5 reasons to stay bullish on these dividend-paying assets, according to Morgan Stanley
Morgan Stanley expects the good times to continue for senior housing. The aging population has been a boon to healthcare real estate investment trusts, which also pay solid dividends. The assets have outperformed the broader market over the last 12 months, gaining 31.3% versus the S & P 500 ‘s 20.7% gain, analyst Ronald Kamdem said in a note Monday. As the senior population grows, demand is increasing. Those aged 80 and above are expected to reach nearly 23 million by 2025 — up from the roughly 15 million in the July 2025 population estimate. In fact, demand is currently outpacing new senior housing construction, with overall occupancy now near 90%, according to the National Investment Center for Seniors Housing & Care . A 90% occupancy level is where “senior housing can move from a recovery trade to a pricing and operating leverage story,” Kamdem said. “We see a tighter supply-demand backdrop than last cycle, with record-low inventory growth and accelerating 80+ demographics that should drive occupancy to 95%+,” he wrote. With that in mind, Kamdem reiterated his overweight rating on Welltower and raised his price target to $251 from $215, implying 6% upside from Monday’s close. He also has an overweight rating on American Healthcare REIT . He rates another player, Ventas , equal weight. WELL YTD mountain Welltower year to date Welltower pays a dividend yield of 1.44%, while American Healthcare REIT yields 1.81%. Ventas has a 2.28% dividend yield. Here are the five reasons he remains bullish on senior housing. 1. Occupancy upside potential Kamdem anticipates Welltower’s total senior housing operating portfolio (SHOP) occupancy to reach 94% in the fourth quarter of 2027 from 87.4% in the fourth quarter of 2025. That should support 15% growth in same-store net operating income, he said. American Healthcare REIT should see SHOP occupancy reach 94% to 95% during that same time period, while Ventas should reach 95%. AHR YTD mountain American Healthcare REIT year to date 2. Acquisition upside potential Senior housing REITs are also expected to grow through acquisitions. Kamdem is modeling $15.4 billion of acquisitions for Welltower in 2026 and $5 billion in 2027. For American Healthcare REIT, he sees the potential of $1.9 billion and $800 million in acquisitions in 2026 and 2027, respectively. Ventas is also expected to make acquisitions of $4.5 billion in 2026 and $2 billion in 2027, he said. 3. Mix shift toward higher-growth senior housing operating portfolio Kamdem sees the move towards senior housing as a larger mix of the REITs’ portfolios as a way to boost growth. “The combination of sales of non-core assets in other segments and the higher organic growth rate of senior housing should continue to increase the overall mix of SHOP exposure,” he said. Welltower’s exposure is currently around 70% and American Healthcare’s sits around 80%, he noted. Ventas only has 55% exposure, he added. 4. Underlevered and opportunistic balance sheets Welltower, Ventas and American Healthcare have reduced their leverage, Kamdem said. “REITs now have the most competitive cost of capital in the industry vs private players, and we expect leverage to continue to move lower given both strong EBITDA growth and equity issuance to fund acquisitions,” he wrote. 5. Continued track record of execution from management teams. All three senior housing REITs have seen same-store net operating income growth in their SHOP portfolios. Welltower has delivered 15 quarters in a row of 20% growth, Kamdem pointed out. Ventas saw 10% growth during that same time frame, although that has come with some execution risk from operator transitions, he said. American Healthcare REIT, which went public in February 2024, “has exceeded all expectations, with ISHC/SHOP same-store NOI growth of +23.8%/ +52.8% in [2024] and +18.4%/+25.2% in [2025],” Kamdem said.
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