The Dynamic Dividend

Omega Crashes to 20-Month Low, Yield Rockets to 9%

The “grand compromise” over the weekend was not kind to healthcare-related stocks. One name that took a particularly nasty hit when trading started Monday morning was Omega Healthcare Investors (OHI), the real estate investment trust that owns and holds mortgages on long-term care facilities.

The stock was crushed today, falling as low as $16.97 (13.59%) at one point — its lowest intraday level since November 11, 2009. It had to climb steadily all afternoon just to close the day trading at $17.81 (-9.32%), where it carries an 8.98% dividend yield. As you can see from the chart below, the stock’s yield has rarely flirted with the 9% level:

The company has given its shareholders an absurd 19 raises since reinstating its payout in late 2003 (a period wholly covered by this chart), and other than a brief six month period when the world was engulfed in economic panic, Omega’s yield has come nowhere near 9% until today.

Will this end up being another short-lived opportunity to buy Omega and lock in an elevated yield, or is the Elite REIT’s steadily-rising dividend actually at risk?