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, we continue to see health care and health care-related companies thriving.
According to census numbers, the percentage of Canadians that are above the age of 65 is fast approaching 20%. This number has been steadily rising; just five years ago it was closer to 15%.
Two of the ramifications of this aging population are that they need income-producing investments, and industries that cater to this group, such as the health care and the long-term care industry, will outperform.
NorthWest Health Prop Real Est Inv Trust (TSX:NWH.UN) has been benefiting from this trend, as cash flows and occupancy levels have been rising significantly.
As the company’s debt levels continue to be reduced, and the international portfolio continues to impress, the stock should continue to respond favourably.
With a current dividend yield of 7.4%, Northwest is a great addition to your portfolio for its exposure to the aging population and for its high-quality, global, diversified portfolio of healthcare real estate properties.
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 shares are trading just over book value and present a great opportunity to establish positions.
Chartwell Retirement Residences (TSX: CSH.UN) is currently yielding 3.8%, and as Canada’s largest seniors-housing provider, Chartwell provides investors with the go-to name in this space.
As of the third quarter of 2017, occupancy levels were 93%, and with consistently rising earnings and a dividend that has been increased yearly in the last three years, the company is clearly seeing positive trends.
Fund from operations increased 9.3% in the quarter, as the dividend-payout ratio remained at healthy 36% (94% if we include capital expenditures), and debt levels remain easily covered, with an interest coverage ratio of 3.4 times.
Going forward, the company has a strong pipeline of opportunities to expand its portfolio of seniors-housing development as well as a plethora of opportunities to continue to expand its support services that are offered in house.
For example, Chartwell has been working hard at expanding its sources of revenue by introducing additional care and ancillary services, such as dental, foot care, and physio services.
So, there you have it: two names for income and steady capital appreciation, as they benefit from this secular trend.
