#1 REIT Portfolio Best Buy HCP (NYSE: HCP) bounced back to meet analysts’ expectations in the first quarter after struggling late in 2015. The performance of HCP is indicative of the outperformance by healthcare REITs this year.

The year-to-date total return for health care REITs is 7.56% with a 5.46% dividend yield that is one of the best in the REIT industry.

“Diversity has not always proven to be a good strategy for healthcare REITs, especially since changing government reimbursement policies are putting financial pressure on skilled nursing and post-acute care. This pressure has prompted several of the largest REITs to spin off property portfolios to focus on private-pay facilities,” observed one report by REIT cafe.

In order to focus on its core businesses of senior housing, life science, and medical office buildings, HCP recently announced plans to spin off into a new publicly traded REIT. The spin-off will feature HCR ManorCare properties, as well as certain other skilled-nursing facilities.

As we noted a few months ago when HCP’s share price took a hit on a bad fourth quarter, we have long believed in the capacity of management to face recent challenges, and we believe in spinning off HCR ManorCare and the skilled-nursing facilities the company has resolved the issues that had been weighing on the company’s valuation.

And we’re not surprised that management moved quickly and decisively – this is a capable management team that has been able to deliver strong, increasing dividends through thick and thin for 31 consecutive years. HCP is the only REIT in the S&P 500 Dividend Aristocrats index. 

We continue to believe HCP is best positioned to take advantage of long-term demographic healthcare trends of retiring baby boomers that will drive demand for senior housing and other medical services for years to come. HCP is a Buy up to $44.