Honestly, if you’ve spent any time looking at REITs lately, you know the sector has been a wild ride. Interest rates did a number on everything with "Real Estate" in the name, but there’s something specific happening with Sabra Health Care REIT stock that feels different. It’s not just another ticker moving with the Fed.
Basically, we’re looking at a company that is mid-pivot. They’ve been known as a skilled nursing powerhouse for years, but the ground is shifting under their feet—intentionally.
The 40% Target Nobody is Talking About
Most people look at Sabra and see nursing homes. That's old news. CEO Rick Matros has been pretty vocal about a major shift toward SHOP. That’s the Senior Housing Operating Portfolio for the uninitiated.
Right now, senior housing is about 26% of their units. Matros wants that at 40%. Why? Because in a SHOP structure, the REIT actually gets a piece of the operational upside instead of just collecting a fixed rent check. When occupancy goes up, Sabra wins bigger.
You’ve gotta realize that the demographics we’ve been hearing about for 30 years—the "Silver Tsunami"—are actually hitting the data now. This isn't theoretical anymore. Occupancy in their domestic senior housing jumped significantly over the last year, hitting around 83% recently, while their Canadian portfolio is already north of 90%.
It's a supply-demand crunch. New construction for senior living basically fell off a cliff because it was too expensive to build. Now, existing properties are filling up, and Sabra is sitting on a "recent vintage" portfolio that doesn't need a ton of work. They aren't looking for "fixer-uppers" or value-add projects right now; they want assets that are ready to cash flow today.
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Let’s Talk About That 6% Dividend
Is the dividend safe? That’s the $1.20 question.
Sabra currently pays out $0.30 a quarter. At a share price hovering around $19, you’re looking at a yield of roughly 6.2% to 6.3%. For a while, that yield was way higher, but that was because the stock price was in the gutter. The fact that the yield has "compressed" while the stock price rose is actually a sign of health, not a loss for investors.
The payout ratio is the metric to watch. Currently, it sits around 80% to 82% of Adjusted Funds From Operations (AFFO).
- Is it tight? Sorta.
- Is it dangerous? Probably not, as long as occupancy keeps climbing.
What’s interesting is that they haven’t raised the dividend since the big cut during the pandemic. They've kept it steady at $0.30 for 20 quarters straight. Some investors hate that lack of growth. But others, like Gilman Hill’s Jenny Harrington, recently named it a top pick for 2026 specifically because that yield is backed by improving fundamentals.
The Skilled Nursing Elephant in the Room
We can't ignore the skilled nursing facilities (SNFs). They still make up about half the portfolio.
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The SNF world is a headache. You’ve got Medicaid reimbursement rates that vary by state, staffing shortages that make it hard to keep beds full, and regulatory "overhangs" that never seem to go away.
But here is the nuance: Sabra is actually being picky about SNFs now. They’ve been trimming the fat, getting out of relationships with struggling operators like Genesis HealthCare. They are focusing on "transitional care"—the places you go to recover after a hip surgery before going home. That’s where the money is because the "skill mix" (patients with higher medical needs) pays better than long-term custodial care.
Valuation: Is it Actually "Cheap"?
Depending on who you ask, Sabra is either fairly valued or a massive bargain.
If you run a Discounted Cash Flow (DCF) model using their projected AFFO growth, some analysts suggest an intrinsic value way higher than $19—some even whisper $40. But let's be real. REITs rarely trade at their "paper" intrinsic value. They trade on multiples of FFO.
Currently, Sabra trades at a P/E (or P/FFO) of about 27x. That’s higher than some of its peers like Omega Healthcare Investors (OHI), which is a pure SNF play. The market is giving Sabra a "premium" because they are diversifying into senior housing.
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What Could Go Wrong?
- Operator Distress: If a major tenant can’t pay rent, the stock takes a hit.
- Labor Costs: Nurses aren't getting any cheaper. If operators can't manage labor, they can't pay Sabra.
- Interest Rate Volatility: REITs and rates are like a see-saw. If the Fed surprises us with hikes in 2026, Sabra will feel it.
The 2026 Outlook
The pipeline for 2026 looks busy. Sabra is targeting over $500 million in new acquisitions. They’ve got about $1.1 billion in liquidity, so they aren't begging for cash.
What's really fascinating is how they are handling their debt. They’ve hedged a big chunk of their term loans at a fixed rate of around 4.1% through early 2028. That gives them a "shield" against the current high-rate environment that some smaller REITs just don't have.
Actionable Insights for Your Portfolio
If you're looking at Sabra Health Care REIT stock, don't just buy it for the yield and walk away. This is a "show me" story.
- Watch the SHOP Occupancy: If this number dips below 80%, the growth thesis is in trouble. If it climbs toward 90%, expect a share price breakout.
- Monitor the Payout Ratio: You want to see this move toward 75% over the next two years. That would signal room for a dividend hike.
- Check the Operator Mix: Keep an eye on their top five tenants. If they start diversifying further away from any single operator, the risk profile improves.
The days of Sabra being a "boring" nursing home stock are over. It's now a bet on the operational recovery of senior living. If you believe the 80-year-old demographic is going to keep growing (spoiler: they are), then the tailwinds here are pretty hard to ignore.
Invest for the 6% yield today, but stay for the portfolio transformation that's quietly happening in the background.
Your Next Steps:
- Review Sabra's latest 10-K to verify the current "top tenant" exposure percentages.
- Compare the P/FFO multiple of SBRA against Welltower (WELL) and Ventas (VTR) to see if the "senior housing premium" is still justified.
- Set a price alert for $17.50—if it dips there, the yield becomes an even more compelling 6.8% with a better margin of safety.