SNH REIT doing well?

[Bearded Man]

I won't be putting money into it now unless it's money I can afford to lose, since it is an individual stock, however; I can't believe when I first started looking at this REIT a few months ago it was paying 7% dividends, and now it is over 9% and counting. The price is low, and has gone down and it looks like a good buying opportunity.

It is said that although the cost of obtaining loans will affect profits, so will the rising rents that will favor existing landlords who got loans at record lows.

That said, I feel more comfortable putting money into index funds, even if it is VNQ and pays less dividends. The first rule of investing; don't lose money, don't invest in anything you don't understand.

[seattlecyclone]

Have they actually raised their dividend recently, or has the yield just gone up on account of the price declines? There's a thing called "chasing yield" that a lot of inexperienced investors do. They purchase stocks that have gone down in price but still have a pretty nice dividend yield. Unfortunately these price declines often happened for a reason, and so you'll get a few nice dividend payments before the company decides they have to cut dividends and maybe go out of business entirely. I have no opinion on whether this particular REIT is in this boat or not, but it's something to be aware of.

[thd7t]

The dividend hasn't changed.  The price has just declined.  I have a couple of hundred dollars that I put in SNH when I first discovered MMM.  It's lost value, even with reinvestment of dividends.  I'm not about to get rid of it (miniscule part of my portfolio), but I wouldn't really recommend it.  I would rather just have put it all into index funds.

[Thinkum]

I remember looking at them, but went with OHI instead. On first glance that dividend seems rather suspect especially since they are not even a dividend champion. OHI is a dividend challenger at 13 consistent years of dividend growth. Meanwhile SNH has kept their dividend payment of $0.39 static sine 2012. So that might be worth looking at; share price is not going up and the cash dividend has stayed the same. Not really a good investment in my book.

[zoltani]

For REITs I would go with OHI or WPC

[Bearded Man]

Yikes, good info. Looks like I'll be sticking to VTSAX or VNQ if I feel the REIT itch again.

Thanks guys/gals.

[Rollin]

I got hit hard a number of years ago with a significant drop in share price from SNH, but wasn't about to bail out at that point.  I figure it is a long-term deal and will eventually end up on top so I let it ride.  Check back a few years and you'll see where the drop in value was.  Maybe that is the "correction' you would be looking for (already occurred??).

[codemonkey]

Thanks for the analysis on this.  I'm all in index funds at the moment, including REITs, but after reading the MMM article that mentioned it and seeing the 9% dividend I was tempted to put some money into it.