Why Is Omega Healthcare's Dividend So High?

Omega Healthcare Investors (NYSE: OHI) has a huge yield of more than 9%. That's generous by just about any standard. It is large on both an absolute level and relative to the broader market (the S&P 500 index has a roughly 1.6% yield) and the average real estate company (3.7%, using Vanguard Real Estate Index ETF as a proxy). Omega's yield is so disproportionately high for two important reasons.Omega is a real estate investment trust (REIT) that focuses on the senior housing market using the net lease approach. That means the companies that lease out the REIT's properties are responsible for most of the operating costs. Although it's a vast simplification, Omega basically just collects rent, while the tenants pay for things like maintenance and taxes.Image source: Getty Images.Continue reading
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