Defensive Addition to My Portfolio

22 Feb 2014 21:33

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Over the last 9 months REITs (Real Estate Investment Trusts) have been in a sell-off. This sell-off has finally motivated me to buy my first REIT in an effort to diversify my portfolio. In addition to increasing my portfolio diversity I also have the goal of picking a defensive stock in the case of a significant market drop by owning an alternative investment in the form of property. A REIT is easier than actually buying property and the headaches that come with it as well as also being more liquid.

I settled with a purchase of 54 shares in HCP at a price of $37 per share and a dividend yield of 5.8%. HCP’s health care property investments are the most diverse in their industry and tenant income source is just as diverse as it is spread (almost evenly) between Private investment, Medicare, & Medicaid.

Additionally HCP has increased its dividend for 29 straight years, has a 10 year dividend growth average of 2.4%, and is the only REIT currently a member of the S&P 500 Dividend Aristocrats Index. HCP is quite proud of its inclusion in the index and heavily advertises as such, of which helps attract new investment when HCP requires capital for property growth.

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