Healthy Dividends from Hospital REIT - Ventas (VTR)

The healthcare sector in the US is very much in spotlight as the government attempts to make quality facilities more accessible to more Americans. However the barriers to entry for new players remain high and investors seeking exposure to the sector may want to consider some of the existing operators.

One such player is Real Estate Investment Trust (REIT) Ventas (VTR) which was established in 1999.

Ventas (VTR) has a portfolio which includes 505 healthcare-related facilities located in 43 US states and two Canadian provinces and recently announced that it had completed its acquisitions of Lillibridge Healthcare Services which adds another 95 medical buildings to its portfolio.

The company has also been kind to shareholders. On top of its 4% dividend yield it has delivered an annual total shareholder return of 65% over the last five years.

Reporting first quarter results in April, management was positive indicating that growth was on the cards. Ventas (VTR) experienced another quarter of strong and growing cash flows, along with continued improving fundamentals in the portfolio.

Funds from operations for the quarter were up 9.9% to $105.2m compared to $95.7m for the comparable 2009 period. The company also received a favorable judgment of $101.6m against competitor HCP (HCP) who they argue had attempted to sabotage a deal to buy Canadian operation Sunrise Senior Living (SRZ). HCP (HCP) has said it will challenge the judgment but should the ruling be upheld, shareholders could score further here.

Ventas (VTR) has also re-affirmed its earnings guidance for the remainder of 2010 with earnings to come in the range between $2.69 and $2.75 per diluted share.

Ventas (VTR) operates in a selection of well-located, need driven communities presenting some downside protection and obvious upside benefits.

With healthcare a very topical issue in the US and a high barrier to entry for new players, Ventas (VTR) offers not only a good dividend track record but also an existing footprint which can leverage off future investment in the sector.