Great opportunities in the stock market don’t come around too often and in those rare instance, they usually don’t last long.

For example,  I highlighted three appealing real estate investment trusts a few months ago. My favorite industry pick at the time, Omega Healthcare Investors, Inc. (NYSE: OHI), has become an even more appealing value since then.  

OHI is a pure-play REIT that focuses on skilled nursing facilities. A number of unique events in the last quarter have made investors uncertain about the stock and that uncertainty is contributing to the sell-off.

First, Omega Healthcare recently closed on the acquisition of Aviv REIT, announced last year. As partial payment, the REIT issued 9.5 million shares of common stock in February, and investors generally don’t like being diluted. However, with the purchase of Aviv, Omega Healthcare becomes the dominant player in skilled nursing facilities (SNF).

Source: Company Presentation

Omega Healthcare also used the proceeds of an equity offering to pay down debt and now has ample capital and credit to continue to add to its portfolio. The company notes that 87% of the $100 billion skilled nursing facility market is still privately-owned. As a result, there is still ample room for Omega to grow yet larger.

#-ad_banner-#In order to maintain flexibility while closing the Aviv acquisition, Omega paid out a prorated portion of its first quarter dividend in February and the rest of it in March, after the deal was completed. The strange timing of the dividend ended up being a wash for investors, but it added to the confusion around the company.

Sometimes the market can “sell first and ask questions later” whenever rumors of bad news crop up around a stock or industry. For example, take HCP, Inc. (NYSE: HCP), one of Omega’s competitors.  It’s HCR Manor Care segment is going through financial and legal troubles. Omega Healthcare and other healthcare REITs aren’t affected by the issue, but have fallen on the news, in a case of being guilt-by- association.

Indeed HCP’s troubles highlight another of Omega Healthcare’s strengths. HCR Manorcare, the troubled tenant of HCP, constitutes a whopping 26% percent of HCP’s portfolio, which is a big concern for shareholders. Omega Healthcare’s largest tenant makes up only 8% of its portfolio, better insulating it from potential tenant troubles than industry competitors.

There are a lot of distractions not material to Omega Healthcare’s long-term performance clouding the fantastic fundamentals of this business, and the stock has been whacked more than 15% in the past few months.  Herein lies our opportunity for incredible gains.

Omega Healthcare now trades for a bargain valuation of 12 times its funds from operations. For a company that has grown funds from operations per share 15% per year over the past 10 years, this is an unusually low valuation.

The stock also sports a fantastic 6.1% yield, and has been raising the dividend over 10% a year over the past decade. This combination of a high starting yield and fantastic dividend growth just isn’t available anywhere else in this richly valued market.

The market is giving investors an exciting opportunity to get an industry leader at a terrific discount. If Omega Healthcare traded for a reasonable 15 times funds from operation, then it has 20% upside in the short-term. The 6% dividend yield, which is growing at a nice clip, is a nice consolation in the event that share price appreciation takes longer to materialize.

Risks To Consider: Omega Healthcare is reliant on Medicare reimbursement. The company hasn’t highlighted it as a risk on recent conference calls, and I don’t expect any issues in the foreseeable future. Nonetheless, it’s something to be aware of as an investment consideration.

Action To Take –> America will need more skilled nursing facilities in the coming years and decades. This company is on an exciting growth trajectory, trades for an appealing price and pays a terrific dividend.

If you’re interested in further exploring the world of high-yielding securities, then look no further than High-Yield Investing. Each month in this premium advisory covers things like REITs, MLPs, municipal bonds, preferred stocks and more. These are the kinds of market-beating opportunities for income investors that you won’t hear about anywhere else. More recently, High-Yield Investing has been informing readers of a hidden market of high-yield stocks that is available to all investors, but most don’t know about. To learn more about this market and benefits of High-Yield Investing, click here.