REIT To Avoid: 11% Yielding Community Healthcare Trust
Community Healthcare Trust (CHCT) offers an 11.15% dividend yield and has a history of consistent payouts, making it appear attractive to income investors. However, the company's financial health is weakening, with adjusted funds from operations (AFFO) potentially overstated due to aggressive accounting adjustments. This raises concerns about the sustainability of its dividend given a payout ratio exceeding 100%.
- ▪Community Healthcare Trust (CHCT) currently offers an 11.15% dividend yield, drawing investor interest despite underlying financial risks.
- ▪The company's adjusted funds from operations (AFFO) are likely overstated due to aggressive add-backs, distorting its true earnings power.
- ▪CHCT's dividend payout ratio is approximately 118%, indicating that it is paying out more than it earns, threatening dividend sustainability.
- ▪Management has faced criticism for high general and administrative (G&A) expenses and questionable capital allocation decisions.
- ▪Despite a strong dividend history, deteriorating fundamentals and poor transparency raise red flags for long-term investors.
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