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.

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