TAKING STOCK: Is Health Care REIT a good bet?

Dear Mr. Berko: My broker of 11 years moved to another firm in another city, and I don't know what to do. I need your advice. I have $15,000 but don't want to put it in a certificate of deposit. I want to invest this money and get a better yield than the 0.85 percent that banks offer. I've looked at all the advertising from the banks, and they all look attractive, but when you get up close, they all look alike. Are there any banks paying better yields that you could point me to? In lieu of a CD, my new broker suggested that I buy 200 shares of Health Care REIT Inc. at $72 because it pays a 4.5 percent dividend, and he says the dividend and stock price will go up. I've only owned mutual funds and annuities, and I'm concerned that a stock would be too risky for a 76-year-old widow lady. I get $2,100 a month in income from my funds and annuities (see enclosed portfolio, valued at $288,000) plus $1,600 from Social Security and a tiny bit from my $80,000 in CDs. The broker seems like a nice man. Please tell me whether this stock would be OK for me or whether I should invest that money in another mutual fund or annuity. -PR, Jonesboro, Iowa Dear PR: Watching banks colorfully promote their CDs in the local paper and present theirs as the highest-yielding, best possible CD is a real hoot. Their exaggerated advertising would have you believe that a one-year, 0.8 percent CD from Alpha Bank would give you much more than an identical CD from Beta Bank. These banksters are all selling equivalent products, and their efforts to attract your business are like ladies of the night trolling for business from sidewalk passers-by. Low yields put you between a rock and a hot plate, and the banks know it. And once they get you in the door, there's a full-court press to sell you an annuity, which is probably why you own them. Meanwhile, this broker is a peach and sounds like a man you can trust. Because probity is rare in this business, I'd give him a bottle of Chivas Regal and treat him and his wife to a steak dinner. He could, easy as pie, sell you another mutual fund and make a 5 percent commission or encourage you to invest $15,000 in another annuity and rake an 8 to 12 percent commission. I like his Health Care REIT (HCN-$72) recommendation. It yields 4.5 percent and could be a jim-dandy stock for you to own. HCN owns senior housing communities, skilled nursing facilities, medical office buildings, inpatient and outpatient medical centers, and life science facilities. It is a $3.3 billion-revenue business and among the most profitable medical boondoggles in the U.S. And the three pillars of this business-Medicaid, Medicare and the Affordable Care Act-ensure the institutionalization and corruption of the health care business, so hospitals, nursing facilities, rehab clinics, pharmaceuticals, insurers, etc., can take trillions from the economy every year with impunity. HCN, the revenues of which have grown elevenfold in the past decade, is in a recession-proof and inflation-proof business. The $3.18 dividend has been increased in each of the past 11 years. And in 2015, Wall Street expects HCN to report a 10 percent increase in revenues, to $3.6 billion, improve profit margins, have a 12 percent increase in earnings, to $4.46, and have a dividend of $3.42. Health care spending and costs will continue to increase because most Americans (especially those with Medicare or Medicaid) believe it's free. Because our health care system is run by an inefficient government bureaucracy (think of defense spending), there will be gold dust in the air for years and years to come. And HCN should continue to enjoy strong growth in its revenues, earnings and dividends because it knows how to milk the system, maximizing returns for its shareholders. Meanwhile, the consensus on the Street is that HCN could trade in the $95-$120 range by 2017. Keep this broker. -------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com. ©Copyright 2014 Creators.com Published: Thu, Nov 27, 2014