend payment history and the types and locations of the healthcare facilities each REIT owns. The investor relations page of each REIT will have this information. Listen to the most recent recorded earnings conference call to get a feel for the company's management objectives.
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Select the healthcare REIT in which you want to invest and calculate the number of shares to buy, dividing your planned investment amount by the current share price.
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3
Buy the selected REIT shares through your stock brokerage account. REIT shares are bought and sold like any listed stock. If you do not yet have a brokerage account, "SmartMoney" magazine conducts an annual review and rating of the online discount brokers (see Resources).
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Tips & Warnings
A stable and growing distribution rate is a better long-term performance indicator than a current high dividend yield.
Your selected healthcare REIT may also offer a direct purchase plan with dividend reinvestment. If you want to invest small amounts in the shares, this plan would be an alternative. Direct purchase plan information will be available in the investor relations webpages.
There is a healthcare REIT called Health Care REIT. It is not the only company in this sector. Research all of the healthcare REIT stocks to find the one you like the best.
REIT shares can go up and down in value like any other stock price. Understand the risks before buying any shares.
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References
Resources
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