We are all aware of the fact that one of the biggest demographic shifts is taking place, and with it come lucrative opportunities for investment. I am, of course, referring to the aging population, and as the Baby Boomers are now between the ages of 51 and 70, we are seeing a new set of investment opportunities.
This aging population needs income-producing investments, and industries that cater to this group, such as the health care and long-term care industry, will outperform.
Income-producing investments will be in much greater demand, as seniors are more concerned with income than with capital appreciation at this point in their lives. And this, along with record low bond yields and other company-specific factors, is one of the reasons why many of the high-yielding common shares have provided very high levels of capital appreciation over the last few years.
Healthcare products and services and the long-term care industry have seen (and will continue to see) unprecedented demand. We have already seen this come to fruition, but there is still more to come, as this is just the beginning.
The following two stocks are both well-run companies that are perfectly positioned to reap the rewards of this demographic shift, and they have already been benefiting from this trend. It is not too late for investors to get exposure, as the dividend yields are still high and company and industry fundamentals are still strong.
First on my list is NorthWest Health Prop Real Est Inv Trust (TSX:NWH.UN). The company’s high-quality global, diversified portfolio of healthcare real estate properties located throughout Canada, Brazil, Germany, Australia, and New Zealand offers investors exposure to the growing market that addresses the aging population not only in Canada, but in selected countries worldwide.
Healthcare properties generally have stable occupancies and long-term leases which make the underlying REIT a defensive one that is attractive for long-term investors.
The dividend yield is currently 7.48%. The stock trades just above book value.
Chartwell Retirement Residences (TSX:CSH.UN) is another company that continues to benefit from this shift. It has a dividend yield of 3.78%, and in the coming years, demand is expected to increase more than the new supply of retirement homes. Currently, occupancy levels are at 93% after many quarters of steady increases. The leverage to increases in occupancy rates is very significant.
