We are all aware of the fact that one of the biggest demographic shifts is taking place, and with it comes 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 years old, 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 the long-term care industry, will outperform.
First on my list is Northwest Healthcare Properties REIT (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.
In the second quarter of 2017, occupancy levels were up again and very strong at 95.7%. The international division saw occupancy levels of 99%.
The dividend yield is down from recent levels, as the stock has appreciated somewhat, and is currently at 7.04%. The stock trades at book value.
Chartwell Retirement Residences (TSX:CHS.UN) is another company that will continue to benefit from this shift. Chartwell is currently yielding 3.89%.
In the coming years, demand is expected to increase more than the new supply of retirement homes. Currently, occupancy levels are at 92.5% after many quarters of steady increases.
The leverage to increases in occupancy rates is significant, and here lies the opportunity.
These two names may be somewhat new to investors, and maybe investors are a little less comfortable going to them for yield. But keep in mind that these industries have a lot going for them, and being the beneficiaries to one of the biggest demographic trends is a big one.
But also, these companies enjoy leading positions in their respective industries. Chartwell is the largest provider of seniors housing in Canada, and Northwest is Canada’s leading owner/manager of medical office buildings and healthcare real estate.
Two of the other “go-to” names for yield are Fortis Inc. (TSX: FTS)(NYSE: FTS), which currently yields 3.53%, and Enbridge Inc. (TSX: ENB)(NYSE: ENB), which currently yields 4.77%.
The merger with Spectra Energy gave Enbridge a better growth profile going forward, which should result in good dividend growth for the foreseeable future, and Fortis remains a good defensive investment, as almost 100% of its earnings come from regulated and/or long-term contracted utility infrastructure.
