"Housing starts have swooned, foreclosures have jumped and home prices saw their steepest drop in 26 years," notes income expert Carla Pasternak, who nevertheless is suggesting a real estate investment.

In her High Yield Investing she explains, "Our money-making opportunity isn't based on the housing market; rather, it's with a REIT -- Omega Healthcare Investors, Inc. (NYSE: OHI).

"REITs and housing are both real estate, but that's where the likenesses begin and end. Property-holding equity REITs invest in commercial real estate. And commercial properties continue to generate steady cash flow from rental income, thanks to long-term leases.

"Above-average dividends are what allow REITs to pack a punch. These companies must distribute at least 90% of their profits to shareholders, making them especially attractive to income investors.

"Founded in 1992, Omega manages a $1.3 billion portfolio of over 200 hospitals and nursing homes in diverse locations across 28 states. The company leases the properties to established healthcare operators.

"Under sales/leaseback agreements with these tenants, Omega purchases their properties, then leases them back under long-term contracts. Omega secures its rising income stream for shareholders through long-term triple-net leases and fixed-rate mortgages with built-in rent increases.

"Management recently announced its 14th quarterly dividend increase in the last 18 quarters. The quarterly dividend has doubled from $0.15 a share in 2003 to a current $0.30 a share. That gives the stock a projected annual payout of $1.20 per share, equating to a yield of 6.7%.

"As a real estate investment trust, Omega doesn't pay income taxes, but instead passes along at least 90% of taxable earnings to shareholders. About 70% of the 2007 dividend was taxable as ordinary income, up to 35%.

"The balance was a non-taxable return of capital, by which the company passed along cash flow that's not part of reported earnings. Given the large component of the dividend taxable at the full income tax rate, the shares are best held in a tax-deferred account.

"Omega has a dividend reinvestment plan that allows you to take the payments as shares of the company instead of a cash payout, but the dividends must still be reported as taxable income. You can phone Omega's investor relations at 1-866-996-6342.

"OHI's earnings have grown a robust 72% a year on average over the past three years. Management sees funds from operations of $1.49-$1.55 per share from an earlier estimate of $1.41-$1.43.

"That latest estimate represents a healthy +5-9% growth from last year's $1.42 per share, thanks largely to new investments completed during the year. Overall, OHI offers an attractive mix of relatively low-risk income along with dividend growth and capital gains potential."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.