The increases aren’t large – a quarter of a penny each time. While they have contributed to the current 13% annual yield, the big reason the stock has such a high yield is that the share price has fallen by two-thirds over the past three years.

Community Healthcare Trust owns 200 properties in 36 states that are leased to doctors, hospitals, and other healthcare organizations.

This is a small cap company that generates a little over $100 million in revenue per year. Despite the weak stock price, the company is profitable and cash flow positive.

Let’s see whether its cash flow is enough to sustain further quarterly raises.

Because Community Healthcare Trust is a real estate investment trust, we use a measure of cash flow called funds from operations, or FFO.

Last year, FFO climbed 7% to $51.2 million. This year, it is forecast to slip slightly to $50.9 million. That projected slight reduction in FFO is enough to earn Community Healthcare a penalty on its Safety Net rating.

Negative cash flow growth is a big red flag.

Since the difference between last year’s total and the current estimate for this year is so small, it is possible the company reports positive FFO growth instead of slightly negative. If that occurs, Community Healthcare will earn an upgrade to its Safety Net rating.

Another area of concern is the payout ratio. Again, the difference between a penalty and no penalty is very small.

Last year, Community Healthcare paid shareholders $51.7 million in dividends against $51.2 million in FFO, so it paid more in dividends than it took in (but barely). This year, the gap is anticipated to widen a bit – to $53.5 million in dividends paid against $50.9 million in FFO.

That would push the payout ratio up from 101% to 105%, still just above my 100% threshold for REITs.

Over the first three quarters of 2025, FFO has totaled just $32.6 million, so the company would need a big fourth quarter to eclipse the current full-year estimate and cover the dividend.

As you can see, this is a dividend story with some problems. FFO has been declining, it’s projected to decline again this year, and the company pays out more in dividends than it takes in.

Though it only needs to beat FFO expectations by $300,000, that doesn’t seem likely given that FFO over the first nine months is pretty far away from that number and rental real estate is a somewhat predictable business due to rents being locked in.

On the plus side, the company has a stellar track record of quarterly dividend increases, and I expect management to do everything in their power to keep that 41-quarter streak alive.

I don’t expect an imminent dividend cut, and if FFO improves, the company’s dividend safety rating could even receive an upgrade or two. But if FFO doesn’t improve, management will have some tough decisions to make.

Dividend Rating Safety: D

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

The post Community Healthcare Trust: How Safe Is This REIT’s 13% Yield? appeared first on Wealthy Retirement.

I mentioned that I think the stock is a value trap, as earnings are projected to fall over the next 10 years. The stock has been a dog for 3 1/2 years since reaching its all-time high in late 2021. Today, it trades at less than half that level.

Nevertheless, it’s easy to understand why income investors are interested in Pfizer. With a current yield of 7.1%, it’s one of the highest-yielding stocks in the S&P 500.

Let’s dig into the dividend and see whether it’s in any better shape than the stock.

From a cash flow perspective, Pfizer is a victim of its own success. The COVID-19 vaccine generated huge amounts of free cash flow in 2021 and 2022. Since then, the company’s cash flow has evaporated.

After hitting a peak of $29.9 billion in 2021, free cash flow plummeted to just $4.8 billion in 2023.

Last year, free cash flow more than doubled to $9.8 billion, but that was still lower than any year in the past decade other than 2023. This year, it is forecast to grow sharply again to $17.7 billion.

While this year’s free cash flow is projected to jump from last year’s and be higher than any non-pandemic year’s, the dividend safety rating gets a penalty because of the negative three-year growth. Next year, that will change when the 2022 vaccine windfall ages out of the model. But for now, it lowers the dividend safety by one notch.

Another issue is last year’s payout ratio. Pfizer paid shareholders $9.5 billion in dividends out of its $9.8 billion in free cash flow. A 97% payout ratio is too high.

However, because of this year’s anticipated free cash flow growth, the payout ratio is expected to shrink to a more comfortable 54%.

After cutting its dividend in half during the global financial crisis, Pfizer has raised its dividend every year since 2010. That 16-year streak earns the company a bonus point.

If Pfizer is able to deliver anything close to the cash flow numbers that are forecast for 2025, its dividend should be considered safe. However, a repeat of 2024 would mean the payout ratio would be too high once again, and that would put the dividend at risk.

But for now, the probability of a dividend cut is low.

The dividend appears to be in better shape than the stock.

Dividend Safety Rating: B

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

The post Could Pfizer’s 7.1% Yield Be a Trap? appeared first on Wealthy Retirement.

Its properties include…

• HCA Houston Healthcare Medical Center
• Mercy Hospital Campus in Miami, Florida
• Thomas Jefferson University Hospital Campus in Philadelphia

The company’s cash flow has been steadily climbing since 2022. Funds from operations, or FFO, is the cash flow metric we use for REITs. FFO jumped from $611 million in 2021 to $905 million the following year, then rose to $995 million in 2023, and is expected to come in at $1.1 billion this year.

Meanwhile, the company paid out $657 million in dividends last year for a 66% payout ratio. In 2024, the total dividend payout is forecast to drop to $638 million, which would lower the payout ratio to 57%.

For REITs, I’m comfortable with payout ratios of up to 100%, because REITs must pay out 90% of their profits in dividends. Profits are different from cash flow, but since REITs are required to distribute so much of their profits, their payout ratios tend to be higher.

A 57% or even 66% payout ratio for a REIT is nice and low. That tells me Healthpeak can easily afford its dividend.

But that hasn’t always been the case.

The company has paid a dividend every year since 1989 and has paid out $0.30 per share every quarter since February 2021, which comes out to a 5.8% yield at current prices.

However, the dividend was $0.37 before that, so the dividend got a pretty decent haircut in early 2021.

Healthpeak also slashed the dividend in 2016, when it paid $0.575 per share.

So we have a company that is growing its cash flow and can easily afford its dividend… yet it has shrunk its payout twice in the past 10 years.

I’m not worried about another dividend cut in the immediate future, but management has proven that the dividend is not sacred. It will reduce the payout to shareholders if necessary, as it did in 2021 when FFO fell by nearly 13%.

Because of the company’s willingness to lower the dividend when times get tough, the payout can’t be considered rock-solid safe.

Dividend Safety Rating: C

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

The post Healthpeak Properties: A “Healthy” 5.8% Yield? appeared first on Wealthy Retirement.

These charities are sometimes found in our own backyard… but at other times, they’re in faraway lands. Sadly, there’s never scarcity when it comes to places and people in dire need. And yes, I think everyone can agree that giving feels good – for ourselves personally and for our businesses. (Plus, we can get a good tax deduction to boot!)

But we want to be careful and confident that our donations are going to programs that are run effectively – serving the people we want to support. I’m sure you feel the same way.

Well, look no further…

I urge you to consider supporting the highly professional and dedicated team of The Roberto Clemente Health Clinic.

This small nonprofit health center is located in a rural area of Nicaragua, the second-poorest country in the Americas.

The Clinic was founded by The Oxford Club’s longtime CEO, Julia Guth, in 2004. I’ve personally visited the Clinic and have seen firsthand the incredible value it provides the community.

Without this team of 26 doctors, nurses, and program staff, tens of thousands of people would go without medicines, clean water, and nutritional support.

The Clinic is open 24/7. It has the only off-road ambulance in the region, providing emergency stabilization and transportation to hospitals. The team’s outreach program reaches remote villages on flooded roads, delivering medicines and providing examinations. The Clinic’s team even teaches families how to grow their own organic food.

And it does so on a very small budget.

This team has to be highly resourceful with what little support it receives. There are no large grants. Instead, the Clinic is supported mostly by individual donations. So your dollars will go tremendously far here. And the Clinic is a 501(c)(3) nonprofit, so your donation is tax-deductible.

Julia recently wrote a white paper that outlines everything you need to know about charitable giving, and she asked that we give it to our readers. It’s titled “Top 10 Charitable Giving Strategies for Modern Times,” and you can access it HERE.

The Clinic team operates its budget with professionalism and accountability, led by several highly experienced and talented individuals, who you can learn more about by going here.

Right now, the communities around the Clinic are facing unprecedented flooding.

Families are unable to access schools, healthcare, or even clean water for days and weeks at a time. Even more concerning, the makeshift houses in some of the most rural areas are at risk of being swept away.

The Clinic needs our help now more than ever.

I hope you’ll consider looking into the wonderful services the Clinic provides to the community and helping to support it.

Every little bit helps.

Good health is our most precious asset… and with your help, the welcoming citizens of Nicaragua can have a better life.

The post Giving Thanks and Giving Back appeared first on Wealthy Retirement.

Additionally, after a 150% dividend increase in 2022, the company’s payout ratio was over 900%! That means it was paying an astonishing $9 in dividends for every $1 in free cash flow. That’s as unsustainable as it gets.

Let’s see whether Spok has improved its ability to pay its dividend since last November.

Spok’s free cash flow has grown meaningfully in 2023 and 2024, rising from just $2.7 million in 2022 to $22.8 million last year and an expected $26.5 million this year. So the company is already in much better financial shape.

However, Spok’s total dividend payout is forecast to rise from $25.6 million in 2023 to $30.4 million in 2024, so it is likely still paying shareholders more than it’s taking in.

Interestingly, management acknowledges that the company can’t afford its dividend. During Spok’s second quarter conference call, CEO Vince Kelly stated, “Our cash flow is on a path to grow into our current dividend level and cover it in full on an annual basis.”

That’s why Wall Street’s $30.4 million estimate for Spok’s total dividend payout in 2024 doesn’t make sense to me. Analysts are clearly expecting Spok to boost the dividend this year… but if the CEO himself acknowledges that the company isn’t generating enough cash to afford its current dividend, why would it raise the dividend even further? That would be very irresponsible.

(That being said, management has already been paying a dividend it can’t afford, so it’s possible the analysts will be correct.)

If Spok simply maintains its $0.3125 per share quarterly dividend, which equates to a generous 8.5% yield, it will pay shareholders $25.6 million this year. That would be just below the amount of free cash flow the company is forecast to bring in.

But even if that happens, the payout ratio would still be too high at 97%, so that wouldn’t help the company’s dividend safety rating.

Lastly, Spok has no debt, which is a positive, as it means the company is not draining cash to pay interest on debt. But with only $23.9 million in cash in the bank, it doesn’t have a big buffer between its free cash flow and the amount of cash it needs in order to fund the dividend at current levels.

The bottom line is Spok can’t afford its dividend right now, but that may be changing soon.

At this time, you can’t consider the dividend safe. However, it’s in much better shape than it was last year.

Dividend Safety Rating: C

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds or closed-end funds.

The post Is Spok Holdings Close to Being Able to Afford Its Dividend? appeared first on Wealthy Retirement.

So when he talks, I – and his thousands of readers – listen.

Today, he’s sharing a story about a time he narrowly avoided a catastrophic biotech investment… and learned several valuable lessons in the process.

– James Ogletree, Managing Editor

“It’s either water, or it’s not water. And we know it’s not water.”

That’s what the CEO of a small cap biotech company once said to me in a hotel suite during the J.P. Morgan Healthcare Conference.

He was talking about his company’s groundbreaking cancer drug that was in clinical trials. He was basically telling me that the drug worked.

The CEO was a Harvard grad, and he was energetic and charismatic. I believed him.

I was early in my career covering biotech stocks, and this drug tackled a difficult-to-treat cancer. I wanted the medicine to work for patients, and I wanted the recommendation to work for my readers, as we were getting in early.

My readers made a tiny bit on the stock, but not a ton, as we got stopped out when the stock started to slip after an initial gain.

I was disappointed to get stopped out, but I stuck to my discipline and recommended selling the stock when the stop was hit.

Boy, am I glad I did.

It turns out that the CEO was right. The drug wasn’t water.

It was poison.

Not only did the Phase 2 data show that the drug did nothing to treat cancer, but patients who took it actually had a higher death rate than those not taking it.

You can imagine what happened next. The stock fell off a cliff. It dropped from about $15 to below $1 and eventually became a zero.

As I said, this was very early in my days covering biotech, about 15 years ago. I learned three valuable lessons…

Lesson No. 1: Fine-tune your BS detector.

CEOs of publicly traded companies are typically measured in what they say about their companies – or, in the case of biotech and pharmaceutical companies, what they say about their drugs.

They’ll tell you what the data shows and will of course be bullish, but they won’t say definitively that a drug is safe and effective until the FDA says it is.

The guy I talked to was so cocky about his drug, alarm bells should have been ringing.

If you ever hear a biotech CEO talking exuberantly and definitively about a drug that has not finished clinical trials yet, be wary.

Lesson No. 2: Look at the data.

When it comes to clinical trials, understand what the data shows. A drug may have shown effectiveness in an early trial, but if the number of participants was low or if the study wasn’t double-blind (where neither the patients nor the doctors know who is getting the drug), the data may not be accurate.

That doesn’t mean the drug doesn’t work. Many successful blockbusters started with a small trial. But you should temper your expectations until a larger, more rigorous trial is conducted, because lots of failed drugs started with a small trial too.

Lesson No. 3: Stick to your stops.

I’ve always been disciplined when it comes to trading. When a stop is hit, I sell – no matter how bullish I am. (In some cases, after I sell the stock, I may look for a better opportunity to buy it again later.)

When you’re upset about potentially getting stopped out, it’s too easy to make excuses and justify why you should stay in a trade. Stops take the emotion out of trading, and that’s the single most important thing you can do to improve your results.

Honor your stops.

The Cost of Learning

Everyone makes mistakes and pays “tuition” – the cost of learning – when they start trading. I certainly have.

Luckily, this one wasn’t costly at the time. But the lessons I learned helped shape the way I invest and trade – especially in the biotech and pharma sectors.

The next time you hear a CEO talking about their company, ask yourself whether the statement is equivalent to the “it’s not water” declaration. If it is, don’t just walk away – run.

The post Avoid These Pitfalls of Biotech Investing appeared first on Wealthy Retirement.

Organon has hit the ground running with a diverse portfolio of women’s health products, including its flagship product, Nexplanon – a long-acting reversible contraceptive implant. It’s also working on treatments for conditions like endometriosis and polycystic ovary syndrome.

The company is aiming to capitalize on the growing market for biosimilars, which are lower-cost alternatives to biologic drugs. It also has an “established brands” business that produces cash flow from well-known drugs that have lost patent protection.

Overall, Organon has an interesting business model that blends the potential high growth of women’s health and biosimilars with the stability of established brands.

Speaking of high growth, the stock has just about doubled year to date.

But as we’ll see, the financials tell a more complicated story.

First, let’s examine Organon’s enterprise value-to-net asset value (EV/NAV) ratio. As always, this metric gives us a sense of how the market is valuing the company relative to its assets.

Organon’s EV/NAV sits at an eye-popping -1,215.7, which is nearly 11 times worse than the average of -111.2 for companies with negative net assets.

We typically compare our Value Meter stocks with companies that have positive net assets, so you might be wondering why we’re looking at companies with negative net assets today. The reason is simple: It’s not uncommon for younger companies to have more liabilities than assets as they grow and invest in the future, so I wanted to compare Organon with the companies it’s most similar to.

Even so, Organon’s situation is far more extreme than most – especially when you consider its cash flow generation.

In three out of the last four quarters, Organon has burned through cash faster than a California wildfire. On average, its free cash flow was -99.6% of its net assets over those four quarters.

For context, the average for similar companies was just -5.3%. While that’s still not great, it’s a far cry from Organon’s cash bonfire. It’s like comparing a leaky faucet to Niagara Falls.

Organon did, however, manage to report some solid numbers in the first quarter of this year.

Total revenue was up 7%, with all three of the company’s franchises showing growth. Biosimilars revenue grew by a very strong 46%, women’s health revenue rose 12% (led by 34% growth for Nexplanon), and established brands revenue increased 2%.

But despite those promising results, it’s important to step back and look at the bigger picture. And that picture shows a company that’s been struggling mightily with its balance sheet and cash flow.

The Value Meter is focused on the company’s overall financial health, and the road to consistent profitability and positive cash flow looks long and bumpy. Plus, Organon’s extremely negative EV/NAV ratio and cash burn rate are simply too glaring to overlook.

Of course, none of this means Organon is a lost cause. But it does mean that at current prices, investors might be paying too high of a premium for its shares.

The Value Meter rates this one “Slightly Overvalued”… but it’s dangerously close to crossing into “Extremely Overvalued” territory.

What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.

The post A Healthcare Stock Burning Cash at an Alarming Rate appeared first on Wealthy Retirement.

According to one of the leading voices on investing in biotech, “The biotech sector produces gains that would make a tech investor jealous. These stocks can absolutely launch when they receive positive news.”

Who is that expert, you ask?

Our very own Chief Income Strategist Marc Lichtenfeld!

Having studied biotech for over two decades, Marc has more knowledge of the inner workings of the sector than almost anyone else. And in this episode of State of the Market from last August, he goes over the three items on his checklist for uncovering winning stocks in the biotech sector.

The post The Top 3 Criteria for Uncovering Biotech Winners appeared first on Wealthy Retirement.

And we’re starting to see that happen.

As I told you on Saturday, some experts predict that by 2040, generative AI could result in $1 trillion in value for healthcare.

Nvidia CEO Jensen Huang said it will be “the next amazing revolution [and] one of the biggest ever.”

Those are powerful words coming from someone like him.

But let me be clear… This isn’t just biotech 2.0.

This revolution is so huge and so radical that scientists have come up with an entirely new word for it…

TechBio.

It’s more than just a buzzword. It’s a true paradigm shift.

Biotech typically starts with the biological elements – living organisms, biological molecules, genetic material, etc. – and then applies data analysis, engineering principles and technology to manipulate or harness those biological components for desired products or outcomes.

TechBio, on the other hand, often begins from an engineering, data science or technological standpoint. It leverages tools, devices, computational power and technologies first and then applies or integrates them with biological systems to study, measure or interface with those living systems.

TechBio signifies a uniquely sophisticated method of drug development.

And it can’t be done without AI.

Thanks to these innovations, we’re starting to see how AI can accelerate the whole process of discovery and testing new compounds. It’s taking a fraction of the time… in some cases making the process as much as 15 times faster.

A study by Carnegie Mellon suggests AI could ultimately cut costs by as much as 70%.

So AI is just the thing that will ignite a massive rally in these stocks. And soon.

But that’s not all…

A Perfect Storm Is Brewing

The cherry on top?

Morgan Stanley analysts point out that a Fed rate cut will also fuel these stocks, writing, “In our view, there have been green shoots pointing to the beginnings of a rally in the biotech industry.”

All year, I’ve been saying rate cuts wouldn’t come as quickly as most people expected, and I’ve been proven right. But one is coming eventually.

And when that happens, look for this corner of the market to really take off.

Why?

Low rates provide a favorable financing environment and increase the valuations of biotech firms’ pipelines, driving outperformance in the sector.

Add it all up, and there’s NEVER been a better time to jump into this market.

The post “TechBio”: A New Era of Innovation appeared first on Wealthy Retirement.

Today, I’m doing something I’ve never done before in Wealthy Retirement.

You may know that late last year, The Oxford Club launched a Members-only interactive video platform called The Oxford Clubroom. We host several live video sessions in the Clubroom every month, and it allows Members to ask questions and chat with other Members in real time.

This morning, I went live in the Clubroom for an hour-long session called “Three Powerful Market Catalysts That Will Make Stocks Soar.” It was one of my favorite Clubroom sessions I’ve ever done.

But unfortunately, less than one-third of Wealthy Retirement readers have access to the Clubroom.

I don’t want any of you to feel left out…

So – for the first time ever – I’m sharing a full Oxford Clubroom session with all of my Wealthy Retirement readers.

You can watch the whole thing by clicking the image above.

Here are some things I covered during the session:

• Three catalysts (or, as I like to call them, “Trigger Events”) that send stocks soaring
• A few stock recommendations for companies that are about to hit those catalysts
• A key parameter (aka secret sauce) that I look for to tell whether a company is likely to hit these catalysts
• How to time these kinds of market catalysts
• Why healthcare is such an exciting sector to invest in right now.

I was glad to see that our Members said they learned a lot from the session.

JacksonB wrote, “This is a terrific presentation! More like this, please.”

SugarDoc said, “Enjoyed this session more than usual. Keep up the good work!”

And Swesley91 told us, “I’m learning how to trade, so I’m new at this. The way everything was explained, even I could understand. Thank you for having these chat rooms.”

Click the play button above to watch my latest Clubroom session, “Three Powerful Market Catalysts That Will Make Stocks Soar.”

The post 3 Trigger Events That Can Send Stocks Soaring appeared first on Wealthy Retirement.