The healthcare industry is what I would call a “Steady Eddie” industry, with strong long- and short-term fundamentals, little economic sensitivity, and definite staying power.
Let’s put some numbers behind this.
As we know, society is facing a rapidly aging population, and as the baby boomers are now between the ages of 54 and 72, we continue to see big demand in products and services for this stage of life.
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 and just five years ago was closer to 15%.
Here I will discuss two dividend stocks in the healthcare space that you should consider for your TFSA, as they are benefiting greatly from the aging population and making their shareholders tonnes of money in the process.
Chartwell Retirement Residences (TSX: CSH.UN)
Chartwell, the largest provider and owner of senior-housing communities from independent living to long-term care, has been benefiting from rising occupancy levels, as an uptick in demand has been accompanied by a stagnant supply of seniors’ housing.
With a 4% dividend yield, four consecutive years of cash distribution increases, and a quality portfolio of properties, Chartwell is a solid investment that is well positioned for the future.
In its latest quarter, Chartwell reported a 6% increase in funds from operations, but the real story here is the long-term trend, as a doubling of people over the age of 75 in the next 20 years will provide a big boost to demand
Going forward, the company has a strong pipeline of opportunities to expand its portfolio of senior-housing developments as well as a plethora of opportunities to continue to expand its support services that are offered in house.
Northwest Healthcare Properties REIT (TSX:NWH.UN)
With a current dividend yield of 7.34%, Northwest also represents a good opportunity.
Like Chartwell, Northwest is benefiting from the aging population. It offers a high-quality global, diversified portfolio of healthcare real estate properties, such as medical buildings and hospitals, located throughout Canada, Brazil, Germany, Australia, and New Zealand.
As such, Northwest stock offers investors exposure to the biggest demographic shift that much of the developed world is facing. This real estate giant has a 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.
