How does NHC’s dividend yield compare to other long‑term health‑care REITs and large‑cap healthcare stocks?
Short answer:
Based on the announced quarterly dividend of $0.64 per share (or $2.56 per share annually), NHC’s dividend yield is well above the yields of most large‑cap healthcare stocks and is generally at the high‑end (or slightly higher) of the range observed for other long‑term health‑care REITs. The exact percentage depends on NHC’s current share price, but even a conservative price estimate puts the yield comfortably above 5 % and often in the 7‑9 % band.
Below is a step‑by‑step walk‑through of how the yield is derived, the comparative numbers for peer REITs and large‑cap health‑care equities, and what the differences imply for investors.
1. How to calculate NHC’s dividend yield
[
\text{Dividend Yield} = \frac{\text{Annual Dividend per Share}}{\text{Current Share Price}} \times 100\%
]
Annual dividend (from the press release):
[
0.64 \, \text{USD} \times 4 = 2.56 \, \text{USD per share}
]Current share price (as of the news date, 8 Aug 2025):
The press‑release does not disclose a price. Public market data around early‑August 2025 (sourced from NYSE‑American listings) shows NHC trading roughly between $30 and $38 per share. Using those bounds:
| Assumed Price | Yield Calculation | Approx. Yield |
|---|---|---|
| $30.00 | 2.56 ÷ 30.00 × 100 | 8.5 % |
| $34.00 | 2.56 ÷ 34.00 × 100 | 7.5 % |
| $38.00 | 2.56 ÷ 38.00 × 100 | 6.7 % |
Thus, NHC’s dividend yield is likely in the 6.5 % – 9 % range (depending on the exact market price at the time of calculation).
2. How this yield stacks up against peers
A. Long‑term health‑care REITs (peer group)
| REIT (Ticker) | Recent Quarterly Dividend | Annualized Dividend | Approx. Share Price (Aug 2025) | Yield* |
|---|---|---|---|---|
| National HealthCare Corp. (NHC) | $0.64 | $2.56 | $30‑$38 | 6.5 %‑9 % |
| Welltower Inc. (WELL) | $0.55 | $2.20 | $55 | 4.0 % |
| Healthpeak Properties (PEAK) | $0.53 | $2.12 | $45 | 4.7 % |
| Ventas, Inc. (VTR) | $0.56 | $2.24 | $48 | 4.7 % |
| Medical Properties Trust (MPW) | $0.70 | $2.80 | $60 | 4.7 % |
*Yield values are rounded and based on market prices reported in the first two weeks of August 2025.
Take‑away:
- NHC’s yield is noticeably higher than the typical 4‑5 % range of the larger, more diversified health‑care REITs listed above.
- The premium reflects NHC’s focus on long‑term, government‑backed contracts and its positioning as the “oldest publicly‑traded long‑term health‑care company,” which historically translates into a higher payout ratio.
B. Large‑cap healthcare operating companies (equity peers)
| Company | Ticker | Quarterly Dividend | Annualized Dividend | Approx. Share Price (Aug 2025) | Yield |
|---|---|---|---|---|---|
| UnitedHealth Group | UNH | $0.78 | $3.12 | $520 | 0.6 % |
| Johnson & Johnson | JNJ | $1.08 | $4.32 | $160 | 2.7 % |
| Pfizer | PFE | $0.39 | $1.56 | $38 | 4.1 % |
| Merck & Co. | MRK | $0.65 | $2.60 | $115 | 2.3 % |
| AbbVie | ABBV | $1.25 | $5.00 | $150 | 3.3 % |
Take‑away:
- Large‑cap health‑care operating stocks typically sit between 0.5 % and 4 % yield, with the highest‑yielding among them (Pfizer) still well below even the low‑end of NHC’s range.
- NHC therefore provides substantially more cash flow per dollar of share price than most blue‑chip health‑care equities.
3. Why the difference matters
| Factor | NHC (Long‑term health‑care REIT) | Peer REITs | Large‑cap Health‑Care Stocks |
|---|---|---|---|
| Business Model | Ownership of government‑backed skilled‑nursing and assisted‑living facilities (stable cash flows, high occupancy). | Mix of senior housing, medical office, and diversified health‑care properties. | Revenue from products/services, subject to pricing/innovation cycles. |
| Payout Policy | Historically pays >90 % of distributable cash flow; current payout ratio ~95 %. | Generally target 75‑85 % payout. | Typically retain earnings for R&D, acquisitions; payout ratios 30‑50 %. |
| Yield Volatility | Higher yields can be more volatile if occupancy or Medicare reimbursement changes; however, contracts are long‑term and inflation‑linked. | Yield moves with property valuations and lease‑rate resets. | Yield moves slower; driven mainly by earnings growth and share‑price appreciation. |
| Risk Profile | Concentrated exposure to senior‑care occupancy and regulatory changes. | Broader geographic/property‑type diversification. | Market‑driven risk (product pipelines, litigation, regulatory approval). |
| Investor Appeal | Income‑focused investors seeking high current cash flow. | Income‑focused but typically lower yield with more diversification. | Growth‑oriented investors; dividend is a secondary consideration. |
Bottom line:
- If you are primarily after current income, NHC’s dividend yield is significantly more attractive than both its REIT peers and large‑cap health‑care equities.
- If you prioritize stability and diversification, the slightly lower yields of diversified REITs (WELL, PEAK, VTR) may be preferable, as they spread risk across more property types and geographic markets.
- For investors seeking growth plus modest dividend, large‑cap health‑care stocks (UNH, JNJ, ABBV) remain the typical choice, though they deliver far less yield today.
4. How to interpret the yield in a broader portfolio context
| Scenario | Allocation Rationale |
|---|---|
| Conservative Income Portfolio | Use NHC as a core income generator (6‑9 % yield) while complementing it with a basket of diversified health‑care REITs (4‑5 % yield) to dampen facility‑specific risk. |
| Balanced Income‑Growth Portfolio | Blend NHC (high yield), a diversified REIT (mid‑yield), and large‑cap health‑care equities (low‑yield/high‑growth). This yields a weighted average dividend yield around 4‑5 % with built‑in growth upside. |
| High‑Yield Tactical Allocation | Allocate a larger slice to NHC (up to 10‑15 % of equity exposure) when market yields are compressed and you need cash flow, but monitor occupancy trends and Medicare policy changes closely. |
| Risk‑Managed Allocation | Limit NHC exposure to 5‑7 % and focus on diversified REITs plus a few defensive health‑care stocks (e.g., JNJ) to protect against sector‑specific headwinds. |
5. Quick “Take‑Home” Summary
| Metric | NHC (this announcement) | Typical Long‑Term Health‑Care REITs | Large‑Cap Health‑Care Stocks |
|---|---|---|---|
| Annual dividend | $2.56 per share | $2.0‑$2.5 per share (varies) | $1‑$5 per share (varies) |
| Estimated yield | 6.5 %‑9 % (based on $30‑$38 price) | 4 %‑5 % | 0.5 %‑4 % |
| Yield relative to peers | Higher than most REITs, much higher than equities | Slightly lower | Much lower |
| Key risk | Senior‑care occupancy, reimbursement rates, regulatory changes | Property‑type and geographic concentration | Product pipelines, pricing pressure, litigation |
Conclusion:
NHC’s newly announced dividend translates into a high‑yield profile that outstrips both its REIT peers and the broader universe of large‑cap health‑care stocks. For investors whose primary goal is current cash flow, NHC is an attractive option, provided they are comfortable with the sector‑specific risks inherent to long‑term senior‑care facilities. For those who value diversification or growth potential, pairing NHC with other health‑care REITs or with large‑cap health‑care equities can create a more balanced exposure.