The Monthly-Paying Healthcare REIT With a Demographic Wave at Its Back

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Healthcare REITs

Healthpeak Properties Pairs a 6%+ Monthly Yield With a Demographic Tailwind

Healthpeak Properties (NYSE: DOC) is a $13.41 billion healthcare REIT that owns lab space, medical offices, and senior housing communities across the U.S. The combination matters.

Defensive cash flow on one side, a demographic growth engine on the other. And the stock is still trading well below where Morningstar pegs fair value, even after this week's pop.

Most healthcare REITs investors know (Welltower, Ventas, Omega) lean heavy on senior housing. Healthpeak is built differently. It blends three property types: outpatient medical (the largest bucket), life science labs, and continuing care retirement communities (CCRCs).

That mix gives investors more diversification than a pure-play senior housing REIT, while still riding the aging-population tailwind.

The lab portfolio went through a brutal correction in 2024 as biotech tenants pulled back on space. That cycle is turning. Leasing activity has picked up in the major hubs of South San Francisco, Cambridge, and San Diego, and renewal spreads are firming.

Meanwhile, the medical office portfolio is the boring, beautiful workhorse. Long leases, sticky tenants, near-100% occupancy. It's the reason Healthpeak can pay monthly without breaking a sweat.

DOC currently trades at $19.07 and pays a dividend of $1.22 per share, a yield of 6.4%.

The Cash Engine

Healthpeak runs about $1.7 billion in annualized cash NOI, with the bulk of it coming from outpatient medical buildings on long-term leases. That's the foundation. On top of it, management has been recycling capital out of older lab properties and into higher-yielding outpatient and senior housing development.

Same-store NOI growth across the healthcare REIT space has been accelerating. Senior housing operators are reporting double-digit same-store NOI growth on the back of occupancy gains and rate increases. Healthpeak's CCRC segment sits right in that current.

The Physicians Realty merger that closed in 2024 continues to drive synergies. Cost takeouts and overlapping portfolio efficiencies are still flowing through the P&L.

From an investor's perspective, the dividend coverage is what should build confidence. Healthpeak's FFO payout ratio sits comfortably below 80%, with AFFO covering the dividend with room to spare. That gap is what gives management the flexibility to keep raising the payout while still funding development.

Liquidity is in solid shape, debt is well-laddered, and there's $500 million remaining on the current buyback authorization. Another lever to pull if the stock stays cheap.

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The Demographic Tailwind

Here's the catalyst Wall Street keeps undercounting. The 75+ population in the U.S. Is growing at roughly 4% a year through 2030. That's the fastest-growing cohort in the country, and they are the primary users of medical office buildings, outpatient care, and senior living facilities.

No squinting required to see what that means for occupancy and rents. Healthcare REITs operate in long-cycle markets where supply takes years to add. Demand is already outpacing it.

On top of that, biotech funding is rebounding off its 2023-2024 lows. The lab leasing trough is in the rearview. As life science tenants return to the market, Healthpeak's lab portfolio re-leases at improving spreads.

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The Monthly Dividend Story

Healthpeak moved to a monthly dividend earlier this year, joining names like Realty Income in the rare club of monthly-paying REITs. The annual payout currently runs $1.22 per share, putting the yield at roughly 6.4% on yesterday's close.

That yield is meaningfully above the healthcare REIT average and above where Healthpeak itself has historically traded. The five-year average yield sits closer to 5%. Today's level is a clear sign the market is still pricing in risk that looks overdone.

Management has signaled they want to grow the dividend in line with AFFO. And AFFO is set up to grow as senior housing NOI inflects and lab leasing normalizes.