Rarely have real estate investment trusts (REIT) enjoyed such an alignment of the stars. Low interest rates mean REITs have access to cheap, abundant financing. Steady, if slow, economic growth means rising demand for their properties. And REITs continue to pay attractive dividends.

We especially like the prospects of HCP (NYSE: HCP), among the largest US health care REITs—and the first to become part of the S&P 500. Due to a stable tenant base and growing demand for its health care properties, HCP has been able to fund 28 straight years of dividend increases, an elite record matched only by a few US companies. The recent dividend yield: just under 4 percent.

Cautious expansion. Over the years, HCP has been a very discerning investor, using a variety of approaches— buying and developing properties, forming joint ventures or investing in debt—depending on the opportunity. It currently has $21 billion in assets under management, and its portfolio is throwing off about $1.6 billion in net operating income.

HCP is well diversified, with properties nationwide that are senior-housing developments (35 percent of assets), nursing homes (29 percent), life-sciences facilities (17 percent), medical offices (15 percent) and hospitals (3 percent).

To minimize costs and ensure a stable tenant base, HCP offers mostly long-term, “triple-net” leases, which means tenants pay for maintenance and taxes for at least 10 years. Thanks to these lock-ins, less than half of HCP’s leases expire in the next seven years. In addition, the triple-net leases are inflation-protected, stipulating that rents will rise annually by the rate of inflation, which is now running at 2.5 percent in the real estate industry.

Time is on its side. With 35 percent of HCP’s assets in senior-living communities, HCP has demographics on its side. About 13 percent of the US population is currently over 65. But this percentage is expected to rise dramatically: each day for the next two decades, some 10,000 Americans will be celebrating their 65th birthday. By 2050, a quarter of the US population is expected to be over 65, up from 15 percent in 2020.

Largely due to our aging population, US health care spending is expected to rise about 6 percent annually the next two decades. This should also be good news for medical practices, life-sciences companies and hospitals, helping to ensure strong demand for HCP’s properties.

Among health care properties, Obamacare is widely expected to have a negative impact on nursing homes, as incentives are given for home-health care. Nursing homes, which are 29 percent of HCP’s assets, aren’t likely to disappear, however. Expanded health insurance coverage, especially for lower-income people, is likely to mean more patients living in nursing facilities.

When the credit markets froze in 2008-2009, HCP stock lost nearly half its value. But we don’t think such a recurrence is likely. In fact, a more likely threat now is  rising interest rates. Having been around since 1985, HCP has shown it can successfully operate in such an environment. It helps that HCP’s financing portfolio is 93 percent fixed-rate loans.

Recently at around $53, HCP shares are up more than 30 percent in the past year. Yet the valuation remains attractive, at just over 17 times 2013 “funds from operations,” a common measure of REIT income.

The quarterly payout, 52.5 cents a share, should continue rising faster than inflation, making HCP an attractive source of income with some potential for capital gains. All in all, we think HCP is a healthy choice for conservative, income-seeking portfolios.