FinanceGlossy

3 lesser-known dividend stocks for a rocky summer




It’s been a choppy stock market so far in 2014, particularly for the “risk on” momentum shares that were last year’s leaders.

Popular biotechs like Vertex VRTX -0.16% are off by double-digits. Tech mainstay Amazon AMZN -0.02% is down about 30%. And recent cult stocks Twitter TWTR +1.50% and 3D Systems DDD -2.41% have been cut in half this year.
Of course, it’s not all gloomy. The broader market indexes have slowly plodded about 1% higher in the face of these troubles.

And some stocks have pushed even higher.

What are those picks? Surprisingly, they are some of the sleepiest names on Wall Street — defensive blue-chip dividend payers that were largely overlooked during the market’s roaring run of 2013.

And as the market gets more selective and investors increasingly move “risk off,” these picks could continue to do very well across the rest of 2014.

Here they are:
Ventas VTR -0.18% — 19% return this year, dividend yield of 4.3%. VTR -0.18%
Longtime readers of my column (hello to all three of you!) will know that one of my favorite long-term investing trends is the demographic shift in America that is taking place. As Baby Boomers age, it will transform many industries, particularly across health care.

A great way to play this trend is via high-yield real estate investment trusts that focus on elder care. A company like Ventas is a perfect example, since it controls some 700 senior-housing facilities, 400 skilled-nursing facilities and 250 medical-office buildings across the U.S.

Of course, this demographics trade hadn’t really borne any fruit across 2011 and 2012 as health-care REITs remained stuck in neutral, but the risk-off environment and a hunger for yield amid falling Treasury interest rates has re-energized interest in stocks like Ventas.

But short-term stock performance aside, the dividend is what should keep you interested in Ventas long term.
Even after the run-up, the stock, VTR, yields 4.3%. The company has increased its distributions 120% in the past 10 years, from 32.5 cents per share in 2004 to 72.5 cents today.

Ventas is also gobbling up smaller competitors, with eight major acquisitions over the past decade that total over $16 billion, in order to ensure future growth. These are also high-quality purchases, with so-called triple-net leases that mean tenants, not Ventas, are obligated to pay for any property-related expenses like taxes, maintenance and insurance.