An Amazing Long-Term Opportunity

(HCP Inc.): One of my favorite high-yielding dividend stocks is healthcare real estate investment trust HCP, which pays about 5.6% as of this writing.

HCP owns healthcare real estate, specifically senior housing, medical offices, and life science properties. Over the past couple of years, HCP has gotten rid of its riskier assets, reduced its concentration to its largest tenant, and taken several steps to improve its balance sheet and its general financial strength.

Healthcare real estate will be a pretty exciting opportunity over the next few decades. The aging U.S. population (the number of senior citizens will roughly double over the next 35 years) should create a steadily rising demand for healthcare, particularly senior housing and medical offices. And, with only about 15% of all healthcare real estate owned by REITs, there's lots of room for consolidation in the existing $1.1 trillion market.

There are a couple of reasons I like HCP better than some of the other big players in healthcare real estate. First, it's well diversified, with its property portfolio nicely divided among its three core property types. On the other hand, peers are generally more heavily weighted in senior housing. Second, HCP focuses more on private-pay healthcare properties, with roughly 95% of its revenue from private sources as opposed to less-predictable government reimbursements.