Is National Health Investors a Good Dividend Growth Buy?

I’ve been scouring various resources looking for new opportunities in dividend growth land. One interesting REIT that popped up is National Health Investors (NYSE: NHI).

What does NHI do?

NHI is a medical properties trust that invests primarily in senior living properties. Very similar to Omega Health Investors and similar in performance.

NHI is a real estate investment trust specializing in sale-leaseback, joint-venture, mortgage and mezzanine financing of need-driven and discretionary senior housing and medical investments. NHI’s portfolio consists of independent, assisted and memory care communities, entrance-fee retirement communities, skilled nursing facilities, medical office buildings and specialty hospitals.


Several medical property REITs have come under a bit of duress in the last few months due to the leasees operating with too much leverage.


We typically start with the Dividend Discount Model for our dividend growth investments:

3 Year Dividend Growth: 5.57%

Trailing 12 month Dividends: 4.20

Cost of Equity: 10%

Value = 4.20 * (1 + 5.57%) / (10% – 5.57%)

Value = $100

There is a wide range of numbers that I’ve seen for cost of equity on NHI. With a 10% cost of equity, NHI is trading (~$80) at a comfortable discount to value given its dividend yield and growth history. It does have a bit of risk baked in due to its sector, but looks to be an interesting opportunity for REIT buyers.

I haven’t initiated a position yet, but will be looking to add one if the opportunity arises before its next ex-dividend date in September.

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