Senior Housing Properties Trust (SNH): A ‘Forever Stock’ Stock Every Investor Should Own

In addition, the company has performed consistently through the years. In addition to a growing stock price, Senior Housing Properties Trust (NYSE:SNH) has steadily raised the dividend from $1.20 a share in 2000 to a recent $1.56 a share, which brings the yield to just over 6%. Add that to capital appreciation, and you have a compounded annual return of 47% during the past 13 years. Not bad for a “lost decade” of investing…

The fact that REITs are required by law to pay 90% of their income as dividends to shareholders — regardless of whether their share price goes up or down — makes this an even sweeter deal.

Risks to Consider: Although the lion’s share of Senior Housing is private pay — which implies relatively affluent tenants — tougher economic conditions or external circumstances such as inflation, could affect the company’s pool of qualified prospects in the senior lifestyle and assisted-living segment. In addition, as part as their different tax structure, REITs don’t pay income taxes. This means their dividends are usually fully taxable.

Action to Take –> I see Senior Housing as a long-term holding, especially if you are building a retirement, income-focused portfolio. This doesn’t mean the stock can’t perform well in the short term. Based on favorable long-term demographics and the company’s history of consistency, a 12-month price target of $29 is completely reasonable.

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