For retirees, one of the ongoing challenges is balancing income with capital preservation. That often leads to an allocation toward bonds, but in a higher-for-longer rate environment with sticky inflation, fixed income alone may not keep pace with withdrawal needs.
As a result, many retirees maintain some exposure to equities. But instead of relying solely on broad indexes like the S&P 500, a more targeted approach can help manage risk.
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Defensive sectors such as consumer staples, utilities and tend to offer that balance. These industries provide products and services with inelastic demand, meaning people continue to spend on them regardless of economic conditions.
Health care stands out in particular because it combines that stability with growth potential, supported by ongoing demand for medical services, and biotechnology innovation.
Even so, the sector remains less volatile than the broader market. For example, the State Street Health Care Select Sector SPDR ETF (ticker: ) has a five-year monthly beta of about 0.6, indicating lower sensitivity to market swings, though its 30-day SEC yield of 1.7% may fall short for income-focused retirees.
offers a different trade-off. Many publicly traded real estate companies are structured as , or REITs, which are required to distribute at least 90% of their taxable income to shareholders. This results in higher dividends, as seen in the State Street Real Estate Select Sector SPDR ETF (), which yields 3.2% on a 30-day SEC basis.
However, real estate is more cyclical and tends to be more sensitive to economic conditions, with higher volatility than the broader market. For example, XLRE’s five-year beta is significantly higher than XLV, at 1.1. A potential middle ground is health care REITs.
These companies own and operate properties such as senior housing, hospitals, medical office buildings, skilled nursing facilities and outpatient centers. They combine the income characteristics of real estate with the defensive demand profile of health care.
According to Nareit, there are 17 health care REITs in the U.S., offering an average dividend yield of about 2.6%. Year to date through April, the group has collectively returned 13.5% with dividends reinvested, making it one of the stronger-performing segments of the market recently.
“I would also highlight the two recent health care REIT initial public offerings (IPOs) in Janus Living Inc. () and National Healthcare Properties (),” says David Auerbach, chief investment officer at Hoya Capital. “It shows there is consistent demand in a sector with no new supply, and as aging populations continue to grow, we will need a wave of new investment.”
Here are five of the best health care REITs for a retirement portfolio:
| REIT | Forward Dividend Yield |
| Welltower Inc. () | 1.4% |
| Omega Healthcare Investors Inc. () | 5.8% |
| Healthcare Realty Trust Inc. () | 4.7% |
| Medical Properties Trust Inc. () | 6.8% |
| Ventas Inc. () | 2.4% |
Welltower Inc. ()
There are a few ways to size a REIT. You could look at square footage or number of properties, but for publicly traded REITs, market capitalization is the more common measure. This metric reflects share price multiplied by shares outstanding and gives a sense of how investors value the business at a glance.
By that measure, Welltower is currently the largest health care REIT, with a market cap of $148 billion. Its core business is senior housing, spanning independent living, assisted living and memory care, which represent increasing levels of support.
“Welltower’s market cap has increased five times in the past half-decade, and they’ve done so by perfecting the public REIT formula — it’s all about access to equity capital,” explains Alex Pettee, president and director of research and ETFs at Hoya Capital Real Estate. “It’s taken full advantage of the fact that it’s one of the few REITs that investors award a sizable premium to net asset value, and used ‘cheap’ capital to fund accretive acquisitions.”
In the first quarter of 2026, the company reported normalized funds from operations, or FFO, of $1.47 per share, up 23% year over year. FFO is the key metric for REITs because it adjusts for non-cash items like depreciation that can distort traditional earnings per share.
The company has also leaned heavily on capital recycling, closing $10.5 billion in investments this year while funding part of that through $2.8 billion in asset sales and loan repayments, along with $700 million in debt reduction. This strategy helps maintain balance sheet stability, though the stock’s strong recent run has pushed its dividend yield down to about 1.4%.
Omega Healthcare Investors Inc. ()
One challenge with large-cap REITs and other is that they are widely followed and heavily traded, which makes it harder to find mispricing. Their inclusion in major indexes also brings steady flows from passive funds, which can keep valuations efficient.
Investors looking for more value-oriented opportunities may need to move down the market-cap spectrum, where coverage is thinner and trading volumes are lower. These segments can offer more room for alpha, as fewer participants are actively pricing in every development.
Omega Healthcare Investors, with a market cap of about $14.3 billion, sits in the mid-cap space. It focuses on skilled nursing and long-term care facilities, with a portfolio of more than 1,100 properties across the U.S. and U.K., representing roughly 102,000 beds.
One notable feature is its lack of an anchor tenant, a large, dominant renter that contributes a significant share of total income, often stabilizing occupancy but also creating reliance on that single operator. Omega avoids this risk, with no tenant accounting for more than 10% of total rent.
The company also uses a triple-net lease structure, where tenants are responsible for property-level expenses such as maintenance, taxes and insurance, which supports more stable margins. Finally, many leases also include fixed rent escalators, giving Omega’s management more visibility into cash flows.
In the first quarter of 2026, the company reported adjusted FFO of 82 cents per share, up from 75 cents per share a year earlier, while funds available for distribution reached 78 cents per share, supporting a sustainable yet high dividend yield of about 5.8%.
Healthcare Realty Trust Inc. ()
As investors move down the market-cap spectrum in health care REITs, business models tend to become more specialized. Larger REITs often operate across multiple property types, which can make valuation more complex due to differing growth rates and risk profiles across segments.
That “conglomerate” effect can obscure underlying performance. Mid-cap REITs, by contrast, are often more focused, making their operations easier to understand and analyze. Healthcare Realty Trust, with a market cap of $7.1 billion, is a clear example, concentrating exclusively on medical outpatient buildings.
These properties are typically located near hospitals or in community settings and house physician offices, diagnostic centers and outpatient care facilities. They differ from senior housing or skilled nursing facilities in that they are less tied to residential care and more aligned with routine services.
In the first quarter of 2026, Healthcare Realty Trust reported normalized FFO of 41 cents per share driven in part by 6.9% same-store net operating income growth, which measures performance from existing properties. The company also posted a strong 93.5% tenant retention rate, which supports stable rental income and reduces costly turnover.
Recent activity has focused on its existing portfolio, with 2.2 million square feet of lease executions, mostly renewals and redevelopments, alongside $100 million in share repurchases. The REIT currently yields about 4.7% and has returned roughly 42% over the past year on a total return basis.
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Medical Properties Trust Inc. ()
Many health care REITs focus on long-term care facilities such as skilled nursing or senior housing. These properties tend to have longer stays and more stable occupancy, as residents often remain for extended periods. That stability can support predictable cash flows and rising fees over time.
The main risk is operational disruption, which became clear during the COVID-19 pandemic when staffing shortages, higher costs and lower occupancy pressured operators and, in turn, landlords.
Investors willing to accept a different risk profile may consider Medical Properties Trust. The company focuses on acquiring and leasing hospital facilities under long-term net lease agreements, making it one of the largest hospital owners globally, with 378 facilities spanning 38,000 licensed beds.
Medical Properties Trust is in the midst of a turnaround, reporting normalized FFO of 14 cents per share in the first quarter of 2026, alongside ongoing capital recycling activity. It recently sold two facilities for $31 million and acquired a post-acute facility in Europe for 23 million euros ($27 million).
Its asset base totals about $15 billion, including $8.8 billion in general acute facilities, $2.4 billion in behavioral health and $1.7 billion in post-acute assets, which stands in contrast to a market cap closer to $3 billion. This gap is what former Fidelity fund manager referred to as an “asset play,” a situation where investors value the company at a fraction of what its underlying real estate may be worth.
That disconnect can exist for several reasons, such as concerns around tenant quality, leverage or cash flow stability. But if those issues stabilize or improve, there is potential for the share price to move closer to the underlying asset value. In that sense, investors are not just buying the current income stream, but also betting that the market may eventually reassess the value of the real estate portfolio itself.
MPT’s current quarterly dividend of 9 cents per share equates to a yield of 6.8%, though the stock is up only about 4% over the past year, reflecting ongoing uncertainty.
Ventas Inc. ()
While mid-cap health care REITs can offer value, they often come with higher risk during economic slowdowns. Larger REITs, particularly those included in the , tend to be more stable.
To qualify for inclusion, companies must meet strict requirements around size, liquidity and earnings consistency, along with a committee review. That can make them more suitable for risk-averse investors. In addition to Welltower, another major S&P 500 health care REIT is Ventas, which has a market capitalization of about $41 billion.
Ventas owns more than 1,400 properties and operates largely under a triple-net lease model. Its portfolio spans hospitals, long-term acute care, inpatient rehabilitation and skilled nursing facilities.
In the first quarter of 2026, Ventas reported normalized FFO of 94 cents per share, up 9% year over year, driven in part by its senior housing operating portfolio. That segment saw 15% same-store cash net operating income growth, meaning existing properties generated higher income without relying on new acquisitions or expansions.
The company has also been active in capital recycling, closing $1.7 billion in senior housing investments and using equity forward agreements to fund future deals in a more measured way than traditional share issuance. Ventas currently pays a 2.4% dividend yield and has returned 35.1% over the past year on a total return basis.
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Update 05/07/26: This story was published at an earlier date and has been updated with new information.
