Healthpeak Properties: A High-Yield REIT With Attractive Value and Growth Catalysts

For income-focused investors seeking a blend of capital preservation and attractive returns, Healthpeak Properties (NYSE: DOC) emerges as a compelling opportunity. With a current dividend yield of 6.8% and a stock price trading at a significant discount to its estimated fair value, this healthcare-focused REIT offers a unique combination of undervaluation, defensive balance sheet strength, and growth-driven catalysts.

Undervaluation: A Contrarian Opportunity

Healthpeak Properties is currently trading at 50.4% below its estimated fair value, according to Morningstar’s valuation metrics [2]. This discount is amplified by the company’s low forward FFO (funds from operations) multiple of 9.4x, significantly lower than the average for the healthcare REIT sector [5]. For context, FFO is a critical metric for REITs, as it adjusts for non-cash expenses like depreciation. A low multiple suggests the market may be underappreciating the company’s stable cash flows and asset quality.

The company’s recent second-quarter 2025 results underscore this narrative. Despite a net income of $0.05 per share and Nareit FFO of $0.43 per share [3], the stock remains undervalued. Analysts attribute this to broader market skepticism toward healthcare REITs, despite Healthpeak’s diversified portfolio of 700+ properties spanning medical offices, life science assets, and post-acute care facilities [1]. Morningstar’s analysis further notes that DOC’s conservative capital structure and focus on high-growth outpatient segments position it to outperform in a post-pandemic healthcare landscape [2].

7% Dividend Yield: A Well-Covered Income Stream

Healthpeak’s 6.8% dividend yield (calculated using its $1.22 annualized dividend and a stock price of $17.74 as of September 3, 2025 [2]) is a standout feature for income investors. While the yield is slightly below the often-cited 7% figure in some analyses, it remains among the highest in the REIT sector. Crucially, the dividend is well-covered by earnings, with a payout ratio of approximately 70% based on Nareit FFO [4]. This conservative approach ensures sustainability, especially in a rising interest rate environment.

The company’s monthly dividend structure—$0.10167 per share—has grown modestly over the past three years, with a 0.28% compound annual growth rate [3]. While not aggressive, this stability aligns with Healthpeak’s risk-averse strategy. With $2.3 billion in liquidity (via cash and a revolving credit facility) [3], the company has ample capacity to maintain its payout even amid economic headwinds.

Growth Catalysts: Liquidity, Portfolio Diversification, and Sector Trends

Healthpeak’s $2.3 billion liquidity war chest [3] provides a strategic advantage. This capital positions the company to capitalize on distressed assets in the healthcare real estate market, particularly as smaller operators face refinancing challenges. The company’s focus on outpatient medical and lab segments—which account for 60% of its portfolio [6]—aligns with long-term demographic trends, including an aging population and the shift away from inpatient care.

Recent performance metrics reinforce this thesis. The company reported 3.5% growth in same-store cash (adjusted) NOI for Q2 2025 [1], driven by strong demand for ambulatory surgical centers and diagnostic facilities. Analysts project 7.9% annual EPS growth and 3.2% revenue growth over the next five years [4], supported by its conservative leverage profile (net debt to LTM FFO of 3.7x) [5].

Conclusion: A High-Conviction Play for Income Investors

Healthpeak Properties represents a rare intersection of undervaluation, defensive balance sheet strength, and sector-specific growth drivers. Its 6.8% yield, while slightly below the headline 7% figure, remains among the most attractive in the REIT space, supported by a payout ratio that prioritizes long-term sustainability. For investors willing to look beyond short-term volatility, DOC’s strategic positioning in the healthcare real estate sector—coupled with its liquidity and disciplined capital allocation—makes it a high-conviction addition to a diversified income portfolio.

Source:
[1] Healthpeak Properties Reports Second Quarter 2025 Results [https://ir.healthpeak.com/news/news-details/2025/Healthpeak-Properties-Reports-Second-Quarter-2025-Results/default.aspx]
[2] A Contrarian Investor's Perspective on Healthpeak Properties [https://www.ainvest.com/news/unlocking-contrarian-investor-perspective-healthpeak-properties-2508/]
[3] Healthpeak Properties, Inc. (DOC) Stock Price, News, Quote [https://finance.yahoo.com/quote/DOC/]
[4] Healthpeak Properties (NYSE:DOC) Dividend Yield [https://simplywall.st/stocks/us/real-estate/nyse-doc/healthpeak-properties/dividend]
[5] Healthpeak Properties: Undervalued Despite Conservative Balance Sheet [https://www.ainvest.com/news/healthpeak-properties-undervalued-conservative-balance-sheet-limited-downside-2508/]
[6] Earnings call transcript: Healthpeak Properties Q2 2025 [https://www.investing.com/news/transcripts/earnings-call-transcript-healthpeak-properties-q2-2025-misses-eps-expectations-93CH-4154030]