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Spokane, Washington  Est. May 19, 1883

Motley Fool: Senior real estate

The Bonney Lake Medical Building, a Ventas property in Bonney Lake, Wash. (MultiCare)

If you’re interested in investing in real estate without taking title of any property, consider a real estate investment trust, a dividend-paying company that owns or finances income-producing properties. A particularly promising one is Ventas (NYSE: VTR).

One of the largest health care property owners in the United States, Ventas boasts more than 1,200 properties, the majority of which are senior housing. Medical offices, post-acute care properties, life science facilities and health system real estate make up the rest.

Wall Street is putting pressure on Ventas’ shares because rising interest rates mean more competition for investor dollars for high-yield investments such as REITs. (Ventas’ shares recently sported an appealing dividend yield of 5.8 percent.) But the trends driving this REIT’s future haven’t changed. For example, 10,000 baby boomers are turning Medicare-eligible daily, the 75-plus age group is the fastest-growing age demographic, and those 65 and older spend five times more on health care than younger age groups do. All of this spells huge demand for health care in the years ahead – and for the property needed to administer all that care.

In addition, the existing health care real estate market is more than $1 trillion in size and is less than 15 percent REIT-owned, reflecting lots of opportunity for consolidation and further acquisitions for Ventas. Long-term dividend-seeking investors should give this stock serious consideration.

Ask the Fool

Q: Why do some companies pay no dividends? Are they worth investing in? – P.T., Elyria, Ohio

A: They can be. A company can use its earnings to reinvest in its business, pay down debt, buy back shares (reducing their number and making remaining shares more valuable) and/or pay shareholders a dividend, among other options.

Some companies, typically smaller, younger or faster-growing ones, often need to spend any earnings on growth. Amazon.com and Facebook, for example, pay no dividend, while Starbucks only started paying one in 2010. Clearly, many great companies have been or are without dividends. Still, companies that pay dividends are worth including in your portfolio because they offer a relatively reliable income that tends to increase over time as long as the underlying companies remain healthy. Struggling companies may reduce or eliminate their payouts.

Strong, growing companies offering little or no dividend can still reward you well, through the increases in their stock prices.

To see many stocks we have recommended, some of which offer dividends, try our “Motley Fool Stock Advisor” newsletter via fool.com/services.

Q: How do I bonds protect you from inflation, and are they good investments? – J.J., Manteo, North Carolina

A: I bonds feature interest rates that are tied to inflation. Their interest rates have two components: a fixed rate that lasts for 30 years and an inflation rate that changes every May 1 and Nov. 1. The latest I bond rate is 2.58 percent, through April.

If you’re looking for bond income and you expect inflation to rise in the future, I bonds can help you keep up with it. I bond rates have been as high as 7.5 percent and as low as zero, with a median rate near 3.4 percent.

My dumbest investment

I was convinced that Cara Therapeutics had a winning drug. Oops! It crashed, and I got out after losing around 50 percent. I’ll stay away from pharmaceuticals going forward. – D.M., online

The Fool responds: You’ve been hasty in several ways.

First, don’t dismiss an entire industry because of a bad experience with one stock. Given our country’s growing and aging population and the demand for drugs to cure or treat more conditions, the pharmaceutical industry’s future seems solid.

You weren’t necessarily wrong to invest in Cara Therapeutics, either. Many investors have been bullish on Cara, largely over the potential for its “CR845” drug in development, which targets chronic pain. In February 2016, the Food and Drug Administration put a “clinical hold” on a late-stage clinical trial of CR845, sending the stock down, but the hold was lifted a few months later.

Any investor in biotechnology companies should have a good understanding of the industry and, ideally, the science involved. Setbacks are to be expected as promising drugs go through the usual series of clinical trials. Only a fraction of contenders pass all trials and end up approved by the FDA. Thus, investors often prefer to focus on biotech companies with deep pipelines featuring many drugs, ideally with a bunch in late-stage trials. Cara may end up a long-term winner, but it’s not without risks.