With Baby Boomers entering old age, U.S. demographics favor one particular sector: healthcare. And within that sector, investors seeking sizable yet stable dividend returns may want to look at healthcare and senior housing real estate investment trusts (REITs).

Generally speaking, real estate is an attractive source of reliable dividends because rental yields provide steady income, with few expenses required to maintain them. In addition, rentals tend to rise with inflation, which should ensure future dividend increases.

Senior care and medical real estate offer the additional benefit of demographics, and demand for such facilities should remain robust in the years to come. These properties are also somewhat less prone to leveraged speculation than other forms of real estate – and since many medical costs are paid by the government, they're less likely to lose rental income in a downturn.

However, caution is needed. Too many healthcare REITs are paying dividends far in excess of their earnings, making their income streams unreliable in the long run.

Indeed, with interest rates so low and monetary conditions so easy, companies can borrow money to pay dividends – and for REITs whose share prices are sustained by dividend yield, there's a strong temptation to do so.

In addition, depreciation allowances on real estate provide cash flow from which dividends can be paid, while capital investments can be financed with new share issues from a buoyant stock market. This tempts real estate companies to pay dividends greater than earnings – which, in moderation, may not be a problem. However, in the longer term, companies that increase leverage or allow their real estate to age without being replaced will be unable to maintain earnings as available rents decline. In such cases, the dividend cannot be relied upon for long-term income.

I kicked the tires on five healthcare and senior housing REITs to see which ones offer the best investment at this point in time.