Happy birthday, Bob. Five more years till you qualify for Social Security.

Yes, those products of the post-World War II population explosion are watching their icons one by one lead the way into post-middle age. Like a Rolling Stone, baby boomers are heading downhill, physically speaking. (Just look at me!)

As the members of this huge demographic group head closer and closer to senior status, they will need to rejigger their investments to produce a more predictable stream of income, while still looking for a certain amount of upside potential.

But, just like other equities, they also can appreciate (and, unfortunately, decline) in value.

So with REITs you can get double-digit dividend yields and possibly huge total returns — all while diversifying your holdings.

And recently, for holders of REIT shares, that has been a very good thing indeed. There weren’t many stock sectors that made you money over the past year. The S&P 500 Index, for example, lost close to 14% for the twelve months ending April 2001. We won’t even talk about the NASDAQ. But during that same time, REITs appreciated 18%.

Even more significantly, REITs provided total returns — capital appreciation (or decline) plus dividends — of 20%, compared to a negative 5% total return for the S&P 500.

A REIT is especially attractive to investors when it has been paying a high dividend and is likely to continue paying those dividends at the same rate or higher.

REITs are publicly traded companies that invest solely in real estate. There are REITs that own all sorts of properties, such as apartment complexes, shopping centers, office buildings, hotels, or a mixture of various types (these are commonly referred to as diversified REITs).

But at the moment, REITs that invest in healthcare-related property are especially intriguing. Healthcare REITS invest in properties such as nursing homes, assisted living and retirement centers, specialty care hospitals, and medical offices.

And the time seems right to be looking at investing in senior care. You see, the industry had terrible years in 1999 and 2000. Stock prices plummeted. Some companies even went bankrupt.

But even without the baby boomers, the population that is likely to need senior housing and nursing care is growing fast. For example, the age group 85 and older is expected to grow 2.9% from now to 2005. The U.S. population as a whole is projected to grow at an annual rate of only 0.89%.

There are other factors helping the senior care industry. For a while, changes in government Medicare reimbursement policies had shaken up the industry. But since April 2000, nursing homes have been receiving higher federal Medicare reimbursements.

Moreover, the 1990s saw too much nursing home and assisted living development. But this dropped off in 2000 and seems to be dropping more in 2001. So the supply/demand ratio is coming more into balance.

To be sure, there are still problems in the senior care industry, such as high labor and liability costs.

But overall, the substantial good news has translated into profits and healthy total returns for investors.

The appropriately named Health Care REIT Inc. (HCN:NYSE), based in Toledo, OH, is the pioneer in the field. Formed in 1970, it was the first REIT to invest exclusively in healthcare facilities.

HCN owns more than US$1.1 billion worth of real estate located in 34 states. This includes 150 assisted living facilities and 47 nursing homes.

Its dividend yield as of May 9 was 10.5%, and its stock has climbed almost 50% in the 12 months ending April 30, to US$23.35.

You can contact the company at 419-247-2800, www.hcreit.com.

Based in Newport Beach, CA, Health Care Property Investors (HCP:NYSE) owns 175 long-term care facilities, 92 congregate care and assisted living facilities, 82 medical office buildings, 46 physician practice clinics, 22 acute care hospitals, and 9 freestanding rehabilitation facilities.

HCP also recently expanded, acquiring American Health Properties’ 70 healthcare facilities.

After increasing its dividend to 77 cents a share, a 5.5% increase over a year ago, the company boasts a dividend yield of 8.4%. Its stock jumped 30% in the past 12 months, to a bit more than US$36.

For information, you can contact the company at 949-221-0600, www.hcpi.com.

With good growth potential in the stock price of both these REITs, investors are looking at a potential double-digit return in the coming year.

Not quite ready to dive into individual REITs yet? Then you may want to start out with a REIT mutual fund.

For example, there is the no-load Vanguard REIT Index (VGSIX), which reported a total return of more than 26% in 2000. Contact: 800-662-7447, www.vanguard.com.

Another REIT fund, Spirit of America Investment Fund A (SOAAX), has a substantial investment in both HCN (its third largest holding at 3.42%) and HCP (its top holding at 4.11%). In the past year, it has reported a return of more than 24%. But the fund imposes a hefty front load of 5.25%. (Its B shares, which issue a smaller dividend, impose a declining back end load depending on your holding period). Contact: 800-452-4892.