2024-04-30 12:34:09 ET
Summary
- I am downgrading my rating on Omega Healthcare Investors (OHI) stock to SELL.
- The dividend yield is no longer attractive compared to historical averages and risk-free interest rates.
- Most importantly, the dividend safety has become a concern due to payout ratio, earnings headwinds, and status of its balance sheet.
OHI stock downgraded to SELL
Readers following my writings know that I have been a bull for Omega Healthcare Investors ( OHI ) since 2021 after the COVID-19 interruption. Besides the rebound potential I expect after the pandemic, its dividend was another draw. At the time of my earlier bullish writings, the stock has been yielding around 9% (see the chart below). More recently, in Oct 2023, I wrote an update to downgrade the stock from BUY to HOLD (see the second chart below). The main considerations were:
- Its dividend yield is no longer as attractive compared to its historical average or the current risk-free interest rates.
- The valuation multiples for OHI have already expanded and now offer little margin of safety, making it a less attractive investment.
Read the full article on Seeking Alpha
For further details see:
Omega Healthcare Investors: Dividend Safety Has Become A Concern (Rating Downgrade)