HCP (NYSE: HCP) recently became the first REIT to be listed on the prestigious S&P 500 Dividend Aristocrats index. The California-based health care company received the designation for increasing dividends to its shareholders every year for the past 27 consecutive years.
The company joins the ranks of 51 blue-chip corporations, from various industries, including Coca Cola, Wal-mart, Exxon and T. Rowe Price. To qualify for inclusion on the index, S&P members must have a market capitalization of more than $3 billion and have increased dividends for at least 25 consecutive years or more.
Jay Flaherty, HCP's chairman and CEO, said he'd like to use this designation to market and further advance the cause for all REITs.
"This is just the latest affirmation of what we've got going with REITs in terms of good quality corporations with modest amounts of leverage," he said.
Flaherty said he expects to see more REITs added in the future.
"Much like the outperformance of REITs justified inclusion in the S&P 500, my guess is we will see more included on this index going forward," Flaherty said.
Steven A. Wechsler, NAREIT president and CEO, congratulated HCP on its inclusion in the S&P 500's Dividend Aristocrats Index and also anticipates seeing more REITs join the elite group in the future.
"HCP's accomplishment is a tribute to the quality of the company's management team over an extended period of times, as well as a testament to the REIT approach to real estate investment," he said.
Wechsler added that the index has qualities embedded in the REIT investment proposition by highlighting the importance of both capital growth and dividend income over at least 25 years.
Flaherty said that the decision by HCP's board to raise dividends last month reflects the company's confidence in fundamentals and commitment to delivering attractive cash returns to its shareholders.
"Health care is a little more defensive. Our sector tends not to have the same dips, as even in a recession people get sick," he said. "We have our challenges like every other space, but the core economic driver for healthcare is the again baby boomer," Flaherty said.
"I have enormous regard for my peers in retail, lodging and multifamily, but I would not trade the core underlying economic fundamental drivers of health care for any other space," he said.