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REIT + Health Care = Hot Stock

NEW YORK (TheStreet) -- Consider that an exchange-traded fund, Healthcare iShares (IYH), that tracks the health-care sector is currently up 9.5% year-to date. With the passing of the Affordable Healthcare Act (only time will tell if it is affordable or not) there will be a lot more customers in the health-care system.

Here is a current chart of this ETF:

In addition to this red-hot sector, the REIT sector is also under heavy accumulation. Investors who are not happy with a 10-year Treasury yield of 1.5% and CDs that are currently paying next to nothing are venturing out and seeking yield.

Last year, it was the high-paying large-caps that benefited from this feeding frenzy. This year, one of biggest beneficiary of investors seeking yield is the REIT stocks. I wrote about three such stocks back in early May here on the TheStreet.com

An ETF that track the U.S. REIT sector, streetTRACKS Dow Jones Wilshire Reit Fund (RWR), is now up 13.5% on the year. Remember, this is against a backdrop of a Standard & Poor's 500 that is up just 6.4% for the year.

Here is a current chart of this REIT exchange-traded fund:

Now, what if we can find a stock that combines both the health-care sector and the REIT sector into one nice package, and offers a healthy dividend yield of 5%?

Well, let's give it a shot...

The name of the stock is Health Care REIT (HCN). Wow, that's a good start! All the right names are present. Headquartered in Toledo, Ohio, the company invests in health-care and senior housing facilities in 46 states.

Market capitalization is a very respectable $12.8 billion and the stock, in my opinion, is suitable for investors seeking income first and capital appreciation second

I just love a little growth along with my dividends! I hate investments that just pay income and have never delivered any capital appreciation.

Let's take a peek at the average total returns of this stock over the years:

Very nice! Who would not have been happy with a 15.1% average total return over the last 10 years? The stock has delivered some very nice capital appreciation along with those dividends. That's like getting a nice big, fat kosher dill pickle along with your corned beef sandwich. Maybe a little coleslaw, too.

Stock quotes in this article: HCN, IYH, RWR 

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